The end-of-life care provider has selected Alexander Fernandez to lead its finance department.

VITAS Healthcare—a Miami-based end-of-life healthcare provider with over $700 million in total revenue—has appointed a new chief financial officer to oversee the company’s finance, accounting, and investor relations functions.

Alexander Fernandez assumed the position of CFO for VITAS Health in March of this year, according to LinkedIn. He joins the organization with over 20 years of financial, administrative, and leadership experience in the healthcare industry.

"I'm very excited for Alex to join our team and help lead the ongoing transformation of our company to fulfill our mission of providing high-quality care to more members of the communities we serve across the country each and every day," VITAS President and CEO Nick Westfall said in a release announcing Fernandez’s appointment. "He earned his well-known reputation in the South Florida healthcare community based upon his proven track record of success within each role throughout his career. I look forward to working alongside him as we take VITAS to new heights over the coming years."

Fernandez previously served in several executive finance roles in the nine years he was with Broward Health. Most recently he served as CFO for Broward Health Medical Center and Salah Foundation Children's Hospital. His prior executive roles include chief roles with Tenet Healthcare at Good Samaritan Medical Center and North Shore Medical Center. 

"I am thrilled to be joining VITAS at such a pivotal point in the organization's history," Fernandez said in the release. "I look forward to partnering with this team and all its employees, immersing myself in the culture and executing on strategies that ultimately contribute to ensuring VITAS as the premier provider of end-of-life care."

Very few hospitals are utilizing this payment system, but Medicare wants to change that.

There is an assumption that many within the healthcare industry believe to be true, that there are only two ways to pay for healthcare: fee-for-service and population-based payment. But this mentality hurts patients and providers more than it helps, says Harold Miller, president, and CEO of the Center for Healthcare Quality and Payment Reform.

"The assumption that people come to believe is that fee-for-service is inherently evil and bad, and that population health is good," Miller says. "But it's only really good from the payer perspective in the sense that it controls their cost. It's not good from the perspective of the patients, or from the perspective of hospitals or physicians who need to be paid adequately to deliver the services that patients need. And that may end up in many cases being more than whatever fixed amount of money that a health plan would like to give them."

Miller recently sat down with HealthLeaders to discuss this topic in depth.

HealthLeaders: Explain the correlation between risk- and population-based payment.

Harold Miller: Population-based payment is a euphemism that people are using these days for capitation which means paying a fixed amount per patient to somebody—it could be to a hospital and the hospital global budget models are based on the hospital getting a fixed payment for every patient who lives in their service area, and health systems and accountable care organizations. The idea is to give them a fixed payment for each of the patients who are assigned to them.

The risk is that the hospital or the health system have this amount of money which essentially becomes a budget for that number of patients, and they are responsible for delivering all or most of the healthcare services that the patients need for that amount of money. If it turns out to cost more than the amount of money that they're getting, then a hospital or health system has to eat that cost. So that's why they're at risk, they're going to lose money if it costs more to deliver services to the patients than the money they receive.

HL: What percentage of hospitals are currently utilizing this model?

Miller: Very few are doing this right now. Increasingly that's what Medicare and some other health plans are trying to do, is to move towards that. The challenge is you essentially have to have a very large number of physicians as part of your system because you have to be able to manage a large number of patients in order to be able to take on that risk for them.

Now, there are smaller versions of population-based payment out there. There's the notion of population-based payment for primary care physicians where they are only essentially at risk for the services that they deliver. That is often referred to as practice capitation.

But there is this push toward big population-based payments where Medicare or a health plan would give this population-based payment to some system and then the system would be at risk. It's an odd concept, frankly, because that's what health plans are supposed to do. Health plans are supposed to be taking a premium and being at risk for the spending. So, if they're going to turn around and then give all the money to a health system or a hospital and have them be responsible for all the services, then what do you need the health plan for? So, you're essentially turning health systems and hospitals into insurance plans, which is not what they're designed to do—they're designed to deliver care to patients.

HL: Why, if this is such a funky way of doing things, would Medicare want to push providers into population-based care?

Miller: Because it takes away their risk of having to spend more money and transfers their risk to someone else. From a payer's perspective, this is a great thing. They have a fixed amount of money that they are spending, they don't have to worry about spending more than that amount of money, and they pass off the risk to somebody else. The problem is from the patient's perspective, that's not a very good thing. Today, health plans are at risk, and everybody knows what health plans do because they're at risk. They try to prevent patients from getting services. The one advantage the patient has is the patient has a physician or a hospital that's advocating for them and saying the patient needs this service or this particular kind of care and the health plan should pay for it. But, if the physicians in the hospital are suddenly at risk and are being told that they only have this amount of money, and if they do something more expensive for a patient that means the hospital and the physicians are going to lose money, then who's advocating for the patient?

