A high-stakes lawsuit by Providence against Kaiser Permanente exposes major risks in emergency care reimbursement.
: In a legal clash that could reshape emergency care reimbursement norms, Providence hospitals across California have filed suit against Kaiser Permanente, alleging underpayment, potentially worth tens of millions of dollars, for emergency and post‑stabilization services rendered to Kaiser health plan members.
What Providence Is Saying
Providence’s complaint, filed on April 11, covers more than 12,000 individual bills from 10 hospitals across Los Angeles, Orange, Humboldt, and Sonoma counties. The hospitals argue they did not have any written contract with Kaiser that covered discounted payment rates.
Under California law and contract principles implied in the contract, Providence is entitled to either fully billed charges or the ‘reasonable and customary value’ when no contract exists.
Instead, Providence alleges Kaiser has paid arbitrary reductions—or nothing at all—which has amounted to “several tens of millions of dollars” of unmet payments over the past three years.
Providence is seeking compensatory damages (to be determined at trial), statutory interest, restitution, and an injunction to halt the alleged underpayment practices.
Providence CFO Greg Hoffman said a decrease in Medicaid funds would exacerbate operating losses during the last five years caused by inflation, according to the Orange County Register. Hoffman said Providence lost a half-billion dollars in 2024, adding that by Providence’s calculations, Kaiser Permanente owes the health system more than $100 million.
Kaiser Permanente’s Response
Kaiser Permanente pushed back on procedural grounds, arguing that the varied nature of the 12,528 bills, which span from trauma cases to inpatient stays across diverse geographical areas and varying economic conditions, could confuse juries and impose logistical burdens if they were combined at trial. The court has denied a request by Kaiser Permanente to sever the case to avoid jury confusion over the varying claims.
Kaiser Permanente said in a company statement that the company reimburses “at fair and reasonable rates, based on what is typically paid by others in the community” when no price agreement exists.
According to the Orange County Register, at least seven other health systems, including MemorialCare, Pomona Valley Hospital and Physicians for Healthy Hospitals, have sued Kaiser Permanente over similar allegations
What It Means for CFOs
This dispute spotlights key financial and operational considerations for CFOs, particularly around payer contract terms and contract safeguards.
This lawsuit shines a light on emergency care as a high‑risk revenue stream, and CFOs must be aware. Out-of-network emergency services are a billing gray zone; without precisely defined contracted rates, CFOs must ensure alternative reimbursement frameworks.
Whether billed charges or market-based fair-and-reasonable metrics, every instance must be clearly defined, legally defensible, and consistently applied. The absence of explicit contracts between Providence and Kaiser Permanente opened a legal gap, and CFOs should learn from this by prioritizing reviewing and negotiating mutual emergency‑care agreements, or establishing fallback reimbursement methodologies in writing.
Another lesson from this lawsuit is that billing practices must be reviewed proactively. Providence alleges years of underpayment building up substantial liability. CFOs should optimize revenue through billing practices and mitigate legal and reputational risk through them as well.
Additionally, providers should be mindful that aggregation of disparate claims could create efficiency bias. Kaiser Permanente’s request to sever the case highlights the tension between managing litigation complexity vs. defending systemic billing patterns. CFOs should anticipate such strategic maneuvering and ensure their claims data is robustly aggregated and defendable in court.
Lastly, CFOs must ensure that they create and document fair‑and‑reasonable benchmarks. Whether derived from CMS, third‑party data, or local payer rates, providers need a reliable and documented rationale for their reimbursement decisions when contracts are absent.
For more on navigating payer negotiations, read this.
See how AI and predictive analytics streamline Moffitt’s revenue cycle strategy.
In healthcare today it’s revenue cycle that often makes the difference between financial resilience and operational strain, and the technology
In this episode of HL Shorts, Lynn Ansley, Vice President of Revenue Cycle at Moffitt Cancer Center, offered healthcare finance executives a detailed look at how one of the nation’s leading oncology institutions strategically invests in revenue cycle technology.
Predictive analytics and AI can both help health systems in a few key areas such as streamlining reimbursement, reducing denials and ensuring timely cash flow.
Looking forward, Ansley sees AI playing a crucial role in peer-to-peer authorization workflows. By supporting high-skilled staff in navigating payer criteria and overturning denials, AI in particular enables top-of-license work and strengthens cash flow without expanding FTEs.
Want more? Dive into our full chat with Ansley here.
The CFO role today has evolved into a strategic, mission-driven, empathetic partner above all else, and CEOs are aware.
