Greater investments in tech can help CFOs get their hospitals and health systems on track for sustainable and long-lasting financial well-being.
This article appears in the November/December 2022 edition of HealthLeaders magazine.
Hospitals and health systems are making key investments in technology to advance their healthcare capabilities, enhance the patient experience, and improve the organizations' overall financial well-being. Greater technological investments can also incentivize employees to remain with the organization, another positive jolt for the bottom line.
"Every industry is moving toward technology, it doesn't matter if it is retail, travel, or going to a ball game, everything is [accessed] through technology," says Jennifer Williams, CFO and VP of finance for Wayne HealthCare. "It is an expense, but our mission is to provide quality care. To us, technology on the patient finance side and the patient access side is more important. It is more important that the patient has good quality access on the front end. It is a cost, but we look at it from the perspective of our patients and how it will help our patients."
Greater funding toward technological advancements within hospitals and health systems—whether it is for the admin and workforce side of things or the patient side of things—can only make an organization better. When clinical outcomes improve, more patients will walk through your doors, making the organization the best place for care. When technology helps improve the workflow and back-end tasks it can act as a tool for recruiting and retaining the best workers. Technological investments are not to be taken lightly, but with the right combination of funding, cooperation, and collaboration, CFOs can establish a technological investment strategy that boosts their financial wellness.
Wayne HealthCare—a Greenville, Ohio–based hospital, and healthcare provider with around $75 million in net patient revenue—has been making investments in technology that will not only improve the patient experience but also make administering to patients easier for the organization as well.
In 2021 leaders at Wayne HealthCare decided to look for a new EHR and ERP—their electronic health record and enterprise resource planning tools. Improving the ERP allowed Wayne HealthCare to get a better, more comprehensive view of the organization's overall financial health.
"This technology helped our patients on the front end during the pandemic," Williams says. "A lot of hospitals were doing curbside waiting rooms or in the parking lots. This technology gave us the help we needed during the pandemic."
Research from Deloitte found that by the end of 2021 almost $23 billion had been invested in the healthcare technology landscape through 556 completed transactions, which surpassed the record growth of the previous two years.
When it comes to investments in technology there are many areas within the hospital and health system to consider. On the patient side of things, Wayne HealthCare invested in better quality assurance and registration tools through a tech vendor that now helps the hospital identify payment estimates and gets patients registered for services and treatments faster.
"We do a three-year capital budget, and we don't have a dollar amount set aside just for technology," Williams says. "We have a dollar amount set aside for the whole hospital. Every year when we're looking at the capital budget, we ask our directors to tell us what items they believe they'll need, be it fixed assets or technology. We ask the directors to rate them from the highest need to the lowest need, so we know what to make a priority. As a team, we then look together to determine which [assets] we're going to select, so we stay in line with our costs and our budget."
Managing patient expectations
One of the most significant barriers to care is a patient's ability to pay, which can keep someone from seeking treatment when they need it most. Williams says Wayne HealthCare understands this and that is another reason why the organization made technological investments on the administration side.
"We're looking to collect and cover the cost of the services that we provide," she says. "Having tools that provide estimates does allow the patient to know that they do have a copay or deductible costs. Patients knowing this when they come in helps you understand your cash flow, your accounts receivable, and your days with cash on hand. Some patients are fearful to come because they don't know what it's going to cost them and by having that technology in place, it helps them understand how to prepare for that."
Spending the big bucks
When Dr. Laura Crocitto, the chief medical officer and director of the Helen Diller Family Comprehensive Cancer Center for the University of California San Francisco Health, came to work at the hospital she wanted to bring in a robotic focal high-intensity focused ultrasound machine (HIFU) to help treat prostate cancer patients. It was an investment that would cost approximately $750,000 but has positive implications for the financial health of the hospital in the long run, as well as for patients.
Crocitto expected it would take over two years to break even in terms of the ROI on the HIFU. That was a conservative estimate of approximately one patient per month using a combination of Medicare and private insurance. The investment ended up paying off faster than expected.
"We met our ROI in the first year even though we projected an ROI in two or more years," she said. "Instead of one patient per month, we saw, on average, five patients per month in the first year of using the HIFU machine."
HIFU is an outpatient procedure and therefore less costly than admitting patients for an overnight stay, says Brandon Blonquist, the business line finance director for cancer services at UCSF.
"HIFU also provides a less invasive treatment option for patients on active surveillance who might otherwise have delayed treatment or sought alternatives elsewhere," he says. "Offering HIFU treatment is expected to help improve market share and better meet the demand and needs of our patients."
Working closely with the CFO played a huge role in getting the HIFU machine into the hospital, Dr. Crocitto says.
"Our CFO had to be involved with ensuring all of the costs, that we didn't miss anything if anything else needs to be included, and also working with doctors to understand our volumes," she says. "They work with our strategy and marketing teams to know our current market share and the likelihood of increasing that market share."
Using technology to make a difference
At Rady Children's Hospital in San Diego, the organization invests in technology in two main areas—clinical and external affairs, says Steve Jennings, senior vice president and chief external affairs officer and executive director for Rady Children's Hospital Foundation. The hospital recently made a major investment in 3D imaging, which gives doctors the chance to better individualize their treatments to a specific patient's needs.
"We have a 3D imaging lab on our San Diego campus, which gives physicians the ability to hold a model of the heart they're about to operate on in their hands," Jennings says. "The hospital has also focused heavily on genomic technology, allowing us to sequence our patients' entire genome in a matter of hours."
In 2018, the hospital set the Guinness World Record for the fastest genetic diagnosis. Rady Children's Hospital is also working to finance improvements in its cybersecurity efforts, something many healthcare organizations are doing.
"Better technology means better outcomes for the kids, which is the top priority for us," Jennings says. "When kids are doing better, it is good for the organization. On the other hand, donors love to invest in technology because they get excited about it. When doctors have cool ideas that require a significant technological investment, donors are open to that and want to learn how the technology works. Rady Children's Hospital received a $120 million donation for our genomics institute and the advanced technology that accompanies it, which just goes to show the popularity of technological investments. These investments make a big impact in a myriad of ways, and the generation of more philanthropic dollars is going to make the hospital healthy financially."
When deciding to move forward on technological investments CFOs and other healthcare leaders need to work together to build a review process to examine how the proposed technology will benefit patients and the organization's financial health.
"When it comes to deciding what type of technology to invest in, there is a thorough review process with committees that oversee all capital investments," Jennings said. "We look closely at whether the technology supports the hospital's philosophy to be consistently excellent and selectively distinctive. We also look at the long-term costs, initial costs, potential grants, benefits to revenue, and the hospital's existing resources when considering an investment."
We also have priority service lines that are the main focus of our investments—including cardiology, neurology, orthopedics, and a few other specialties. Each program is led by a physician with a vision for their specialty, so we generally listen to their ideas and work from there. As an organization, we carefully consider how we invest in technology because we never close our doors."
Amanda Schiavo is the Finance Editor for HealthLeaders.
When technology helps improve the workflow and back-end tasks it can act as a tool for recruiting and retaining the best workers.
Research from Deloitte found that by the end of 2021 almost $23 billion had been invested in the healthcare technology landscape.
A close-knit relationship between physicians and CFOs can help better equip hospitals with the most critical technology needed to treat patients.