CFOs have their priorities in certain areas of their organization.
The 2024 HealthLeaders CFO Exchange brought about several insightful discussions for CFOs from across the nation and showed where their main focuses lie.
From virtual care to physician collaboration, see where the event attendees are prioritizing their time (and money).
The HealthLeaders Exchange is an exclusive, executive community for sharing ideas, solutions, and insights.
Please join the community at our LinkedIn page. To inquire about attending a HealthLeaders Exchange event and becoming a member, email us at exchange@healthleadersmedia.com.
The HealthLeaders CFO Exchange brought on a fiery discussion on payers and physician shortages. How are CFOs coping?
From the growing complexities of managing hospital finances amid a turbulent landscape, never ending physician shortages in specialty care, and shifting payer strategies, there is no shortage of challenges for CFOs.
To talk strategy and find solutions to these challenges, dozens of finance leaders from across the country recently met in Virginia for our HealthLeaders CFO Exchange. During the event, attendees laid out all of their most pressing pain points on the table.
Physician Shortages
CFOs discussed one of the biggest challenges facing their health system’s clinical enterprise: gaps in specialty care. CFOs lamented over the struggles of recruiting for specialty roles in genetics, anesthesia, and the shortage of specialty care physicians. The challenge is it takes a long time to be trained in specialized care, and it’s time that health systems just can’t afford, more specialty care physicians are needed now.
“Our forecast is growing so fast we need 100 to 150 primary care physicians in the next five years, ” said Allen Butcher, CFO of St Joseph's / Candler Hospital in Georgia.
The discussion highlighted pain points such as CFOs not being able to replace retiring geneticists or anesthesiologists, and the shortage of treatment centers. One CFO even mentioned how their health system’s anesthesiology department was over budget by two million dollars.
CFOs advised each other to look at other groups that are certified to do anesthesia, for example, an intensivist can sometimes do the “low stakes” cases. They also suggested using locums to fill in the gaps for specialty care.
Another challenge for CFOs is the aging physician population.
Danielle Willis, CFO of LCMC Lakeview Hospital in Louisiana brought up that this issue is where care model changes are having an impact on physicians.
CFOs need to ask themselves: how do you make your physicians part of the organization? How can they be more involved in decision making and how can that affect retention and recruitment?
Payer Strategy
Another big topic at the conference was payer strategy—a multifaceted challenge with implications for health system revenue and operations that is ongoing. With the healthcare payment landscape continuously evolving, CFOs are grappling with shifts from fee-for-service to value-based care models, but payers are playing hardball, especially with denials.
These changes show the need for a realignment of financial strategies to ensure not only sustainability, but profitability.
Payer strategies, including changes in reimbursement rates and the increasing prevalence of value-based contracts, are requiring CFOs to adopt more sophisticated financial models. Value-based care necessitates comprehensive data analytics and performance metrics to track outcomes and adjust strategies accordingly, but the struggle to facilitate this strategy with payers is tough.
CFOs discussed the need for change to come from the legislative level so that payers are not dominating and squeezing the life out of the health systems. Consider monthly check-ins with payers to ensure both parties are aligned on their goals.
The discussion concluded with a strong emphasis on the importance of adaptability and proactive management in navigating the complex financial landscape of healthcare. As CFOs continue to tackle physician shortages and evolving payer strategies, the need for strategic foresight and innovative solutions will be crucial in sustaining hospital operations and ensuring quality patient care.
The HealthLeaders Exchange is an exclusive, executive community for sharing ideas, solutions, and insights.
Please join the community at our LinkedIn page. To inquire about attending a HealthLeaders Exchange event and becoming a member, email us at exchange@healthleadersmedia.com
CFOs dove right into the tough conversations about the impact of accountability and care strategy at the HealthLeaders CFO Exchange.
In a time marked by rapid change and financial uncertainty, CFOs are gathered in Virginia at the HealthLeaders CFO Exchange to dissect and address the multifaceted challenges keeping them up at night.
A major theme that emerged during the discussions was the impact of accountability on hospital finances, organizational culture, and structure.
How CFOs are Navigating the Complexities of Accountability
CFOs voiced concerns over the complexities involved in aligning health system operations with systemwide financial accountability. One of the key challenges they identified is determining who is responsible for outcomes within an organization—whether it's managers or leaders. This lack of clarity can complicate decision-making and hinder the efficient allocation of resources.
Danielle Willis, CFO at LCMC Lakeview Hospital in Louisiana, highlighted a crucial perspective: “It’s less about metrics, more about setting expectations.” Her comment underscores the need for a shift away from rigid numerical targets toward a broader understanding of roles and responsibilities.
Moreover, CFOs stressed that mergers and acquisitions add another layer of complexity to accountability. These transactions can significantly affect job roles and necessitate a reevaluation of who is accountable for what within a newly merged organization.