“We’ve got to reinvent healthcare,” says Rachelle Schultz, CEO of Winona Health. “I think there’s a courage factor in all of that—a willingness to push the boundaries and change the conversations.”
Three CEOs described what they want and need in their CFO and what separates a good CFO from a great one.
These CEO insights indicate a broader industry shift: CFOs in healthcare must transcend traditional financial roles to become mission-aligned strategic partners, fluent in healthcare dynamics, and empathetic leaders who can unite operations, finance, and clinical care.
Kaiser Permanente’s Q2 gains show how strategic investment and integration can drive resilience amid rising costs.
In its Q2 financial update, Kaiser Foundation Health Plan, Kaiser Foundation Hospitals, and Risant Health reported consolidated operating revenues of $32.11 billion, up from $29.06 billion in Q2 2024.
Operating expenses rose to $31.08 billion from $28.15 billion, yielding operating income of $1.03 billion, a modest improvement over $908 million a year ago. Operating margin edged up slightly to 3.2% from 3.1%.
A key contributor was a rise in non-operating income, driven by favorable market conditions, totaling $2.23 billion versus $1.19 billion in Q2 2024. This boosted overall net income to $3.26 billion, up from $2.10 billion.
Membership remained steadily above 13.1 million, bolstered by ongoing strategic expansion via Risant Health, which now includes Geisinger and Cone Health.
Capital investment totaled $1.06 billion—up from $889 million—reflecting sustained spending on facilities, digital infrastructure, and operational modernization.
Care Delivery Investments Paying Dividends
Kaiser Permanente officials emphasized that strategic investments in care delivery infrastructure, especially in technology, integrated care models, and outpatient expansion, played a key role in maintaining access and controlling costs. Notably, leadership credited these investments with supporting a high level of inpatient and outpatient care utilization without significant spikes in per-member costs.
“Care delivery expenses reflect our commitment to timely, coordinated, and equitable care,” CEO Greg Adams highlighted in a press release.
Adams pointed to the system’s ability to maintain cost discipline while absorbing complex care needs and surging demand. This supports a broader industry trend: care models that integrate clinical services, digital platforms, and preventive care can reduce redundancy, improve outcomes, and ultimately safeguard margins.
For CFOs, Kaiser’s experience reinforces the importance of aligning operational investments with long-term clinical and financial performance, not just immediate cost reduction.
For Health Systems
Operating margins remain tight, and Kaiser’s slight improvement in margin illustrates the ongoing financial pressure across the sector, even for large systems. Margin protection now relies on efficient operations and long-range investment returns.
Kaiser’s increased capital spending, even through tight margins, signals a confidence in future cost-efficiency and care delivery ROI. Systems without similar strength in their balance sheet should phase projects carefully and validate strategic alignment.
Scaling through integration should be a priority. The Risant model shows that thoughtful acquisitions can expand geographic footprint and membership. However, keep in mind that integrating care and culture across disparate organizations presents both financial and operational risks.
The CFO To Do and The Bottom Line
CFOs should maximize value from their system’s care delivery spend. Treat clinical investment as strategic capital, not just expense. Ensure tech, staffing, and outpatient buildouts are driving measurable cost and quality returns.
As non-operating income remains unpredictable. CFOs should build financial cushions through conservative investing, liquidity planning, and strategic partnerships. Additionally, M&A and scale strategies must be underpinned by clear integration plans, cultural alignment, and scenario modeling.
Lastly, CFOs should prepare for policy shocks. With demographic shifts and payer policy changes looming, scenario modeling and proactive affordability strategies are crucial.
Bottom line: Kaiser Permanente’s Q2 2025 results highlight how disciplined care delivery investment, integrated operations, and diversified income sources can support resilience, even in a high-cost, high-demand environment. For CFOs, this underscores the value of long-term thinking in today’s volatile market.
For CFOs, the report is both a spotlight on improved performance and cautious reminder of where challenges still lie.
Nonprofit hospitals showed a significant improvement in financial performance during the 2024 fiscal year, according to a new Moody’s report. Median operating cash flow margins climbed to 6.3%, up one percentage point from the prior year.
First, check out the report’s highlights.
The CFO To Do
Moody’s data shows encouraging trends for nonprofits, including improved liquidity, rising margins, and sustained revenue growth. But the report also highlights lingering vulnerabilities, particularly among lower-rated and smaller hospitals.