HL: Has Medicare acknowledged the risk to patients and hospitals if they continue to push this model?

Miller: No. The assumption is that they are attaching quality measures to all of these programs. The problem is that the quality measures that they attach, have nothing to do with the things that are the most expensive. For example, Medicare has created this program called the ACO REACH program, which was originally called direct contracting, where they were going to give a population-based payment to an accountable care organization and hold them accountable for the total cost of care on the patient. And there's a series of quality measures associated with it. But there are no quality measures for cancer care. There are no quality measures for rheumatoid arthritis care. There are no quality measures for osteoarthritis. So, if in fact that ACO gets more patients with the kind of lung cancer that needs more expensive treatment, or it gets patients with other more expensive conditions, the ACO will lose money, and if they, for whatever reason decide not to give patients the more expensive treatments that they need, there's no quality measure that would identify that.

It's a real problem that became apparent when Medicare had a program called the oncology care model that they terminated and are going to try to reboot in a year. But basically, it held physicians accountable for the cost of oncology care. And physicians said, although they were able to do a variety of things to improve the quality of care, they couldn't save Medicare money. In fact, it was viewed as a failure because it didn't save Medicare money. And the reason was that drug costs were driving up expenses. The physicians were not going to give cheaper drugs to patients just to save money.

HL: So, if I'm the CFO of a hospital or health system dealing with this model, how does that make my job harder?

Miller: It depends on the circumstances. A lot of people have focused on Maryland and what Maryland has in terms of global budgets for hospitals. So, say you're the hospital and rather than paying you for each thing you do, I'm going to give you a fixed budget based on the number of people who live in your community, and you have to live with that.

Now, if the hospital is currently doing a lot of unnecessary things, or if its population is shrinking in the community, then that's a great thing from the hospital’s perspective. Now the hospital doesn't have to worry about the fact that it's going to be delivering fewer services and losing revenue.

The problem is on the upside. What if you're a hospital and you all of a sudden have COVID-19 patients coming in the door and you have to bring in more staff and you have to buy more equipment and PPE and everything else that goes along with it, but somebody has told you 'Oh no, you have a fixed budget'.

Under the current system, the hospital can bill more because they have more patients needing the services that they're delivering. But, under the global budget, they can't do that. They have a fixed amount of money and have to figure out how they’re going to ration care to patients.

Imagine needing food, and you say you’re going to give the grocery store a monthly payment and then that grocery store must be responsible for providing enough food to each customer who comes in. Imagine what the grocery store is going to say. They are not going to say 'Oh sure, we'll provide a big selection of products.' [No, they are going to offer a limited number of products]. That type of system doesn’t respond to needs.

The situation is worse in healthcare because the hospital or the physicians do not control many of the most expensive things that they deal with—drugs being a perfect example of that. So, if you give the oncologist a fixed budget and say, 'you know, this is all you get' and the drug prices have gone up, where are they supposed to get the money to pay for that? The only way they can do that is to cut back on other things. They have to hire fewer nurses, or they have to deny patients the kind of care that they need.

The women at the head of healthcare's financial strategies are finding solutions to some of the toughest economic challenges.

On March 8, 1908, women in New York City marched through the Lower East Side in protest of child labor, the conditions of sweatshops, and to demand women's suffrage. Two years later, in 1910, the first annual International Women's Day would be observed—and ever since, March 8 has been recognized as a day to celebrate the economic, political, and social achievements women have made.

Thanks to the pioneering efforts of those who came before, today women are thriving in careers and industries it was once thought impossible for them to enter. One area where women have been successful is in the C-suite, particularly in corporate finance. While full gender equality in the C-suite hasn't yet been attained—women made up just 16% of CFOs in 2022, a rise of only 6.3% since 2004, according to the Crist Kolder Volatility report—these women are bringing strong strategic leadership to the table to tackle the biggest economic challenges plaguing businesses today.

There is no shortage of economic pressure in healthcare. Hospital and health system CFOs are kept awake at night by issues involving financial sustainability, payer relations, growth, costs, and supply chain. And while just 23% of CFOs and chief actuaries in healthcare companies are women, according to a 2019 Oliver Wyman report, those that do hold this position have found solutions to help their organizations thrive financially.

In celebration of International Women's Day, HealthLeaders highlights the following women CFOs who are laser-focused on the top financial challenges affecting healthcare organizations and who are leading the way to solutions.

