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Q&A: Banner CEO on 'Getting the Cost Out'

Philip Betbeze, for HealthLeaders Media, December 13, 2013

HLM: If you were starting this over again, what's one thing you would do differently?

Fine: In any process like this, you have to bring people along. We did a good job of prepping people on the front end, but if there's one thing we probably could have done better, I would focus on more in-depth information gathering. We did that up to a point, but I'm not sure we always thought through implementing things—the outcomes didn't necessarily match what we thought.

Maybe if we'd done a deeper cut of information we might have identified things in a more appropriate way. The problem with that is you get analysis paralysis. There is no perfect data and we had to be willing to accept some degree of non-effectiveness. Overall it was the right decision because the things that didn't work were far outweighed by the things that did.

HLM: Many of these are obviously one-time gains. You were one of the first CEOs who mentioned that you thought the bogey for cost-cutting was being able to make a margin on Medicare rates. Have you achieved that, and if not, what's standing in your way to getting there?

Fine: We can't do it universally yet, because until you find the fully insured piece of the business that will fully support Medicaid, which pays seven cents on the dollar in costs, it will be hard to operate the whole company on a Medicare reimbursement rate level.

The fully insured are still subsidizing the shortfalls of Medicare and Medicaid. The only way you can get capital and margin without better reimbursement is through reduced overhead.


Philip Betbeze is senior leadership editor with HealthLeaders Media.
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1 comments on "Q&A: Banner CEO on 'Getting the Cost Out'"


Deborah Kimbell (1/6/2014 at 11:23 AM)
Do you mean $.70 cents on the dollar? The article says it's seven cents on the dollar, but I'm looking at this news report from 2011: "Arizona hospitals will now be paid 70 percent of what it costs to care for a Medicaid patient, said Pete Wertheim, a vice president with the Arizona Hospital and Healthcare Association. "We are very disappointed to learn that they have approved another 5 percent cut," Wertheim said. "The cumulative effect of all of these cuts have really begun to take their toll on hospitals." Read more: http://www.azcentral.com/news/election/azelections/articles/2011/11/25/20111125arizona-medicaid-cut-approved-by-feds.html#ixzz2pdV0RoQT