Could analytics adoption make a big difference in your health system?
On this episode of HL Shorts, we hear from CFOs and HealthLeaders Exchange members Pat Keel, (St. Jude's Children's Research Hospital) and Bob Flannery, (UW Health) about the impact of data analytics and how health systems can drive and prioritize greater analytics adoption.
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Rural health system CFOs must employ strict strategies for financial profitability to stay operational.
Rural hospitals have seen a pattern of closures over the last decade, with 192 rural hospitals closing since 2005, and CFOs of these organizations will need to be diligent and creative with their financial strategies. To ultimately resolve this ongoing challenge, calls will need to be heard for federal assistance and regulatory reform. Until then, CFOs must strategize more aggressively than urban health systems to avoid financial issues.
Check out these four strategies that could help your rural health system.
Uncompensated care has been a mounting challenge for the health system.
Denver Health has appointed April Audain as its new chief financial officer. Audain brings over two decades of experience in healthcare finance, having previously held senior positions at prominent health systems across the country, including Parkland Health, where she worked for twelve years including her time as vice president of finance. "Parkland with my training ground," she told HealthLeaders.
Her extensive background in financial management and strategic planning positions her well to navigate the complexities of healthcare financing, especially in the wake of growing uncompensated care costs.
Uncompensated Care
Uncompensated care has become a pressing concern for healthcare providers nationwide, but particularly for Denver Health, Colorado's largest safety net hospital. Denver Health prides itself on treating everyone, but since the pandemic, uncompensated care has risen dramatically.
"The largest conversation that we've had is related to uncompensated care and the trajectory that we've seen at Denver Health since 2020," Audain said. "We went from about $60 million in 2020, to projecting $155 million for 2025."
Although Audain just started her new role, she recognizes the importance of addressing this challenge head-on.
"We're digging into what we can do to help us mitigate some of the increasing costs that we've seen since COVID," she said.
Audain knows going from a health system like Parkland Health in Texas, to Denver Health has it's similarities: "When you go from one safety net to another, there are a lot of things that parallel each other, and so it really did help me to hit the ground running literally here at Denver Health," she said.
The Importance of Teamwork
A new health system will still present its own unique set of challenges for a CFO. For instance, Colorado is a Medicaid expansion state, unlike Texas. But Audain is rising to the challenge and knows the importance of having a good team on her side.
"Not only do I have to make sure that I have a strong team, I have to make sure we have strong partnerships across the organization," she said. "And if you don't have a good solid relationship there, it's not gonna go anywhere."
Luckily for Audain, she automatically had one familiar face at her new organization; Denver Heath's COO Kris Gaw previously worked with Audain at Parkland Health.
"It's really nice to have that existing relationship because we know exactly how each other works. And so that's been a great thing to have such a strong partner from the very day that I walked through the door," she said.
In a healthcare landscape increasingly defined by financial pressures and shifting regulations, Audain's appointment as CFO signals a proactive step toward ensuring Denver Health not only survives but thrives in the years to come. Her strategic focus will be crucial in addressing the challenges posed by uncompensated care and reinforcing the organization's commitment to serving its community.
Would debt relief be the biggest industry shift to true value-based care?
Medical debt is no small issue within the American healthcare system. It often becomes a burden for patients and makes them hesitate to seek future care. A KFF analysis found that 41% of US adults have some type of medical debt, and more often than not, it disproportionately impacts lower income families, parents, and black and Hispanic adults.
One health system is looking to change the way we look at medical debt, and it may be an option for other CFOs to consider. Advocate Health, the nation’s third-largest non-profit health system, recently announced it would begin canceling all judgment liens previously placed on homes and real estate as part of its efforts to collect unpaid medical bills. The health system will also forgive the outstanding debts associated with those liens.
“When we expanded our charity care policy, we immediately began assessing all previous outstanding liens and determined that most of those patients would qualify under our new policy,” Brad Clark, chief financial officer of Advocate Health said in the announcement. “As the next step in our roadmap to make care more affordable, we are accelerating this process and removing judgment liens that were placed on homes and property to cover unpaid medical bills.”
Advocate's debt relief plan aligns with a larger movement initiated by Health and Human Services and Governor Roy Cooper in North Carolina to erase medical debt for Medicaid patients in the state. Now all of the state’s 99 eligible hospitals have committed to participate in North Carolina’s medical debt relief incentive program. According to the plan, hospitals that choose to meet the eligibility conditions for medical debt relief will receive a higher level of Medicaid reimbursement under the Healthcare Access and Stabilization Program (HASP).