While most hospitals improved cash reserves, a wide gap remains. CFOs at health systems rated Baa and below must develop aggressive liquidity plans. They should think about leveraging investment returns, factoring in reserve thresholds, and preparing for reimbursements volatility.
Speaking of leveraging investment returns, CFOs should ensure their capital investment strategies are tailored. With capital spending steady yet cautious, CFOs must prioritize high‑ROI investments, potentially focusing more on outpatient expansion and strategic cost-saving technologies rather than broad capital expenditure.
Additionally, managing revenue from volume upticks and one-time payments must be done strategically, or it will be unsustainable. CFOs should guard against cost inflation by doubling down on labor optimization, supply chain efficiencies, and capital discipline.
On the back end, CFOs must also be sure to mind their debt carefully.
Improving debt-to-cash-flow and debt-to-revenue ratios present refinancing and strategic borrowing opportunities. Use this window of financial leverage to improve infrastructure—but avoid overextending, especially amid uncertain capital needs.
Outdated player strategies must also be revamped for CFOs to sustain progress.
Rising Medicare volumes and increasing managed-care denials will call for more robust revenue cycle oversight, claim denial analytics, and payer negotiations to safeguard reimbursement integrity.
Lastly, credit-rating mindset matters. Credit rating continues to show a strong correlation to financial flexibility. CFOs should engage proactively with rating agencies, showcase margin improvement, and emphasize liquidity and debt management to solidify or upgrade ratings.
The report offers CFOs both confirmation of hospitals’ improved performance and also a cautious reminder that while progress is being made, vigilance, strategic alignment, and continued cost discipline are key to sustaining the turnaround.
Before joining UMMS, Sousa was CFO for UC Davis Health in Sacramento, California, where he held various leadership roles over almost two decades. While serving as interim CFO there, he oversaw a large team and managed a $7 billion capital plan. His expertise spans across revenue cycle, decision support, capital finance, and government reimbursement departments.
People-First Finance
One lesson he learned at UC Davis: Lead by example. As the old adage goes, seek first to understand, then to be understood. Sousa says aligning himself with the mission and actively listening to his team are crucial, especially in complex organizations like academic medical centers.
“You need to show that you care about the people that you're working with, and you have to listen,” he says. “You're never going to make any progress if you don't really understand what people want you to hear.”
Sousa emphasizes a people-first approach to finance, one grounded in clarity, accountability, and accessibility. He stresses that clarity in expectations is critical to team performance, noting that vague directions often lead to missed targets.
“Ultimately, where people fail at something is because they weren’t really clear on the expectations,” he explains.
By clearly defining deliverables and timelines, even when goals are challenging, leaders enable their teams to either meet expectations or proactively flag issues before deadlines. Strong communication and teamwork are essential to navigating the complexity of the capital strategy.
Sousa makes it clear that leadership isn’t just about oversight—it’s also about setting transparent expectations, fostering accountability, and being a consistent, engaged presence for your team.
Skills From Experience
Managing a $7 billion capital plan, particularly in high-cost California, posed significant challenges in planning, oversight, and communication. Sousa stressed the need to maintain visibility across multiple projects, avoid getting lost in the details, and ensure accountability.
A key takeaway, he says, was fostering a culture where concerns could be raised openly and addressed collaboratively, rather than relying solely on financial contingencies. Involving operational teams often led to practical solutions.
“Sometimes dollars are not the only way to solve a problem,” he notes.
Sousa’s deep exposure to foundational departments such as general accounting, payroll, and payer contracting, enables more strategic oversight and ensures that opportunities for improvement aren't overlooked.
He also emphasizes the value of having experienced the challenges of system implementations and conversions, such as payroll. These experiences offer insight into operational risks and help anticipate issues that may not be obvious to those without that background.
Sousa says that broad operational knowledge enhances his strategic leadership, facilitates better collaboration, and ultimately drives stronger financial performance across the enterprise.
Data Distribution
Sousa says data-driven decision-making is foundational to capital planning and operational budgeting. Visibility into vendor spend, insurance, purchase orders, and cash flow are critical on the capital side, but even more so in operations, where supply costs and service line performance must be closely analyzed.
A key concern is ensuring that data is integrated across systems and accessible to the right decision-makers.
“There’s a lot of good data out there, but it may not be getting to the right people at the right time,” he says.
This underscores the importance of systems that not only capture data but also disseminate it effectively.
Technologically, UMMS is investing in ERP enhancements and overhauling systems like attendance and scheduling. Sousa expresses a clear preference for robust system-generated reporting over manual tracking, citing concerns about data integrity when relying on spreadsheets.
