Robert Ehinger, who serves as both CFO of Reading Hospital and senior vice president of financial operations at Tower Health, discusses financial strategies for healthcare. As a result of Reading Health System purchasing five hospitals in southeastern Pennsylvania from Community Health Systems (CHS), Robert Ehinger, who served as CFO of Reading Hospital, was installed as senior vice president of financial operations for the new system: Tower Health. Ehinger spoke to HealthLeaders Media about assisting the organization during a transition period, establishing an effective leadership structure, and focusing on proactive strategies for the company's financial future. The following transcript has been lightly edited. HealthLeaders Media: Can you give me some insights into your dual role with Tower Health and Reading Hospital? Ehinger: I've been able to balance it pretty well. I know the CFOs at the [five hospitals] and worked with most of them prior to the acquisition, so I have relationships that I think are the key. Being able to interact, communicate, and work with different people in the organization has been one of the things that's helped me personally, and I think it's helped the organization. I've got some knowledge to fall back on regarding those facilities; I know the people, how their system worked before, and how we're trying to integrate them into Tower. HLM: What are the most prominent challenges facing health systems in southeastern Pennsylvania, and how are you working to address them? Ehinger: I think the challenges anywhere—and it's not just southeast Pennsylvania; it's the country as a whole—are in two big areas from a finance standpoint. One is uninsured populations, being able to manage the cost of that care we're providing. We've been successful in qualifying people for Medicaid, for people that previously didn't have insurance. We use a partner to work on those qualifications, take folks [without] any insurance, and get them qualified for Medicaid, which is a help. The other areas of concern—and, again, it's a national concern—is the increasingly high out- of-pocket responsibilities of patients and how do you manage that. It used to be where you'd have an annual $250 [payment] and now it can be anywhere from $1,000 to $10,000 out- of-pocket before insurance actually starts paying. To me, they're the two big challenges facing us as a system, but also healthcare in general. HLM: What gives you hope about healthcare's ability to transform itself? Ehinger: I entered healthcare in 1980, so I've gone through when hospitals used to have cost-based reimbursement for Medicare and they went to DRGs. There used to be insurers paying 80% of charges and the patient paid 20%, but that evolved into per-case per-diems. Now, the new thing are bundled payments. What I've noticed over time is that healthcare has been very adaptable. We went to DRGs; then outpatient fee schedule from cost; to APCs; to per-episode for home health, psychiatric care, and rehabilitation; yet systems still continue to survive. There has been some fallout over time, but the key is visionary leadership and people that are able to look beyond today and into the future. One example is bundled payments, which [Tower] has been involved with, and I know some of the [five hospitals] were in a pilot program with Medicare. If they're doing it, then by taking advantage of being part of that pilot program, we're laying the groundwork for when that actually becomes part of the system. Then [Tower] is prepared; they've already made the adjustments for how you handle that care, how you provide that care, and what you need in place. It's different from all of a sudden somebody coming along and saying, 'Oh, starting October 1, we're going to do this,' and you have no history. That can get organizations into trouble. Looking in the future and staying current on what's being talked about going forward, you're able to position yourself and adapt to the changing landscape of healthcare. HLM: Where is Tower Health investing most of their money? Ehinger: It's a combination of making sure infrastructure capital is there to keep your property and equipment up to date. But we also use our capital for strategic initiatives where we've identified adding a service or building upon a service we have and using capital dollars to purchase the equipment. HLM: Would that apply to things such as telemedicine or different kind of equipment upgrades? Ehinger: It potentially could apply to telemedicine; that's really in its infancy. I know some of the initiatives we're looking at are trying to address that but the payers are a little bit behind in telemedicine, right now. But for equipment, say I have a need in one of my markets for an orthopedic surgeon who does a specific type of orthopedic surgery. We'll invest in the equipment needed to make sure that surgeon has what they need so they can provide the service. It's not just about a new MRI or CAT scan, you've got to make sure you're making the investments in building upkeep and make sure that dated equipment is getting replaced. You have to look and have a plan to do that, not just wait until something breaks. One of the advantages I've noticed at Tower is we have a plan where we look into the future and set out what our goals are, including capital investments over the next several years, so that we're able to plan the allocation of the funds to meet those needs.
Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.