All Things Considered
Advocate’s debt relief plan is a smart move for the organization. Lawmakers and policy groups have begun cracking down on medical collection practices, questioning some system’s tax-exempt status in some instances.
But there are other benefits for health systems to consider, if debt relief is financially viable for their specific organization. For example, relieving debt can have a positive impact on patient relationships and patient satisfaction.
This leads to not only stronger patient engagement through fostering goodwill, but also higher patient satisfaction which can enhance the provider's reputation and lead to positive reviews.
Debt relief also indirectly improves access to care. Patients unburdened by debt are more likely to seek necessary medical care, leading to better health outcomes, which can potentially reduce the need for more expensive emergency care.
Eliminating debt collection processes can streamline administrative operations, making them more efficient. Providers can reduce the resources spent on billing and collections, allowing them to get back to patient care.
While it may seem counterintuitive, relieving debt could potentially lead to increased revenue over time. While studies have not pinpointed a direct increase in revenue, many have the highlighted that the impact it has on patients could in turn help stabilize a health system’s revenue over time. Healthier patients are less likely to incur high costs associated with untreated conditions, and satisfied patients may return for elective services or recommend the provider to others.
Lastly, as the industry looks towards a shift to value-based care and emphasizing patient outcomes over volume, relieving debt can lead to better health management and lower readmission rates.
"Tech isn't just the pure solution," says CFO Mark Flakne.
Virtual care has become an integrated part of modern healthcare, allowing for easier access to care and often, cost savings. Mark Flakne, the new CFO of Included Health, a provider of healthcare navigation and virtual care, says with the implementation of more advanced care technology comes more responsibility around patient experience. But with pressures to reduce costs while bettering clinical outcomes, telehealth and virtual care implementation can get complicated.
As virtual care and telehealth implementation becomes more prevalent CFOs must consider several factors that can affect the virtual side of their business.
Be sure to check out the accompanying article too!
How CFOs Can Advance Virtual Care by Marie DeFreitas
Data analytics can help health system's decision making when it comes to reviewing large datasets and where to allocate resources.
With CFOs under mounting pressure to make the right financial decisions for their organizations, it can be difficult to see where all operations and investments are having an impact.
Enter data analytics.
The role of real-time data and analytics has evolved into a primary driver of informed decision-making for finance executives. With quick insights and operational overviews, CFOs need to recognize the importance of adopting analytics to optimize outcomes for their organization.
The hospital uses a governance structure and when a department has a need for specific data, they must go through the analytics council, she explains, which includes representatives from operations, finance, clinical, and research departments.
"We have also really worked to try to push our departments who have analysts within their departments, so the ability for them to access data–integrated data that's in our data lake, which includes clinical, financial as well as other types of data–so they can build their own data sets and work independently instead of going through a competency and evaluation period to get access to that level of data," says Keel.
HealthLeaders Exchange member Bob Flannery, is the chief financial officer at UW Health, and his organization has a similar approach. UW Health's ‘finance business partner model' assigns a finance business partner to each department who undergoes ongoing competency training to ensure an understanding of UW Health's ‘data mart.'
"It is really just helping to elevate expectations at the senior leadership level about the fact that we should not be making decisions in a vacuum of data and analytics to support those decisions that we make," says Flannery.
The first important step to adopting data analytics is ensuring that all staff who will come in contact with understand and are comfortable using it. Like the adoption of any new tech, there must be a type of governance and education for staff to lean on while being introduced to the new system.
CFOs can collaborate with CTOs to ensure a smooth introduction to data analytics and help both clinical and administrative staff with any concerns. Without this education and governance executives risk having their organization fall behind on analytics usage, which can have a direct impact on ROI for analytics investments.
Resource Allocation & Transparency
How can executives effectively communicate with other leaders to ensure resource allocation to high impact areas? An evolving factor within the CFO role is collaborating with other departments and understanding their needs.
According to Flannery, it's not easy to facilitate communication about the fiscal realities of healthcare since the pandemic, but it's an important responsibility. It takes a targeted approach to identify where resources should go, and transparency within the organization is key, he says.
"And then even sharing that, when we do actually allocate some additional resources, what went into the thought process, what went into the recognition that that really was a high impact area for people that we serve," Flannery adds.
While the structure of Keel's organization differs from the traditional health system, with about 30% of resources going to research in basic science departments, her team continues to prioritize the revenue cycle and grants to ensure their donor dollars go as far as possible.
"One of the side benefits of our governance structure has occurred in the data council level where it's a lot of directors, analysts, managers who work with data, and they have worked together to collaborate on getting data or on analyzing data," she says.