System integration, real-time access to trustworthy data, and aligning technology investments with strategic decision-making are essential for driving operational and capital efficiency.
Organizing for the Road Ahead
Looking ahead, Sousa notes that financial sustainability and the academic mission are not at odds, but integrated priorities within the health system’s five-year strategic plan.
Medical education, research, and other mission-driven areas are intentionally built into long-term financial projections, with a clear understanding that they require ongoing investment despite not always generating direct revenue.
To support this, the organization is focused on efficiency gains, care model innovation, and improvements in quality and patient experience. These operational levers are essential for generating the margin needed to fund academic medicine.
Coming from California, Sousa says he looks forward to understanding a new regional culture and building relationships within the organization. More significantly, he’s energized by the scale and influence of UMMS.
“UMMS has 25% of the state [market share] ... and I think it’s pretty exciting to be a part of that,” he notes.
He emphasizes the system’s statewide impact, leadership in trauma care, and proximity to national health policy discussions in Washington, D.C.
In the near term, Sousa’s priorities include improving financial reporting, strengthening margin performance, and addressing any immediate gaps in capital investment oversight.
“That’s how I define success,” he says. “Were we able to make some impacts and see some changes moving the organization forward?”
In the long-term, success is tied directly to advancing the organization’s five-year strategic plan. Sousa emphasizes that finance must enable—not just support—key initiatives, and that failure to meet those goals reflects on the entire leadership team, including finance.
See how this CFO drives transformation with a mission-driven strategy fueled by a culture of collaboration.
Jonathan Ma officially stepped into the CFO role at Sutter Health two months ago after serving as interim CFO.
During that time, Ma built the foundation for a leadership style focused on strategic alignment, operational transformation, and financial sustainability, all while maintaining a solid commitment to Sutter's mission.
Ma emphasizes that lasting operational transformation isn't achieved through technology alone. Instead, it must be grounded in a holistic approach that aligns people, processes, and purpose. He also urges for strategic frameworks around capital allocation, such as Sutter Health’s multifaceted, adaptable scorecard to evaluate its capital allocation. His strategy as a CFO operates on a strong foundation of trust and collaboration, which Ma believes is crucial for alignment on shared goals
Check out these three insights from Ma on how CFOs can achieve their system’s goals for sustainable transformation, capital allocation, and collaboration.
CFOs should be able to show strategic agility, sector fluency and heart, according to these top healthcare executives.
CFOs are no longer just stewards of the bottom line. They’re also strategic leaders shaping the future of care delivery.
The demands on financial executives are as urgent as they are complex, especially for rural hospitals. And according to Martha Henley, CEO of Unity Medical Center, and COO of Java Medical Group, the ideal CFO must blend technical excellence with a deep, mission-driven understanding of the healthcare environment.
“We need someone who can balance strong fiscal stewardship with a deep understanding of our mission to protect healthcare for rural America,” Henley says.
That mission-centric mindset, she says, is essential for aligning financial strategy with core goals like patient access, care quality, and long-term sustainability at any health system.
From Controller to Strategic Partner
At Unity Medical Center, the CFO plays a central role in evaluating digital tools, innovative partnerships, and population health initiatives.
“I rely on my CFO to help us move from reactive budgeting to proactive positioning,” Henley says.
That means identifying opportunities for grant funding, evaluating risk-sharing arrangements, and helping lead the transition to value-based care.
At Winona Health, CEO Rachelle Schultz believes CFOs must bring more than technical financial skills—they also need strategic insight, courage, and relationship-building capabilities to drive meaningful change. The traditional models of healthcare delivery are no longer effective, and CFOs must help lead the transformation.
“We’ve got to reinvent healthcare,” Schultz says. “I think there’s a courage factor in all of that—a willingness to push the boundaries and change the conversations.”
Is Sector Fluency Negotiable?
While broad financial acumen is valuable, healthcare-specific expertise is a must, according to Henley. This is true especially in rural hospitals, where resources are thin and financial complexity and regulatory nuance can make or break the balance sheet.
“There’s no room for guesswork when it comes to things like Medicare cost-based reimbursement, swing bed billing, DSH payments, or the 340B program,” Henley explains.
These mechanisms are often financial lifelines for rural providers.
Yet technical skill alone isn’t enough. The ideal candidate, Henley says, brings “operational grit” and a willingness to dig into how the numbers translate into real-world impact. A spreadsheet doesn’t mean much if it can’t account for staffing shortages, limited access to capital, or the long distances patients must travel for care.
