This initiative shows the possibilities when healthcare invests in data.
Five medical centers in the University of California Health system have collected more than a decade’s worth of cardiac surgical data. Now, that data is being used to optimize hospital efficiency, and reduce costs by millions.
The surgical data, comprising more than 200 elements from each patient at the health system, has undergone advanced analytics to give financial executives insight into local and systemwide performance, according to the university. So far, executives have used the data to streamline care and improve financial margins, resulting in 132 bed days saved, and $15 million in savings so far.
How it works
The collective, known as the University of California Cardiac Surgery Consortium (UCCSC), consists of UC Davis Medical Center, UC San Francisco Medical Center, UCLA Medical Center, UC Irvine Medical Center and UC San Diego Medical Center.
The consortium is working to build standardized and sustainable quality improvements. To ensure this quality, these metrics are vetted, audited, and fall in line with a national database known as Society of Thoracic Surgeons (STS).
“We can benchmark ourselves against national data, and that allows us to be sure that we are among the best quality, elite institutions performing cardiac surgery, not only in the state and in our local markets, but nationally,” said Richard J. Shemin, MD, chief of the division of cardiac surgery and professor at the David Geffen School of Medicine at UCLA.
The UCCSC aims to increase the volume of procedures and reduce their variability, where it has seen some success. When analyzing the generated cost savings, the UCCSC found that early extubation resulted in a margin improvement of roughly $6.7 million, and decreased ventilation saved about $3.6 million. The 132 bed days saved equaled cost savings of about $486,000.
Beyond this, the UCCSC also aims to optimize costs and explore contracting opportunities, such as joint purchasing, according to the university.
“It's amazing that through collaboration and data analysis we have been able to improve patients’ lives as well as optimize the health systems’ economic efficiency,” said Nancy Satou, RN, director of informatics & database management in the division of cardiac surgery at UCLA Health.
For The CFO
This initiative shows the power of the healthcare industry when it invests in organized data and the effect it can have on patient care. CFOs should pay attention to projects like this, as well as others like the Truveta Genome Project, another initiative to improve care and lower costs through robust datasets.
While the funds for these projects don’t always appear from organizations like the UCCSC, this is where health systems can glance into what’s possible from a collective effort aimed at fixing a fundamental challenge in healthcare, — the lack of organized, analyzed, specific data.
CFOs should recognize the long-term importance of investing in initiatives like this. When the healthcare industry can efficiently make use of accurate data in every step of every patient's healthcare journey, that’s when the industry will be able to embrace real change.
Zehner started at the health system in January, bringing in more than 30 years of healthcare finance and operations experience. Previously a Regional CFO with Robert Wood Johnson Barnabas Health (RWJBH), he has also held the title of Chief Operating Officer for Newark Beth Israel (NBIMC). On top of this, Zehner has also held CFO positions at Washington Hospital Center, and HCA Healthcare.
Zehner says one factor that influenced his decision to join Holy Name was its size.
Coming from positions at large organizations, Zehner shared that often, in independent health systems, decisions can be made more rapidly, more nimbly.
“One of the calling cards of the health system is its ability to react to situations and move quickly to solve problems or to create opportunities, and that's appealing to me, “ he says.
Curious and Collaborative
Zehner was a COO for a number of years, adding to his knowledge of what can and cannot work for a health system. Now, he’s taking his leadership skills to Holy Name and applying them to finance.
“My style is curious and collaborative, and so [I like] to understand what problems are out there and what we're trying to solve,” he says. “I've learned a lot about how these types of organizations and hospitals work and how people attack issues, and where some of the blind spots exist in organizations. And so I think for me, to bring that operational experience in, it gives me credibility in the room.”
Zehner says it’s difficult for finance leaders to know which new solutions or new hires are the right ones to prioritize. Sometimes, they can feel like they wasted time, money and resources on investments that didn’t bring the kind of value to the community and organization as expected. This is why it’s imperative for CFOs to not make decisions in isolation.
Zehner says it’s important to allow the people that are going to be affected by decisions to participate in the dialogue, which helps to avoid missteps.
In terms of leadership style, Zehner knows collaboration is key.
“That's what I've learned from working with robust medical staff: Leadership is bringing folks into the conversation,” he says.
