In a closed-door discussion, healthcare leaders explored current industry issues, pending legislative matters and looked to the future.
The ongoing pressures within the healthcare sector, the need to protect and improve patient access to care and the post-election national landscape — these three overarching topics were on chief financial officers’ minds at the recent 2024 HealthLeaders CFO Exchange held in the Washington, D.C., area. How do these forces interact for chief financial officers at the nation's healthcare systems, and what do they portend for 2025? A closed-door discussion, sponsored by Bank of America, dared to explore those individual marketplace forces and their potential combined effect on healthcare organizations. The roundtable featured CFOs of five leading healthcare systems.
Charles Alston and Melinda Ramsdell of Bank of America share the panel's key conclusions.
Q: How are healthcare systems working to improve/expand/protect access to care?
CFOs of not-for-profit hospitals face tough facts as they navigate day-to-day conditions. Top of the list are a massive physician and nurse shortage, and reimbursement rates that aren't keeping up with inflation in many areas — and don't cover costs in the case of Medicare and Medicaid. In addition, the tax-exempt status of not-for-profit hospitals is being questioned by some critics, presenting another headache for CFOs.
Despite these headwinds, healthcare executives remain keenly focused on their patients and on their collective mission: providing the best care and expanding patient access to that care in rural and urban markets where care deserts exist.
CFOs display a united spirit as they investigate all options and share their ideas: partnering in unique ways with churches, law enforcement and mental health providers; investing in telehealth and virtual care tools; working directly with large employers; and getting beds in micro communities instead of the main hospital tower. These executives understand there is no one-size-fits-all solution to the challenge of providing excellent and accessible care; each community’s specific needs must be determined, along with an accurate inventory of what resources already exist as possible partners for healthcare providers. At that point, hospitals and healthcare systems can decide where to invest and how — and whom to partner with in order to improve access to all members of the community. Although CFOs report this approach is yielding successes, many communities lack the financial resources needed to close the access gap.
Q: What should healthcare providers expect post-election and into 2025?
The consensus is that the national election results will not change anything quickly for healthcare organizations; the results will not fundamentally disrupt the healthcare ecosystem. However, our panel agreed there are a few things to keep an eye on. One is the stock market's performance in response to the election results. Everyone is eager to see markets continue on a tear as they have for most of 2024, setting new records — only to break them again. Is that sort of performance sustainable? CFOs, of course, are concerned about the impact of a downswing and possible interest rate cuts on their organizations' investment portfolios, potentially affecting both balance sheet strength and cash positions.
Second, healthcare executives are watching to see what happens at the Federal Trade Commission, whose recent priorities have produced a mixed bag for healthcare organizations. While the Biden-era FTC scrutinized possible mergers that were perceived to lessen consumer choice within specific markets, it simultaneously allowed mergers of larger systems across geographic regions. Will this change under the new administration? Stay tuned.
Finally, panelists are concerned about the integrity and sustainability of the federal 340B program, which has been a target of some pharmaceutical companies. Will the U.S. Congress clarify and preserve the intent of the program, which many patients and hospitals in rural and safety net areas depend on? Could it be a target for legislative action — and if that were to happen, what would the financial impact be on healthcare systems? This is one of several areas that seem ripe for legislative action by the 119th Congress.
Q: If we could choose one thing, what could we do to create a sustainable healthcare system that makes the reimbursement process more manageable while protecting patient care?
Taking a holistic view, the roundtable participants discussed a few key ideas. One was revising and simplifying the diagnosis-related group (DRG) system. A second was addressing the mental health care gap in our current system by adding capacity and working toward an agreement on reimbursement that places fair value on that important part of patient care. Third was unifying Medicare and Medicaid to manage the stability of the 340B program. And lastly — but foundationally important to keeping everything else running — the group discussed the importance of moving or evolving to a less complex payor philosophy in our national healthcare system.
In discussing these important and complex ideas, one thing was clear: Cultivating the next generation of hospital and healthcare system CEOs and CFOs — knowledgeable and compassionate leaders equipped to navigate these challenges — has never been more important.
Melinda Ramsdell, Managing Director, Global Payments Solutions, Bank of America
Charles Alston, Market Executive, Healthcare, Higher Education and Not-for-Profit, Global Commercial Banking, Bank of America