"So it's not just a one off department looking at something, it's across the organization and collaboration amongst the areas about how to solve whatever problem or challenge we're looking at the moment."
"Tech isn't just the pure solution," says CFO Mark Flakne.
Last month Mark Flakne became the new chief financial officer of Included Health, a provider of healthcare navigation and virtual care. With the implementation of more advanced care technology, Flakne says new tech tools, regardless of the challenge they're brought in to solve, must focus on the patient experience above all else. But with pressures to reduce costs while bettering clinical outcomes, telehealth and virtual care implementation can get complicated.
Telehealth 2.0
There's no doubt healthcare has come a long way in regards to technology, particularly with the adoption of telehealth and virtual care. More and more health systems are implementing automation, A.I. and other tools that can help clinicians focus on direct patient care instead of administrative tasks.
While these advancements have been helpful, there is still a long way to go in order for the industry to begin implementing them in the most beneficial way. Health systems cannot focus on them as a one-stop solution, says Flakne. CFOs must make strategic decisions when deciding which type of tech they need to invest in to overcome the specific challenges in their organizations.
"Tech isn't just the pure solution, and I think that part is key, being very selective on what tech solutions do you deploy to really have a seamless experience for the member." says Flakne. "Because [patients] shouldn't realize they're using the technology. They should just get the outcomes and the experience that they want."
Aiming for seamless integration with a patient focus is what allows health systems to be able to provide whole-person care, a chief focus for Included Health.
"That integration of this system is to be able to provide holistic care to the members," says Flakne. "To me, this really gets back to what a lot of people may refer to as ‘telehealth 2.0,' but it's really bringing that navigation with the virtual primary care together and all the other services and wrapping the patient around delivering care as they need it, when they need it, where they need it."
"I wanted to see how technology could transform the patient experience," Dr. Ami Parekh, chief health officer of Included Health, previously told HealthLeaders. "While we have used a lot of technology in healthcare, I don't think we've really pushed the limits on how transformative it can be from a member experience perspective, as well as from the outcomes it can deliver."
Sustaining Trust
While technology holds immense power to transform the patient experience, health systems shouldn't be too hasty, says Flakne. The proper implementation of technology isn't simply shelling out the funds to acquire it. This process comes with education, governance, and practice. Each of these components plays into a greater, seamless patient experience.
"People have somewhat jumped on the tech bandwagon, I'm sure we've used chat bots that don't work and can't understand you, and so I think technology is really cool and there's a great opportunity, but it's not just jumping into it. It's thinking through ‘how does it become seamless?'"
While it may be an exciting time for healthcare tech, health systems must be careful of how they step into it in order to sustain the trust of their patients.
"How does it happen behind the scenes?" says Flakne. "Because when it doesn't work, I think we've also seen people lose trust in it."
While the operating margins of some hospitals have improved this year, others are facing a different reality.
Five hospitals have permanently shut their doors in the last month, painting a bleak picture of the financial struggles interwoven in the U.S. healthcare system. The closures highlight the financial, economic, and workforce challenges many health systems are struggling with, but also offer critical lessons for hospital CFOs.
The five hospitals that are closing:
Community Memorial Hospital in Hicksville Ohio. After getting caught up in a fraudulent laboratory agreement, facing two cyberattacks and being unable to secure a bankruptcy filing, the rural hospital permanently closed on Aug. 31 after temporarily closing in May due to financial challenges.
Nashoba Valley Medical Center in Ayer, Massachusetts. Nashoba Valley Medical Center also closed on Aug. 31, laying off almost 500 employees.
MercyOne in Des Moines, Iowa. MercyOne Primghar Medical Center will close on Sept. 30 due to economic and workforce challenges. It will also be closing its family medicine clinic in Urbandale.
Stanislaus Surgical Hospital in Modesto, California. Stanislaus Surgical Hospital will be permanently suspending its operations on Sept. 14. The closure will lay off 160 employees and comes after CMS ended the provider’s agreement due to noncompliance with various participation conditions in the agency's MediCal and Medicare programs.
Carney Hospital in Boston, Massachusetts. The hospital, owned by Steward Health Care, closed on Aug, 31, totaling in 753 employee terminations. After seeking Chapter 11 protection in May the health system is still trying to offload its 31 hospitals in a crisis that has shook the Massachusetts community.
