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New Revere Health CFO: Fee-for-Service Is an 'Administrative Nightmare'

Analysis  |  By Jack O'Brien  
   February 06, 2020

Bruce Hayden, CPA, an experienced healthcare veteran, says that an incentive-based system is "how every business should model themselves."

For more than three decades, Bruce Hayden, CPA, has worked in the accounting and finance space, typically for healthcare companies.

Hayden has worked in several segments of the healthcare industry, including hospital, nursing home, and rehabilitation spaces among a few others. For the past five years, Hayden served as chief financial officer (CFO) of Summit Pharmacy, Inc., and Phoenix Toxicology and Lab Services, LLC in Phoenix.

In early October, Hayden was hired as CFO of Revere Health, an independent multispecialty physician group based in Provo, Utah, that employs more than 180 physicians across more than 100 locations in Utah and Nevada.

Hayden spoke with HealthLeaders about bringing his wealth of experience to Revere, boosting the organization's commitment to value-based care models, and how the industry has changed over 35 years.

This transcript has been lightly edited for brevity and clarity.

HealthLeaders: Revere Health has a strong legacy associated with its accountable care organization; can you speak to how that was an attraction to joining the organization?

Hayden: I think the first year [Revere] actually lost money, which wouldn't surprise any healthcare provider. But in speaking with Scott Barlow, [Revere Health CEO], [the system] has had about 8% cost savings or better during each of the past five years. It took a while to learn and understand [ACOs], but here we are. Next year's program is the highest reward, highest risk-based program. I feel like we've got it down, and we understand that we're willing to take that risk. 2018 was a great year and we will continue to do well with it.

Related: Revere Health Reduced Medicare Spending by $30 million in Three Years

[Value-based care] is the direction of healthcare and where it's going. Nobody's going to get it the first time around, but the good thing is [we're] seeing other healthcare systems engage with Revere Health and say, 'Teach us how,' so [we] feel like … one of the top five leaders in the country on this program.

HL: How do you operate in a world that is still fee-for-service dominant but is moving towards value-based care models?

Hayden: We're not only seeing the participation in value-based care from a Medicare perspective, but we're also participating in several commercial providers. That's been successful as we continue to go down that path, and when you cut to the chase from a CFO's perspective, it's a win for the payer and it's a win for providers.

When I look at the difference with fee-for-service it's a battle [of] making sure the coding is right. And if you get your payment denied it's an entire bureaucracy with the payers. It becomes a clerical, administrative nightmare working claims time and again. Moving to value-based care, it's proper coding and the right amount of care. It's simplified in many ways and says, 'Just do the right care with the right coding on it.' If you do [this] efficiently, and do it well with patient satisfaction and great outcomes, then you win and we win.

Related: PIH Health CFO: Health Systems Will Not 'Survive' Without Acquiring More Risk

I read a great article in The New York Times [about] the amount of waste in our healthcare system associated with claims processing and the fee-for-service [system] ... it becomes an administrative nightmare. When you look at the administrative costs, it's about 25% of our healthcare costs.

If we can eliminate a lot of that and get back to letting physicians and providers treat their patients, get paid for doing it, [and provide] great outcomes, that's the way we can reduce our healthcare costs. Is the fee-for-service model sustainable in that format long term? Probably not. The only way that it can be maintained is if you cut physician or hospital reimbursements. I'm always telling CFOs, you can only cost-save your way to profitability before it becomes a dead-end road.

You've got to provide incentives for revenue growth and things of that nature. If you have an incentive to perform and that incentive is rewarded, that motivates people to work well no matter what type of industry you're in. We're bringing that into healthcare and it works. We're highly engaged with our physicians here. It's refreshing to see and we will continue down that path.

HL: How has healthcare changed since you first entered the industry and where do you see it going?

Hayden: Looking back many years ago, we did cost reimbursements and you got paid up to the limit. [That system] bred fraud, waste, and abuse because if you didn't spend up to that limit people viewed it as leaving money on the table. That's not a way to do business. We went to diagnosis-related groups in 1983, but we left a lot of people behind like skilled nursing facilities, laboratories, home health, and rehab. [They were incorporated] in 2001, so it took 18 years to move them into a fee-based system. That, at least, was fair in some aspects.

Related: Intermountain Plans $500M Pediatric 'Model Health System'

But then everybody was looking at the coding maximization ... which created the battles with the insurance companies. [Fee-for-service] had some checks and balances, which was good but, at the same time, it just became a nightmare. Where are [hospitals] hiring? You're not hiring clinicians and physicians. You're hiring administrative staff to work your claims and calls.

Now we're involving data to evaluate patients and their satisfaction. Almost 40 years from when I started my career, now we have the data and analytics to be able to look at the patient and their satisfaction with quality of care. We can measure that, and you're paid based upon that type of analysis, which is good. However, it's probably going to be different 10 years from today, but hopefully, we progress in our capabilities with new opportunities in surgery and patient care. The [incentive-based system] is the right way to go. It's how every business should model themselves.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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