The Role of Culture and Relationships
Beyond accountability, the discussions delved into the importance of organizational culture and the structure necessary to support financial goals.
CFOs emphasized that fostering strong relationships among leaders, vendors, payers, and the entire organization is essential for achieving successful outcomes, especially when adopting new technologies such as AI and automation.
The need for what some referred to as "role reversal" was also a topic of conversation. CFOs suggested that executive teams should strive to understand the day-to-day work at the ground level, which is crucial for comprehending how automation and other technological advancements can be effectively integrated.
Championing Change and Ensuring Alignment
Another significant point raised was the importance of identifying who is championing changes within the organization.
CFOs questioned whether CEOs and COOs are leading these shifts and whether they are promoting new ways of thinking and acting within their teams. Without strong leadership driving these changes, progress can stall, leaving health systems struggling to take the next step forward.
CFOs agreed that alignment across all facets of a health system is critical for moving forward. This alignment needs to encompass not just internal operations but also the overall strategy for patient care, from acute to ambulatory settings.
Acute Versus Ambulatory Care: A Strategic Discussion
A significant part of the discussion also focused on care strategy, particularly the differences between acute and ambulatory care.
CFOs noted that while these two sectors of care need to align, they should not simply mirror each other. “You want to own the patient journey, from acute to ambulatory,” one CFO remarked, emphasizing the importance of a seamless transition across care settings.
Kyle Wilcox, VP of Finance for MercyOne Medical Group, added, “The playbooks don’t overlap. They have to complement each other.” This highlights the necessity of crafting strategies that acknowledge the unique needs and operations of both acute and ambulatory care, while ensuring they work together to provide comprehensive patient care.
Simplicity in Strategy
As the discussions concluded, CFOs shared a final piece of advice: don’t overcomplicate strategies. In the face of complex challenges, it can be tempting to get bogged down in the minutiae. However, maintaining simplicity and focus is crucial for effective decision-making and implementation.
The HealthLeaders CFO Exchange underscored the importance of accountability, alignment, and organizational structure in overcoming the financial challenges facing healthcare. With a commitment to innovative strategies and fostering collaboration both within and outside of the health system, CFOs are well-positioned to navigate the obstacles ahead and continue advancing toward delivering exceptional patient care within an efficient, effective organizational framework.
The HealthLeaders Exchange is an exclusive, executive community for sharing ideas, solutions, and insights.
Please join the community at our LinkedIn page. To inquire about attending a HealthLeaders Exchange event and becoming a member, email us at exchange@healthleadersmedia.com.
See the numbers and strategies that fueled Tenet's 2024 Q2 success.
Tenet Healthcare had an impressive second quarter with over a one hundred percent net income increase. See what was behind the system’s success and where it shifted its strategies to align with profitability.
Two focused strategies helped Mayo achieve its 8.9% margin.
Mayo Clinic ended the second quarter with an operating income of $449 million, a 8.9% margin. This is a major improvement for the health system which sat at a $300 million operating income (5.9%) during the same time last year.
The Rochester, Minn. based system has seen its second quarter revenue increase by 12.1% each year, bringing it to $5 billion. Stable patient volumes and increased donor contributions drove the system’s growth, despite an increase in expenses.
The Breakdown
Mayo’s labor costs have increased by 7% year over year to $2.6 billion, which accounted for 56.9% of total second-quarter expenses. These labor costs are attributed to staff growth to serve higher patient volumes as well as a 4% annual salary increase for health staff. Supplies and service expenses also rose 13.3% to $1.6 billion.
The system also ended the second quarter with a net income of $613 million, an increase from $47 million in the second quarter of last year. These numbers come after factoring in non-operating items like philanthropy and investment returns.
"Our strong second-quarter results enable the organization to invest in its staff, enhance its physical and digital infrastructure, and advance its strategic goals to cure, connect and transform healthcare," the health system stated in its financial report.
As of June 30, 2024, Mayo reported its days of cash on hand were 361, up from 358 on Dec. 31 and 346 on June 30 last year.
It should be noted that the system’s financial results come off a recovery year in which it reported a “mission-sustaining” 6% operating margin. That year Mayo announced the largest capital investment in the system’s history, Bold. Forward. Unbound. in Rochester, which sets out to innovate with digital technologies and novel care concepts.
The CFO Scope
There are several strategies CFOs can take away from Mayo’s second quarter results, the first being to focus on volume growth and efficiency initiatives. Leaders should continuously prioritize these efforts along with managing patient length of stay, readmissions and the care continuum.
Keeping an eye out for growth opportunities is always a good idea, and CFOs should strategize where they can. Mayo made several expansion moves including more than doubling the size of its Phoenix campus, expanding its Florida hospital, and opening a new research facility in Rochester for technological development.
