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5 Big Hospital CFO Concerns for 2015

December 01, 2014

Declining credit ratings and high-deductible health plans are just two of the chief strategic concerns voiced by hospital and health system financial executives.

When hospital and health system leaders look ahead to next year, they see a number of serious financial challenges on the horizon. New payment realities are converging with more efficient, effective clinical protocols to create what many chief financial officers see as the most difficult time in healthcare.

A year ago, they named health insurance exchanges and managed care delivery design among their top strategic challenges. High on the list of their concerns this year:

1. Declining Utilization

Martin Arrick
Managing D
U.S. Public Finance
at Standard & Poor's
Rating Services

Improving quality and producing better patient outcomes are essential for success in a value-based payment system. Yet, as provider organizations find better ways of delivering care, they are also negatively impacting a critical revenue stream, says Martin Arrick, managing director, U.S. Public Finance, at Standard & Poor's Rating Services in New York.

"In a lot of parts of the country, volume has really declined, partially because the quality of care is improving," he says. "Best practices are going to reduce complications and reduce admissions and readmissions, so improving these [quality measures] is going to impact finances."

While Arrick notes that Medicaid expansion is increasing utilization in some states among a low-income population that was previously uninsured, he does not think this will create long-term relief for hospitals.

"It's just a one- or two-year blip as the healthcare system absorbs these people. But the bigger forces will continue to drive down utilization and to drive change within the sector," he says.

David Ertel, chief financial officer at Philadelphia-based Einstein Health Network, says that as providers work to deliver "appropriate care in lower cost settings," patient volume is being driven down, particularly on the inpatient side.

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