Read more from HealthLeaders: Celebrate Women Healthcare Leaders During International Women's Day 2023

Julie Lautt, the chief financial officer for Avera Health—a Sioux Falls, South Dakota–based healthcare provider with 37 hospitals, over 1,600 beds, and more than $2.8 billion in total annual revenue, on financial sustainability, optimization, and growth strategy.

Lautt: ''As soon as we started seeing our trends of costs continue to go higher, we began to focus on a financial stewardship plan at Avera, and our number one focus was maintaining our patient care.

''We're doing assessments on right-sizing our administrative tasks and non-patient care. We've also been assessing our non-core services. And the reason that we're doing that is to protect those critical components of patient care.  

''We're taking a look at some of the short-term levers and discretionary spending, while we also focus on long-term sustainability, optimization, efficiencies, [and] utilizing technology.

''We're focused right now on opening a new freestanding emergency room and clinic on the east side of our town. We also are invested in mental health, and we've identified that continues to be a growing need. We've been at capacity for some time, so we continue to expand in our Sioux Falls market thanks to a grant we have with one of our partners, [and] we were able to construct a new space and answer the need for 24/7 urgent care and residential addiction services for youth and partial hospitalization for youth.''

JoAnn Kunkel, the CFO for LCMC Health, a New Orleans–based, nonprofit health system with $1.7 billion in annual revenue, on payer-provider relations, supply chain, and technology.

Kunkel: ''The payer-provider relationships, interdependencies and involvement with patients is always changing. Financing is important to everybody, so those relationships continue to evolve and they're taking on more risk. A lot of us started out taking just upside risk, and now we're taking on downside risk, and full risk when you're working with your payers—that's huge. Population health has a different definition for almost everyone who does it. So, understanding what's important to you and your system is going to be important. Everyone is talking about supply chain disruptions, supply chain inflation, the bottlenecks, those things in healthcare have been an issue for the past two years. It's not an easy turnaround, so becoming more efficient in revenue cycle is going to take automation technology. Artificial Intelligence is big in that space, and if can you optimize your revenue cycle and automate it that will help with labor. Technology is the foundation of almost everything that we do today.''

Bridgett Feagin, the CFO for Connecticut Children's—a Level 1 pediatric trauma center with roughly $600 million in net patient revenue, on payer-provider relations.

Feagin: ''[A good relationship between the hospital and payers is a] collaborative relationship, meaning that they understand our needs and we also understand their business needs as well. So, if it costs $100 to take care of this patient, we at least need to cover our costs. Now at Connecticut Children's, we are a payer mix, close to 60% of Medicaid. Medicaid does not cover the cost. So, we need our commercial payers to give us a little bit more than the costs. So, we can shift some of that liability over to our commercial payers. And that's just the way it works. They understand that but we are working with the state as well to increase our reimbursement to cover our costs.

''A good payer partnership also reduces administrative burdens, such as a denial. When a payer denies a claim, it creates more administrative work for my team. On the front end, we're talking to payers about what we need to do, to make sure we don't get a denial in the first place.''

The government accused the healthcare provider of making improper donations.

Lakeland Regional Medical Center, a Lakeland, Florida-based healthcare provider with over $4 billion in total revenue, has agreed to pay the U.S. government $4 million to settle allegations the organization made donations to a local unit of government to improperly fund the state’s share of Medicaid payments to Lakeland Regional Medical Center.

The government alleged that between October 2014 and September 2015, Lakeland Regional Medical Center made "improper, non-bona fide donations" to Polk County, Florida by assuming and paying some of the county’s financial obligations to other healthcare providers. The government alleges that this was intended to free up funds that would allow the county to make payments to the State as the state’s share of Medicaid payments to Lakeland Regional Medical Center. This was an alleged attempt to increase the Medicaid payments the provider received.

"When private parties make improper donations to fund the state share of Medicaid, they undermine a key safeguard for ensuring the integrity of the Medicaid program," Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division, said in a statement. "Medicaid expenditures should be determined by beneficiaries’ medical needs rather than by donations by private hospitals to local units of government."

The government says the Medicaid payments received by Lakeland Regional Medical Center were funded by the federal government and the organization’s own donations. This violated the prohibition on non-bona fide donations, according to the DOJ statement.

"Protecting the Medicaid program is crucial, as millions of Floridians rely on it for their medical care and related services," U.S. Attorney Roger Handberg for the Middle District of Florida, said in the statement. "We are committed to ensuring that government funds are used for their intended purposes and are not improperly obtained."