There’s one more lesson CFOs can take from Mayo’s results: investing in staff. Investing in staff can help work toward a positive organizational culture, mitigate burnout and aid in staff retention. Mayo ushered in about 14,000 staff members into new roles last year and saw a 4.9% increase from 2022. Overall Mayo spent $10.5 billion on staff and benefits in 2023, including $30 million in community programs.
CFOs should ensure they stay on top of the interconnectedness of their health system to be better able to pinpoint where certain challenges affect operations. Don’t be hesitant to collaborate with CMOs and Revenue Cycle and other departments to get the full picture and to ensure thoughtful, innovative strategy across the board.
Health systems everywhere have been dealing with ongoing rising costs and new solutions are needed. What are CFOs doing to stay ahead of the price tags?
The upcoming HealthLeaders CFO Exchange is gearing up to get into today's toughest CFO challenges.
Health systems everywhere have been dealing with ongoing rising costs and new solutions are needed. What are CFOs doing to stay ahead of the price tags?
One strategy CFOs can jump on is taking a closer look at non-clinical spend. Where are the costs adding up while flying under the radar? CFOs should look at the not-so-obvious expenses that can often seem irrelevant to big picture spending. From landscaping to signage, examine where your health system can cut back.
Private equity is coming under a bigger microscope as the Steward Health fiasco continues, and one particular area CFOs are concerned with is ambulatory care. In the last few years, private equity interest in the ambulatory care space has increased. Both Surgery Partners and Amsurg, two of the biggest ambulatory care chains, have private equity ownership. How will CFOs strategize competition in this area to protect their system’s finances?
Lastly, there are some challenges that may not seem CFO related, like physician burnout. CFOs must take a closer look at burnout in their organization to recoup lost dollars and build a sustainable, comfortable work ethic for their physicians. One study concluded that physician turnover due to burnout costs health systems an extra $260 million each year. CFOs will need to collaborate with CMOs to implement physician programs to mitigate burnout as much as possible.
Are CFOs prepped with their best strategies in case of a recession?
After a trigger in the labor market indicated an impending recession, CFOs are on edge, but should they be worried for their businesses? CFOs will need to strategize with a secure financial plan to weather the uncertain economical landscape ahead.
Major concerns about the job market surfaced as the unemployment rate rose by 0.2 percentage points to 4.3%. Without a rate cut from the Federal Reserve, a recession could be underway. Better to be prepared than not. Here are four strategies CFOs can implement to ward off recession scares.
To do:
-Create a stout reserve fund: ensure there is extra cash in a reserve fund that can float the business in trying times.
-Audit revenue cycle to increase profitability, there may be unrecognized issues that are costing the system valuable dollars.
-Diversify revenue streams as much as possible, a diverse portfolio is a stable portfolio.
-Strategize growth opportunities, carefully decide on growth opportunities that don’t present a high risk.
From private equity to physician burnout, are CFOs in touch with their whole organization?
CFOs are no longer simply the ‘financial police’ or accountants for a health system. They must now be dynamic executives that examine how each part of their organization functions together.
This shift will require them to have their finger on the pulse of all the issues within their organization, from operational and business structure issues, to workforce and cultural challenges like physician burnout.
Physician burnout can negatively impact finances, as well as patient outcomes and quality of care; making it an area of concern for CFOs as well as CMOs.
“I think we need to start being more thoughtful about the business and finance structure of our organizations and how it impacts physician burnout, but also how it impacts our business models and the way we staff,” said Kyle Wilcox, vice president of finance for MercyOne Medical Group and a HealthLeaders Exchange member.
Lawmakers and healthcare executives are questioning the place of private equity in healthcare, like its involvement in the unraveling of Steward Health. Known to be associated with higher prices, lower-quality care, and reduced access to core health services, private equity will require even stricter examination going forward as it creeps into other areas like ambulatory care.
This topic is one of the many highly anticipated discussions CFOs will dig into at the upcoming HealthLeaders CFO Exchange.
“One topic I'd like to lean into with everyone with ambulatory strategy is private equity and very large groups that lean more into the ambulatory type work,” said Wilcox. “In some states, there's no requirement for a certificate of need, so I'm just interested to see what's happening across the country in this aggressive ambulatory strategy, both for private equity and the health systems.”
There’s a lot for CFOs to consider as more nuanced challenges enter the healthcare sector. CFOs must be equipped with innovative strategies not only to keep finances in check, but also to ensure the health of their system in its organizational culture and how it operates.
An expanding position needs big ideas to stay ahead and CFOs can lean on each other to brainstorm and shed light on the industry's deepest challenges.
TheHealthLeaders Exchange is an exclusive, executive community for sharing ideas, solutions, and insights. Please join the community at our LinkedIn page.
