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3 Healthcare CFOs on the Election and Sequestration

Karen Minich-Pourshadi, for HealthLeaders Media, November 12, 2012

HealthLeaders: How are the $600 billion fiscal cliff and the threat of sequestration influencing your plans for 2013?

Johnson:
I'm concerned with the balance of power in the House and Senate... are we going to be able to enact polices that are going to move the country forward and solve the fiscal cliff problem? I'm also worried, though, about how the elections will impact the country's ability to stimulate jobs and grow the economy. How will we get back into a growth mode and decrease unemployment?

Bloomfield: I'm a little on the pessimistic side about this. When you hear about what some of the Republicans are saying now in the House, I'm worried that [the politicians] won't be able to come to an agreement by year–end and that some of the automatic provisions will kick in. I'm trying to stay optimistically hopeful, but we're less than two months away from that point. We've gone ahead, in our financial plan for next year, anticipating [sequestration] would impact us, and we've planned accordingly. We took out the revenue, which meant we had to look at our own expenses again. We've had many things in place around cost-reducing initiatives in traditional areas, but from this summer through the fall our group looked into how we could increase the efficiency in our organization. We looked at how we could increase standardization utilization of vendors—not just supplies but purchased services across the board, and how we approach utilities management—to help offset those anticipated reductions in reimbursement.

Hinds: [The political configurations in the House and Senate] are going to make it harder to reach an agreement balancing the budget. I'm assuming we're going to have sequestration because I don't think we'll be able to reach an agreement by December. Sequestration is going to hit us hard just like everyone else [in healthcare]. But if something happens beyond a vanilla sequestration, it could be a plus or a minus for us, depending on which specific components the government cuts. For example, we're an academic medical center, so if they decide to cut GME and IME [graduate medical education and indirect medical education] reimbursements, that could hit us worse. We assume that it's going to be an across-the-board cut, but something might happen the last two months of the year that could change it.

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