While Schultz acknowledges healthcare-specific financial expertise is valuable, she places greater emphasis on critical thinking, curiosity, and fresh perspective when selecting a CFO. In her experience, hiring leaders from outside the healthcare finance world has brought new ways of thinking and valuable insight, even if it comes with a steep learning curve.
“The fresh thinking that comes in the way of reframing some things or questioning, I think, is really valuable,” Schultz says.
Rather than relying solely on a CFO’s technical knowledge, Schultz ensures that a strong internal finance team supports complex tasks like audits and cost reports. This allows the CFO to focus on oversight, strategy, and broader organizational alignment.
Ultimately, Schultz says she sees the best fit as someone with a solid financial foundation, strong leadership skills, and the ability to challenge assumptions, even if they aren’t a traditional healthcare finance expert.
Leadership That Shows Up
In a rural setting like Unity Medical Health, presence matters. The CFO needs to be a visible, trusted leader, not someone tucked away in an office.
“We’re a small, tight-knit team,” says Henley. “The right CFO should guide critical conversations, foster trust with the board, and model accountability throughout the organization.”
Interpersonal skills—especially emotional intelligence—are just as important as financial credentials. Great CFOs communicate difficult truths with clarity and empathy. They listen well, build cross-functional relationships, and earn the confidence of both clinical and operational staff.
Kurt Barwis, CEO of Bristol Hospital, agrees that interpersonal skills are a vital element to what makes a CFO a strong, strategic partner of the organization.
"The CFOs of the future really do have to have that strategic knowledge," says Barwis. "They may be smart, but you can't put them at the top of your organization if they have no people skills, no interpersonal skills, and, most importantly, no self-awareness skills."
Schultz highlights the value of curiosity and empathy in financial leadership, as well as approaching challenges with a mindset of inquiry rather than blame. Essentially, great CFOs must be financially grounded but strategically bold, capable of seeing the full playing field and connecting the dots to build a more sustainable healthcare system.
Influencing Innovation
Schultz sees the modern CFO as going far beyond traditional financial oversight, emphasizing the need for deep engagement in innovation, value-based care, and population health. Winona Health’s current CFO, Jessica Remington, exemplifies this expanded role through active involvement in business development, partnerships with payers, and initiatives addressing social determinants of health.
Schultz says the CFO has also been instrumental in leveraging technology to improve care delivery, working on everything from EMR infrastructure to enhancing the patient and provider experience. This broad engagement allows alignment of financial strategy with operational and clinical priorities.
“It’s that overall system insight to understand what’s the flow of information, what is the flow of the data, what is the flow of the clinical process, what is the flow of the financial process or the quality process,” Schultz explains.
Ultimately, the CEO values a CFO who brings cross-functional expertise and stays actively involved in shaping the broader system, ensuring that innovation, finance, and care delivery are tightly integrated.
The Bottom Line: It’s About Mission, Not Just Margin
Schultz says what distinguishes a great CFO in healthcare is their ability to lead through people, foster collaboration, and build inclusive, resilient teams.
“It’s more about where are all of the great ideas and how are we pulling them all together—and then how do we make these things happen?” Schultz says.
In rural care settings, where today’s uncertain reimbursement models hit the organizations particularly hard, CEOs want CFOs who can lead with heart as well as mind. They must see every line item as more than dollars, and realize it’s about lives, community trust, and the sustainability of care where it's needed most.
“A great CFO understands the weight of their decisions and the lives those decisions impact,” Henley says. “That perspective—and that heart—is what separates good from great.”
With so many tasks to balance, how does this CFO stay organized?
For CFOs, staying on top of the most pressing financial tasks is essential. With so many priorities from cash flow, to workforce recruitment, to hospital investments, staying organized can get tricky.
In this episode of HL Shorts UVA Health's CFO Stephanie Schnittger shares how she stays organized and prioritizes tasks as a CFO. See what Schnittger, a long-time finance executive who has worked at various organizations, has to share.
For more, also check our full interview with Schnittger here.
See these tips from the CFO of a health plan and the CFO of a health system on Medicare Advantage.
Medicare Advantage has grown exponentially over the last few years, and small and mid-sized health systems are increasingly caught in a complex web of administrative burdens, underpayments, and unbalanced negotiating power.
To come to a fair negotiation, both providers and health plans need to deeply understand the wants and needs of their organizations before signing contracts.
Check out these tips from Bristol Community Hospital CFO Tim Ajayi and SCAN Health Plan CFO Mike Plumb.