To inquire about attending a HealthLeaders CFOExchange event and becoming a member, email us at exchange@healthleadersmedia.com.
CFOs should ensure strategy always accompanies private equity in their health system.
With the bids closing for Steward Health’s bankrupt hospitals, fears of the health system’s collapse seemed to be abated. However, Steward has now postponed the sale of six of its hospitals, extending the painstaking process.
News of the system’s bankruptcy has been widely circulated: from securing a loan days before declaring bankruptcy, to not selling hospitals because of ‘unqualified bids,’ to facing an investigation called on by Massachusetts Gov. Maura Healy, to inciting firm legislature for financial misconduct.
Not only is the fiasco affecting patient care across the eastern Massachusetts, but over 1,000 health workers are losing their jobs.
The ongoing saga has been heavily criticized, with some outlets calling it a case study in executive greed.
Late last week, Healey suggested a federal investigation of Steward’s bankruptcy, and its CEO, Dr. Ralph de la Torre.
“He basically stole millions out of Steward on the backs of workers and patients and bought himself fancy yachts, mansions and now apparently lavish trips to Versailles. I hope he gets his just due and that federal investigators will come after him for his actions. Our administration is working night and day to protect jobs, protect patients, and pick up the pieces of the situation that Ralph De La Torre has put us in,” Healey said in a statement.
Private Equity
The presence of private equity in healthcare has been controversial, and for good reason: studies show the PE-owned hospitals are associated with more negative patient outcomes, eventually affecting finances and other business operations.
Private equity can cause deep financial issues for health systems, and it’s not going unnoticed by lawmakers. A bill is currently pending in California’s legislature that would require private equity groups and hedge funds to notify the Attorney General’s office of planned purchases of various types of healthcare businesses and obtain its permission. It would also reinforce state laws that prohibit nonphysicians from directly employing doctors or directing their activities.
Although more recent surveys show that the amount of PE in healthcare may be exaggerated, when it is implemented, there must be a financial game plan for the long term to avoid adverse effects. CFOs must be strategic about how they implement and introduce private equity funding.
The CFO Homework
As the CFO role evolves, it’s no longer focused solely on finances. Instead, it’s expanding to consider business structure, operations, culture and strategy.
CFOs must take note of the business evolutions that happen around them and pay attention to the strategies, wins and downfalls of other health systems that can influence their own decisions. They must also develop a symbiotic relationship with CEOs, as the two roles depend on each other.
In addition to acting as the financial police within the C-suite, they must also be proactive in every other aspect of the business. If a CFO is equipped with knowledge about every aspect of the organization, they can better strategize sound financial decisions, know when to cut back and where to grow and innovate.
While unemployment is up, healthcare still added 55,000 jobs in July.
As the nation reacts to the news of a possible recession coming off on an underwhelming jobs report, CFOs must stay on top of domestic and worldwide economics to know how it might impact their business.
The Big Picture: What To Know
Typically, if roughly 200,000 jobs are added each month it shows that the labor market is in good standing and most likely won’t see a recession. However, Friday’s BLS report showed an eerie slowdown in job growth. Only 114,00 jobs were added in July, marking a big drop from 206,000 in June, and far below many economists’ expectations.
Major concerns about the job market surfaced as the unemployment rate rose by 0.2 percentage points to 4.3%. With the Sahm rule being triggered, financial executives everywhere are on-edge.
The labor market is vulnerable right now, and with an upcoming election and the Federal Reserve’s goal of 2% inflation, economists are speculating that a rate cut may be in order. If not, a recession could be underway.
Approximately 7.2 million people are currently unemployed, up from 5.9 million last year. The labor report also indicates that wages are stagnating, and workers are often using part-employment to supplement.
Healthcare jobs are generally considered “recession-proof" because of consistent need, and the industry added 55,000 jobs with big increases seen in home health (+22,000), and hospitals (+20,000), nursing and residential care (+9,000). But healthcare and government were virtually the only two sectors that added a notable number of jobs.
The CFO Checklist
While many CFOs had high hopes for profitability in 2024, the road ahead may be bumpier than expected. CFOs can strategize to adapt to a shifting economy, but only when they balance financial safety nets with precise growth plans that will benefit and add to their organization.
If the Federal Reserve decides not to cut rates in pursuit of 2% inflation, many Americans will see financing challenges for things like cars and homes. This coupled with stagnant wages will put extra strain on employees that CFOs need to be aware of.
CFOs will need to carefully strategize growth opportunities, because without this they risk losing relevancy as a business. They should also focus on creating solid safety nets for their organizations by creating a stout reserve fund.
Lastly, CFOs should also look at auditing their revenue cycle to increase profitability, as well as diversifying revenue streams as much as possible.