Keel recently connected with HealthLeaders to discuss solutions to some of healthcare's greatest financial pain points.
Building a sustainable financial strategy for a hospital or health system is not without its challenges, especially when considering the pandemic, the labor shortage, inflation, and a host of other issues. But when your organization is mostly funded through outside donations, those challenges can grow exponentially.
That is the case for St. Jude Children's Research Hospital, a $2 billion nonprofit health system focused on treating, researching, and curing terminal illnesses in children. CFO Pat Keel has been leading the organization's financial strategy for six years and has encountered numerous financial challenges and has met those obstacles through actionable solutions. Keel recently connected with HealthLeaders to discuss some of St. Jude's biggest financial struggles, the impact of the great resignation, some of the workplace pain points hospitals are currently dealing with, and more.
HealthLeaders: How does St. Jude's financial strategy differ from other hospitals and health systems?
Pat Keel: We are heavily dependent on donations, about 80% of our funding for operations and capital comes from donations. We also receive grants for research; however, we never bill patients or families, and we provide their transportation, meals, and housing while they are here in treatment, and they can be here in treatment for several years. That funding model allows us to focus on scientific discoveries, rather than things like patient volume and profitability of service.
HL: How does St. Jude create its long-term budgeting plans when it is so dependent on donations?
Keel: A couple of ways. Our donations come from our fundraising system, so those are separate companies that make contributions and there are a number of multiyear commitment donations. We also have a reserve that's been built up over the last few decades. We do plan our budget like most other organizations in that we set out a strategic plan. It is a six-year strategic plan, and we are at the end of our first year. We've identified for the remaining five years what we believe our financial resources will be and it matches up with our ability to fund. So going forward, we know that we have that ability, and that strategic plan is our road map. Other organizations tend to do their strategic planning annually, but we do it in a six-year bucket, and we update it quarterly. It is the basis—when we're doing our annual budget—of the decisions we make around funding new initiatives.
HL: What financial goals has St. Jude set for this year?
Keel: The strategic goals for my area are focused on improving the processes so that researchers and clinicians can focus on making more discoveries. The next five years of our plan calls for us to add about 2,300 people. It's a very ambitious growth plan. And so, part of my goals and my focus is on creating an infrastructure that's going to grow with that organization, with that increase in people, and continue to facilitate and support achieving those overarching organizational health goals.
HL: What are some of St. Jude's biggest financial challenges?
Keel: We have supply shortages; we have delivery delays and those can be frustrating. We've had to work closely with all our internal departments, our external vendors, and our network of peer organizations to understand how we can either find alternate suppliers, alternate types of supplies, or share amongst our departments to maximize our inventory on-site. A lot of our strategic plan has a lot of construction in it, and so that's been a challenge not just for us but for our contract vendors who are completing our building projects.
HL: What about on the workforce side of things? What solutions did St. Jude find regarding the challenges of the great recession?
Keel: We worked hard in maintaining our nursing services, and some of our facilities' positions like electricians, plumbers, and carpenters. We made adjustments to some of our starting internal salaries to remain competitive, especially on the hospitality side. We did initiate sign-on bonuses for a short time period, and we got out front with our recruitment.
HL: What are some of the pain points St. Jude's healthcare staff are struggling with?
Keel: There's been a lot written about the stress on the clinical workforce during the pandemic, and it's no different here. Our kids are at higher risk to contract diseases than other people, so we've had to be careful during the pandemic, and that put a lot of stress on our clinical staff because they have multiyear relationships with these kids. So, we've built a resilience system to support staff that includes some of the traditional tools that most hospitals have implemented like a 'code lavender'—a peer support program people can reach out to when they are feeling stressed. It's helped our staff feel supported during the pandemic and allowed us to retain people despite some of the attractive salaries that traveling programs are offering them. We've also added a dog—Rosalie—who dedicates her time to supporting staff, students, and faculty. Anytime Rosalie shows up, it is always a much needed and much happier break.
HL: How can hospitals and health systems prioritize financial needs without sacrificing care or their workforce?
Keel: It's a check and balance. Going back to my days when I was in a traditional health system model, doing scenario planning—when you are preparing for potential volatility—can help identify solutions to implement if needed. And it's worth finding that solution to ensure that [it's] not going to disrupt patients. The biggest thing is, that you have to be transparent with the financial needs of the organization or financial constraints. You must have various input from a diverse group of people and allow people to feel like they have a voice and to raise concerns as you're preparing your budget plan. Communication and collaboration are absolutely foundational.
Amanda Schiavo is the Finance Editor for HealthLeaders.
Photo credit: St. Jude Children's Research Hospital/Shutterstock/Chad Robertson Media
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