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The Exec: Elara Caring's John McMahon Discusses What's Keeping CFOs Awake at Night

Analysis  |  By Amanda Schiavo  
   April 20, 2023

From keeping employees happy to acquisitions and mergers, McMahon has a lot on his plate.

The challenges that go along with maintaining the financial stability of a healthcare provider are vast and ever-evolving. As the leaders of an organization's finance unit CFOs must wear many hats—negotiator, advocate, and accountant.

John McMahon, CFO for Elara Caring, a Dallas-based in-home healthcare provider for patients around the country, recently connected with HealthLeaders to discuss what makes an effective CFO and what the future has in store for Elara Caring.

HealthLeaders: What's keeping healthcare CFOs awake at night?

John McMahon: The challenge that we have here every day and it's the same challenge that all our competitors have is just the rising cost of wages. It's attrition, its turnover, and folks are in short supply. It's a supply and demand thing, folks are able to go next door and work for another company for more money. And so, we have an important job to be a sophisticated place to work. We need quick admissions processes; we need to be easy to do business with and provide great outcomes. We have competent and plentiful caregivers, and we want our caregivers to enjoy working in our culture. So, we try to remove all the friction that we possibly can so that caregivers can work at the top of their license and do what's important to them, which is to take care of patients.

The executive team—on a monthly basis—will go to a branch location and we'll have a town hall, and we'll sit down with the leaders, caregivers, and folks on the frontlines at that particular location. We want to learn what they need and the things that we hear from them aren't always about money. It's not well, you know, we need to make more money. It’s more about wanting to be out in the field as much as possible. So, they ask us to please take away the things that keep us from taking care of patients.

HL: What might some of those hindrances be?

McMahon: A lot of it has to do with paperwork. Caregivers will ask us 'Can you automate this? How much can we automate? Can we automate all the first visits, so we don’t have to spend two hours at the start of care documenting all the things that the patient needs?’ Automation can help caregivers be more productive, so they see more patients in a day.

Caregivers want to spend quality time with patients, they don’t want to spend a lot of time filling out documentation. Automation keeps caregivers happy and keeps them from leaving us for a more attractive job. Again, it’s not just about money, there might be another company out there that makes it easier for them to do their work. Competitors might have less friction in their system than we do at Elara. So, we automate everything. We're constantly working on automation.

HealthLeaders: What are Elara’s growth strategies for the rest of 2023 and beyond?

McMahon: Our lender group came forward and proposed an extension of our credit and extended the maturity out several years and we ended up with some growth capital, some of it for operating and some of it for mergers and acquisition. So, we have a specific amount of cash that we just raised that’s earmarked for M&A. So aside from growing organically through geographic expansions, we’re also looking at small agencies where we can expand our strength in a given market and expand our strength in a given service line.

If we have strong operators in a particular area, we want to try to reinvest some capital in that area by buying a small tuck-in agency that can help us expand our footprint and tap into a referral source that we haven't had particular success with because we just don't have the scale of caregivers in a particular area that a hospital system wants us to be in. And so, by acquiring somebody and getting that critical mass of caregivers, we'll be able to exploit that relationship with that referral partner.

HL: In early April, Elara announced plans to acquire the Rhode Island-based skilled home healthcare provider Assisted Daily Living. What are the organization’s goals with this acquisition?

McMahon: So that acquisition is pending regulatory approval by the state of Rhode Island. So, there'll be no deal if that license transition is not approved. But that's a good example of how we're taking advantage of that referral partner relationship. It is a new state for us, but we have caregivers just to the west of there on the Rhode Island border. A lot of caregivers are already crossing the border and doing work there. So, along with it being a new referral, and helping us with new referral partners, it's also a place where we have considerable scale in terms of caregivers.

HealthLeaders: What are your thoughts about large retailers acquiring providers?

McMahon: It's kind of a double-edged sword. There's a lot of consolidation in the market and in home health. And the folks like CVS and Walgreens and others, that's not their skill, right? I mean, they're not home health players. For us, it's an opportunity and I feel like only the sophisticated players are going to win long-term. So, if we can be part of some of that consolidation and play alongside folks like CVS and Walgreens, and some of the other retailers, then we are going to be much more sophisticated than some of the smaller players out there.

Amanda Schiavo is the Finance Editor for HealthLeaders.

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