The RWJBarnabas Health CFO discusses financing the organization's SDOH initiatives and how the system is preparing for an uncertain future marked by the pandemic.
Over the past several months, HealthLeaders has spoken with several members of the C-suite at RWJ Barnabas Health, the 11-hospital system based in West Orange, New Jersey.
These conversations have focused on efforts to affect the social determinants of health (SDOH), the effects of the ongoing COVID-19 pandemic on the organization, and the financial standing of the system.
According to its most recently available financials, RWJBarnabas reported a total operating revenue of $2.8 million for the first six months of 2020 ended on June 30.
John William Doll, CPA, CFO of RWJBarnabas, spoke with HealthLeaders about financing the organization's SDOH initiatives, and how the system is preparing for an uncertain future marked by the pandemic.
This transcript has been lightly edited for brevity and clarity.
HealthLeaders: Can you walk me through how you're working to finance the various SDOH and community health projects for RWJBarnabas?
John William Doll: SDOH is something that's become ingrained in our culture and existed pre-pandemic. We formally launched a social impact and community investment practice three years ago because we see supporting the community as core to our mission. In terms of financing the efforts, we've handled it in a bunch of different ways.
First and foremost, in connection with launching the social impact practice, we've dedicated a portion of our unrestricted cash investment balance to fund initiatives that are tied to the social impact practice and a major piece of that is addressing SDOH. We earmarked $30 million in spending to address housing and food insecurity. In addition, as part of our normal budgeting process, we’ve allocated resources that promote health and wellness, and we funded them through our operations.
Where we can, we also leverage existing networks. We don't think that recreating everything is the right answer. There are several organizations that do this work in the communities and they do a phenomenal job. One thing we've done is invest in technology that connects our people and patients to those services when we identify the need. Another thing we've done is we've partnered with Horizon Blue Cross on a community health worker project, and that's built off of models that have been successful in other parts of the country, including a successful pilot in Newark.
Ultimately, as we move to value-based contracting, there are rewards and payments for reducing overall healthcare spend. We know that one reason that healthcare spend is higher than it should be is because of SDOH. As we're successful in helping to address those issues, it creates gainsharing. Horizon is focused on that because of the business they're in, and we're focused on it because we want to make our communities healthy, and we're jointly funding the expansion of that program.
HL: How has RWJBarnabas balanced its long-term financial strategy with the acute, short-term issues it faces?
Doll: That tension always exists, and perhaps, has been heightened because of the uncertainty. What it comes down to is that there's probably never enough capital in an organization like ours to do everything that we need.
The balance is prioritizing where you want to spend. What we've done is continuing with planning and evaluation for some projects, but not committing fully to them unless we're sure they're aligned with that long-term strategy, and move some up on the list that are supplemented with planning that we learned from COVID.
A great example is that we had an ER renovation and construction project at one of our facilities that we paused and reevaluated from what we learned [during] COVID. We've redesigned the plan such that it'll create a better [physical] separation should we ever need to get back to isolation of COVID-positive patients from other [patients and staff].
We've created more isolation capacity than was [originally] in the plan, and then restarted it because we know that that's something that will be needed. If there is a second wave that is anything like what we saw the first time, we will be better situated from a physical plan perspective.
HL: A lot of the CFOs I've spoken to have said that they've moved to more dynamic budgeting and financial forecasting on kind of a rolling basis; I'm curious if that's something that you and your financial team have embraced at your organization. What is your outlook for the rest of the year and going into 2021? How are you preparing for what could be a second surge?
Doll: If you ask someone in my position and they give you an answer other than, 'The historical budgeting process is insufficient in the environment we're in,' then they probably should be in another role. We've had such dramatic events impacting all of our business and you need to be more agile in addressing that in order to meet the needs of the people in our communities.
We haven't pivoted to a full rolling forecast, we've done some of that in the past, because a lot of our efforts are still focused on preparing our facilities. What did we learn from the pandemic? How do we best learn from shortages in equipment and supplies to make sure that we're not scrambling? Thankfully, we never ran out of PPE for our staff, but there was a lot of effort put in place to do that and we certainly paid premium. We're looking at rebuilding stockpile systems to deploy that equipment more flexibly than what we had in place.
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Our strategy going into the pandemic was to focus on regional centers of excellence, consolidation of services, and matching the market's need in terms of moving away from strictly acute care and ambulatory settings. If anything, the pandemic validated that strategy, so we're accelerating that. We're fortunate that, from at least the balance sheet perspective, we were in a position of strength going into the pandemic, so that's created a little bit of luxury as we deal with that.
It's just impossible to predict what next year will look like based on the change that's occurred. What I can tell you is we did recast our budget in June, with a prediction through the end of the year, based on what we thought the recovery rate was going to be. That creates a cash flow profile and gave us a sense of where we'd end the year and for capital plans, do everything we need to do from a finance perspective. We're measuring against that, as opposed to historical budgets, and we do adjust that every month. Thankfully, the pace of returns [are] more rapid than what we had originally anticipated.
HL: We've seen the rise of telehealth throughout the crisis, but what are your thoughts on the financial sustainability of the program in a post-pandemic landscape? Additionally, are there any other financial innovations that you expect hospitals and health systems to keep around after we get a vaccine?
Doll: Our experience was remarkable. One thing that maybe isn't 100% evident is that the resistance to adoption of telehealth was [primarily in] a certain group of patients and providers. We did have some of our doctors during the initial [telehealth] rollout pre-pandemic that felt like they would lose a connection with their patient if it wasn't in a live visit. Being forced into that, because of the pandemic, has changed their mindset and outlook.
I think people's perception, both from a consumer-patient perspective and a provider perspective, has been changed, and that will fuel some of the ongoing stickiness of telehealth. Our telehealth program before the pandemic was limited to episodic urgent care. If [a patient] was sick in the middle of night, they could jump on our app and see an ED doctor, or perhaps get flu medicine or a prescription refill. It wasn't really for anything other than that, particularly not for sustained screening processes.
We went from 0 to 10,000 visits-per-week in our employee medical group within the first two weeks of the pandemic. That's now dropped down to about 4,000 visits-per-week, as in-person care has increased. At the peak, [telehealth] was probably 90% of the volume we were seeing, because a lot of offices were closed, and now it's down to about 30%. The sustainability, to a large degree, will be dependent upon the payers and government continuing to support it. CMS has greatly relaxed the regulations around telehealth because of the pandemic and they've announced expansion and criteria around continuing those regulations.
I believe that if those are sustained, the model will make sense and creates more scalability for physicians. It creates, in some instances, better access to specialists. Ultimately, there do need to be in-person visits at a certain level. But in theory, as you're screening and doing other things, you could see more patients, create better access, and that needs to be balanced with a true population health model that doesn't create a churn utilization because it's easier for patients. I know that's what the insurance companies are worried about in my discussions with executives at those organizations.
Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.
Doll detailed why RWJBarnabas Health is focusing so much of its efforts on addressing the social determinants of health.
"Ultimately, as we move to value-based contracting, there are rewards and payments for reducing overall healthcare spend. We know that one reason that healthcare spend is higher than it should be is because of SDOH," he said.
Additionally, Doll said he is optimistic about the role of telehealth in care delivery going forward.