The CFO Takeaway
For CFOs, these closures underscore the importance of strategic financial management and adaptability. Careful financial planning, diversifying revenue streams, and proactively addressing workforce shortages are crucial steps to mitigate risks that could result in closures. Moreover, CFOs must ensure their organization is maintaining compliance with evolving regulations and staying ahead of economic trends can help hospitals navigate these turbulent waters.
Cybersecurity is another issue, particularly for rural health systems. With the rising number of cyberattacks, CFOs should look to invest in high quality cybersecurity measures to lower their risk. Though without proper funding, this strategy can be strenuous for rural hospitals. A call for targeted funding for rural hospital cybersecurity may need to be heard, and policymakers will need to act.
Leaders must also advocate for policies that address the systemic issues contributing to these closures, like improved reimbursement rates and more general targeted funding for rural and underserved areas. As the industry continues to face these challenges, a strategic approach and collaborative effort will be essential for ensuring that hospitals can continue to provide essential services to their communities.
Three simple steps make up CFO Mark Flakne’s revenue growth strategy.
Mark Flakne, the new CFO of Included Health, recently shared with HealthLeaders his expertise in revenue growth strategy. Formerly OptumHealth’s CFO, during his eleven years there, Flakne played a pivotal role in transforming the organization’s financial landscape. Under his leadership, the company achieved a 28% increase in annual revenue growth taking it from $21 billion to more than $70 billion.
Flakne’s strategy to sustain revenue growth is broken down into three steps.
“The first and probably the most important is you need to have an experience that the member loves,” he said. “So if you do have a product, you know that people don't like, we all know what happens.“So for us, it's about having that experience that a member loves to use and be part of.”
The second part of this strategy is examining the question: “how can I reach more members?”
“Whether that be reaching them in more services and products in the ways that they're interacting with the healthcare system. But it's also reaching more members from other avenues. So think of the public sector or think of other market spaces, seniors, those sort of different groups of populations.”
Lastly, Flakne says, develop an appreciation and understanding of value-based care.
“I think it's about how you can participate in their arrangements to drive the right outcomes but also benefit from a financial perspective. And so it also goes to how you structure your financial arrangements.”
John Beaman, CFO of Adventist Health, knows where to focus strategies for his health system’s success.
In the increasingly competitive landscape of healthcare, Adventist Health CFO John Beaman stands out in navigating the challenges posed by private equity firms and maintaining physician satisfaction.
His strategic approach sheds light on how his organization addresses these critical challenges.
Private Equity
Private equity firms have become major players in healthcare, often acquiring practices and facilities with the promise of streamlined operations and enhanced profitability. For nonprofit health systems like Adventist Health, this trend can pose a significant threat. These firms can offer attractive financial incentives to physicians, potentially drawing them away from organizations focused on patient care rather than profit margins.
So how does Beaman fight off private equity investors and compete with their tactics? Well, he doesn’t. Beaman stressed that private equity firms are only interested in primary care or pieces of the healthcare journey. His strategy involves proving to the surrounding community that his health system can be their trusted care provider.
“We've taken the strategy and approach that our value proposition is more the integration and connectedness of all pieces of health care,” Beaman said. “And [the community] sees us as someone that's their partner and empowering them and their health journey. And to me, that's where I see our differentiation is because we're able to connect those dots.”
That’s not to say, he clarifies, that a quick clinic or a certain technology that a private equity firm provides to give the community quick access to care isn’t helpful. He just doesn’t see the need to compete there.
“I think us trying to compete at that level is probably not in our best interest,” he said. “Our best interest will be more the holistic, integrated approach for the people in our communities.”
Retaining Physicians
A second tier to the challenge of private equity competition has to do with physicians. Often private equity firms are gunning for specialty care physician groups, and many health systems feel the need to implement physician attraction and retention strategies.
Beaman's advice here is to search for physicians that would be interested in your particular health system. What can your health system offer them?
“On the physician side, we've also become more intentional around recruiting physicians that want to work for a not-for-profit health system or want to be in some of our communities that are that are very rural,” Beaman said. “In fact, we have a rural residency program where we actually train physicians to be practitioners in a rural setting.”
Adventist Health, Beaman shares, has been able to retain about 75% of its physicians within their network/communities post-completion of their residency.
“I think those strategies are going to be the ones that pay off in the long term for us as a not-for-profit health system because it gets to finding people who want to be a part of our mission, who want to be in the areas that we serve,” he said.
Beaman said that this longevity is a characteristic that speaks to the community and underscores the strong presence of a trusted community provider.
“At the end of the day, I think that's better for the people in our communities because now they've got a partner that's, you know, we've been in many of our communities for over 100 years, and hopefully we'll be in them for another hundred.”
