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4 Ways CFOs Can Battle Low Reimbursement

Analysis  |  By Amanda Norris  
   February 23, 2024

CFOs are seeing more resource-intensive services that do not reimburse well, or at all.

There are a multitude of challenges that have pushed health system margins to the breaking point, but one is the unprecedented rise in the cost of services coupled with low reimbursement for those services from payers.

But what can CFOs do? Solutions may fall back to some tried and true strategies: play hard with payers and take risks on new revenue streams.

How to attack these hard decisions requires some careful planning, and some advice. We asked the members of the HealthLeaders CFO Exchange for the top issues they are facing, and low reimbursement rates—especially for those more resource-intensive services—are top of mind.

As this will be one of the many challenges addressed at our upcoming HealthLeaders CFO Exchange in May, HealthLeaders met up with CFO Exchange member, Bill Pack, CFO at Conway Regional Health System, to give us a preview of how this challenge—and his solutions—affect his health system.

The challenges

According to Pack, there are three main resource-intensive services that the health system sees that are not reimbursed well, or at all are, he says.

First are chronic disease management programs. According to Pack, these services require continuous monitoring, follow-up, and coordination among caregivers and providers, but are not adequately reimbursed by most payers at his organization.

Pictured: Bill Pack attends the 2023 CFO Exchange in Napa Valley, CA. Photo courtesy of HealthLeaders.

Mental health services are also on the list for the health system.

“Mental health treatment often requires extended ER wait times, specialized staff that is not always readily available, and challenges with appropriate patient placement,” Pack says. “The reimbursement rarely covers the cost of psychiatric patients presenting in the ED.”

Another culprit for the health system? Complex surgical procedures with longer recovery times.

Some surgical procedures, especially those involving complex cases or patients with multiple comorbidities, usually require longer hospital stays and more intensive post-operative care along with higher resource utilization with nominal additional reimbursement, Pack says.

The solutions

So how does Pack—and how can other CFOs—address these challenges? There are four main strategies that Pack has deployed:

Cost-Reduction

“We work to streamline operations (such as ED throughput, bed turnaround times, post-acute patient placement), and ensure contract compliance for supplies, and optimize resource allocation (right patient, right place, right time) to reduce expenses without compromising patient care and quality,” Pack says.

Comprehensive Payer Strategy

“Negotiating with payers for fair and equitable reimbursement for services that are resource-intensive, partnering with payers for care coordination and improving quality metrics, and providing evidence of the cost-effectiveness and positive patient outcomes have all been key in our payer strategy for proper reimbursement,” he says.

Diversification of Services

“We are also expanding and adding services that include higher-reimbursed procedures or specialties to offset the lower margins of resource-intensive services,” Pack says.

Utilization Management and Efficiency Improvements

“We are implementing utilization management processes to ensure that resources are used efficiently,” Pack says. “We are also identifying areas for improvement in care delivery, which lowers costs and improves patient care.”

The event

Pack is attending our Spring 2024 CFO Exchange on May 8-10 at the Fairmont Grand Del Mar in San Diego.

Are you a CFO interested in attending our event and hearing more from Pack and other attendees? To inquire about attending the HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com.

The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at our LinkedIn page.

Pictured: CFOs from across the US met at the 2023 CFO Exchange in Napa Valley, CA. Photo courtesy of HealthLeaders.

Amanda Norris is the Director of Content for HealthLeaders.


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