CFOs and CEOs shared sage advice with HealthLeaders on how to weather the current financial storm hospitals and health systems are dealing with.
Ask any hospital or health system CFO what keeps them awake at night and you'll hear three things: labor costs, growing expenses, and shrinking margins. And while 2022 came with significant financial challenges for these leaders, it also brought considerable opportunities for them to think outside the box and implement innovative strategies that helped keep their organizations afloat.
Over the course of the year, HealthLeaders connected with CFOs and CEOs at different hospitals and health systems across the country to learn about how they are leading their organizations among these challenges. Here are five stories with healthcare leaders that you won't want to miss.
''Everyone is talking about supply chain disruptions, supply chain inflation, and the bottlenecks, those things in healthcare have been an issue for the past two years. It's not an easy turnaround, so becoming more efficient in the revenue cycle is going to take automation technology. Artificial Intelligence is big in that space, and if can you optimize your revenue cycle and automate it that will help with labor. Technology is the foundation of almost everything that we do today.'' —JoAnn Kunkel, CFO at LCMC Health
''The largest investments hospitals should make are in their workforce. Certainly, technology and new equipment are important, but without the doctors, nurses, and support staff to take care of the patient, we can't provide the quality care that our communities expect of us. Like everyone else in today's job market, but especially in healthcare, ensuring we have a qualified workforce is a top priority. Today's competition for the workforce is forcing systems to invest more in this area.'' —Michael Sunday Jr., CFO at Pardee UNC Health Care
''We need to focus some resources on educating … about our cost structure. Somebody said to me recently, 'People were so excited about the healthcare system during COVID and what we did for them and now they've kind of forgotten about it because now we're back to conversations about how expensive we are.' There's no doubt that healthcare is expensive. But by the same token, most people providing healthcare are trying to do a good job at keeping costs down. So, I think educating the public about that, so it doesn't get out of hand is valuable.''
''We could also look into developing partnerships and affiliations and things of that nature that will help add to that traditional revenue stream and allow us to be a little bit more self-sufficient. So, maybe working with venture capitalists is an opportunity in some investment lines. That can shore us up and add revenue, where we might see REITs taking revenue away from us.''—Cheryl Sardo, CFO at UC Davis Health
''[Value-based care (VBC)] works. The numbers show it. Medicare saved $1.6 billion in 2021 alone. Think about what will happen when all Medicare recipients are in a program. Payers get it. Big corporations get it (or are at least investing in it). Walgreens, CVS, and Amazon—all the executives that were assigned as ''talking heads'' after their big acquisitions stated that the new businesses were part of their move to value-based care.''
''We all thought we'd be further along towards value-based already, so I'll be more measured in my view than I offered years back. We will certainly advance VBC in 2023. More commercial payers are getting more constructive on the model and providers are more aware of not only the patient benefit but the financial opportunity. And of course, Medicare has put out 2030 as the target for all beneficiaries to be treated by a value-based care provider. We're still not to the point of leaps, but we will see gains in value-based contracts.'' —Ralph de la Torre, MD, CEO at Steward Health Care System
'''We plan on having a positive margin this year—we'll miss our budget—but we'll be profitable—somewhere between a 1% and a 1.5% margin before anything in the market. That's just operations. So, we're preparing HSS with strong leadership and strong financials moving forward in challenging times. We're taking a proactive approach to evolving our care delivery system to be more flexible and cost-effective, while never, ever-changing our outcomes or quality, or our patient experience.''
''We were dealing with supply chain disruptions. Material shortages, and transportation issues during COVID. So, this year we opened a warehouse and we're now keeping materials in storage. We can't wait six to eight weeks for critical supplies, so now when we do have a shortage, we're able to pull items for our warehouse. We also work closely with our physicians and senior leaders when there's a shortage to quickly develop alternative vendor and product options.''
''We want to continue to do the best we can to keep our A-plus rating. But we also want to make sure to get back to our strong financial foundation, which we had prior to COVID. We are undertaking plans to improve our revenue growth. We want to enable our current MD practices to grow and add more people and see more patients effectively.''
''We also need to look at our efficiency and managing the shift to outpatient from inpatient capacity. Everything that we're looking at will ensure that we're reshaping for the future.'' —Stacey Malakoff, CFO at Hospital for Special Surgery
Amanda Schiavo is the Finance Editor for HealthLeaders.
KEY TAKEAWAYS
CFOs and CEOs are making plans to improve margins and relieve some financial pressure as 2023 gets underway.
Value-based care could be the trend of 2023.