CFO Exchange: 5 Big Finance Leader Concerns

Healthcare finance executives gathering this week for the fifth annual CFO Exchange have a lot on their minds, including the pace of the fee-for-value transition, positioning for population health management, and co-existing with retail clinics.

What's on the minds of healthcare CFOs? Nearly 50 hospital and health system finance leaders will meet at the Broadmoor Resort in Colorado Springs later this week for HealthLeaders Media's fifth annual CFO Exchange. At this invitation-only event, attendees will spend two days discussing the biggest financial challenges currently facing their organizations. I spoke with several attendees beforehand about their concerns.

1. The Transition to Value-Based Reimbursements

While most provider organizations still operate almost entirely in a fee-for-service payment environment, senior leaders know the shift to value is coming.

To be successful when the change does happen, Daniel J. Moncher, executive vice president and chief financial officer at Firelands Regional Medical Center in Sandusky, OH, says his organization is using data analytics tools now to "get educated" on where clinical improvements can be made, particularly around DRGs that are ripe for bundled payment models.

"What we are finding out is we seem to fare very well on the hospital side but not as well when the patient is discharged," Moncher says.

"We are trying to have a close association with the post-acute providers and reach out to local skilled nursing units and nursing homes to try to help us understand why those costs are higher than some of the benchmarks we are looking at."

Toledo, OH-based ProMedica is "uniquely set to take advantage of value-based reimbursements," says chief financial officer Alan Sattler, thanks in large part to its health plan.

"With our health plan, Paramount, we have already been managing that risk for nearly 30 years."

ProMedica will also use its clinically integrated delivery network, its accountable care organization, and its Medicare shared-savings programs to succeed in a value-based environment, Sattler says.

"Those areas are certainly part of what we are doing [to prepare for the shift to value], and we want to develop those in more robust ways."

2 .The Need for Population Health Strategies
New payment models will ultimately require providers to design and execute population health management programs that improve the health of their communities and bring down the overall cost of delivering care, says Richard Silveria, senior vice president, finance, and chief financial officer at Boston Medical Center.

"We are still fundamentally paid through fee-for-service. When someone is sick, we get paid to make them better. But population health is a different business and involves a different approach. The payment systems haven't really changed yet, but we can anticipate that this is where society is going," Silveria says.

"The hospital mandate is to get costs down and to produce consistent cost, quality, and outcomes and to use acute-care capacity as judiciously as possible."

Nick Barto, senior vice president at Englewood, CO-based Catholic Health Initiatives, says population health is a major area of focus for the 105-hospital healthcare giant.

In particular, CHI is working to increase patient access to care, Barto says. "We are spending a lot of time making sure we have the right assets in our markets, and we are moving to fill in gaps in our employed physicians, both on the primary care and specialty care sides. We are building clinically integrated networks that can deliver on the promise that we have with our payers and employer partners in terms of having access in place and having the capability of managing populations."

Although Fireland's Moncher agrees that population health is a "key area for any healthcare provider," he says the biggest challenge is that it is impossible to know when reimbursements will catch up.

"The unknown for us is how long it will take before it impacts us financially. Will it be five years? Ten years? Regardless, it is our organizational responsibility to make sure we do our best to keep our communities healthy," he says.

3. The Culture Challenge

Trinity Medical Center in Birmingham, AL, is well-positioned for the shift toward value and population health management, says chief financial officer Julie Soekoro, because of the work its CEO and senior leadership team have already done to create the right organizational culture.

"We started on our journey to value six year ago, and it wasn't because of reimbursements. It was because we wanted to drive improvement in patient outcomes. Our CEO is very focused on patient care, patient experience, and patient outcomes. He has built a culture here for the last six years to support high quality, and interestingly enough, that is where value-based purchasing has gone," Soekoro says.

"Most people who go into healthcare really want to help people, but they have to have the tools and resources to do it. We have put into place accountability, timely interventions, and concurrent review processes, and we are measuring results."

Getting organizational culture right is "critically important," ProMedica's Sattler says. "You have got to get out there and talk to leaders, talk to employees, and talk to physicians. You need to constantly be helping the culture adjust and adapt to what is going on in the marketplace."

Having physician leaders "embedded in all aspects of the organization" is essential for creating an organization that will thrive as the healthcare industry evolves, he adds. Currently, about 18% of ProMedica's governance positions are held by physicians.

"It's very important to have physicians engaged at the governance and board level, at the leadership level, and as leaders of clinical teams. If you don't cover the gamut, then you won't fundamentally be able to move the culture."

4. Harnessing Technology to Meet Patient Demand

The next generation of patients will be more interested in virtual healthcare and less in bricks and mortar, says Mark Bogen, senior vice president, finance, and chief financial officer at South Nassau Communities Hospital in Oceanside, NY.

Patients will expect "more Internet and web-based data sent to and from smartphones, watches, and other smart devices," Bogen says.

"South Nassau is still in its infancy as it relates to this change in delivery modes but is planning a significant upgrade to its Internet and web-based content, apps, and the use of social media. We have hired in-house folks to help develop some of this and are working with other organizations to help develop this on our behalf."

ProMedica's Sattler says that as patients continue to assume more financial responsibility for their healthcare, consumerism will "skyrocket," and the need for technology-based convenience will grow.

"When patients and consumers take on a larger share of the healthcare spend, they will be more focused on what they are spending their money on, so we have to go to them instead of expecting them to come to us," he says.

"We are trying to augment everywhere we can with technology and let patients decide when they want to engage with us, whether it is at 2 a.m. or 2 p.m. There is a whole new generation that doesn't want to talk to you on the phone. They don't open their mail. We are doing a lot of things to create user-friendly formats for them."

For example, Sattler says, ProMedica has created a new patient billing statement that includes a QR code. "The patient can scan it to their mobile device, and they can make a payment from there. It's a very patient-oriented, user-driven statement."

Despite Boston Medical Center's position as a safety-net provider, Silveria also expects technology to play a major role in meeting patient demand in the future.

"People are becoming increasingly technology savvy. With e-commerce, people are doing their banking online, booking their travel online, reading Yelp and Twitter. These people … want convenient access to care and to be able to get prescriptions refilled with an email and receive telemedicine-type services. Going forward, I expect to see more healthcare tailored to smart phone apps."

5. Co-existing with Retail and Urgent Care Sites

Traditional healthcare organizations are being challenged in many markets around the country by the proliferation of retail and urgent care sites. Rather than regarding them as competition, hospital CFOs believe the best approach is to partner with them.

"We are not viewing them so much as having to fend them off. It's more a matter of figuring out how to align with them for better efficiency," says Trinity Medical Center's Soekoro.

"We are moving to a new hospital building that is a hop, skip, and a jump from a fairly busy urgent care center. We've been in discussions with them on how we can complement each other rather than compete. We're very happy to have that relationship without having to employ the primary care doctors."

CHI's Barto says these convenient care sites can relieve some of the need for primary care services that is being created by healthcare reform.

"They are a necessary part of what is going on with the expansion of coverage by absorbing some of the demand for primary care and lower-end care. That frees up our clinicians to take care of more acute or sicker patients. We can partner with them and work with them and tie that back into our own EHR and health system," he says.

Some level of competition with retail and urgent care sites is inevitable, and traditional health systems must learn how to go head-to-head. "If you do have to compete with them, you compete with them on customer service. We need to earn our patients' loyalty," Barto says. "You can still partner with these folks and compete with them at the same time. Ultimately, whoever has more capability to take care of customers and patients will be more successful."