“We have to take that nimbleness that we've got and make sure that it's an asset for us and not a liability. Make sure that we move quickly when we're ready to strike, but [also], we want to make sure that we're making the right decision, and we're thinking about all the affected parties. So that's what collaboration kind of looks like to me.”
Zehner created the financial planning division at his previous health system, which, in a nutshell, took financial analysts and tasked them with deep dives on major decisions. From acquisitions to partnerships, this team examined it all in detail, preparing every decision for retrospective analysis.
Zehner says this team also examined the pathway of new initiatives to the community and the impact made there.
“It does slow things down a little bit to do that, but it makes the organization a little bit smarter about what it's doing,” he says.
Looking Ahead
What’s up next in Zehner’s playbook for Holy Name? Staying competitive, he says. Being in a smaller health system, Zehner knows the organization won’t have all the same financial advantages as its competitors, so it will be important to look at operations through an innovative lens.
“I want to look at whatever we can to try to make sure we can stay hyper competitive,” he says.
CFOs are looking at all the opportunities in 2025.
As we dive into 2025, CFOs are gearing up to focus on their top finance priorities. The general consensus? Confidence is high, and the economic outlook is positive, according to surveyed CFOs.
According to a recent Deloitte survey, 72% of CFOs in all industries have a positive outlook for the 2025 economy. In healthcare, that may translate to growth, enhanced operational efficiencies and improved patient care.
Finance execs will still need to walk the tightrope of making savvy investment decisions to push their organization forward, while keeping a decent safety-net on top of a smooth patient experience.
Check out the three top priorities for CFOs as they strategize in 2025.
This report zooms in on the financial distress in healthcare.
A new report is pointing out where distress lies in the healthcare industry, and bankruptcies are still a major concern.
Gibbins Advisors, a leading healthcare restructuring advisory firm, has published its annual 2024 report of healthcare sector Chapter 11 bankruptcy filings, examining only cases with liabilities exceeding $10 million.
Although filings dropped by 28% from the peak in 2023, this year produced the second-highest level of healthcare bankruptcy filings within the past six years (2019-2024).
The numbers breakdown:
-The average number of healthcare bankruptcies from 2019-2022 was 42 per year
-There were 57 healthcare bankruptcy filings studied in 2024.
-This is down from 79 filings in 2023
The markets breakdown:
-Middle-market cases (liabilities between $10 million and $100 million) declined by one-third from 51 in 2023 to 34 in 2024.
-Large bankruptcies (liabilities exceeding $500 million) remained high post-COVID-19: 12 filings in 2023, and nine in 2024. (The average here was three per year from 2019-2022).
-Filings in the $100 million to $500 million range held steady: 14 cases in 2024, 16 cases in 2023.
The study had a few more key findings:
On track with previous trends, two sub-sectors were the source of almost half of healthcare bankruptcies: senior care and pharmaceutical. Both have caused much stress for providers over the past few years. Drug prices are skyrocketing, and Medicare Advantage denials keep pouring in.
Many CFOs have said they turn to the 304B drug pricing program when able, and this may be the best tactic given today’s hectic healthcare climate. As for Medicare Advantage, strategizing here is even tougher. CFOs should keep active in policy-making discussions and contacting their senators, on top of closely strategizing with and keeping tabs on payers and denials.
Clinics/Physician Practices bankruptcy filings reached their highest level in six years, growing to 10 cases in 2024 compared to a four-per-year average from 2019 to 2023, according to the study. This likely came from numerous factors, including labor costs, supply costs, payer tactics, and private equity mishaps. This steady growth of bankruptcies in this sub-sector calls for the need for policy action to counter costs in some areas and make resource opportunities available in others.
Ronald Winters, principal at Gibbins Advisors, highlighted the financial stress of smaller and rural providers, and called for collaboration:
"While the new presidential administration introduces some uncertainty to the healthcare system, the core factors driving healthcare distress remain unchanged," he said. "Standalone and rural providers will continue to face significant financial challenges, and collaborating with communities on effective restructuring solutions is vital to preserving essential healthcare services in those regions."
The results are clear on the game plan for rural providers: collaboration will be key to enduring financial woes. CFOs of these types of systems should ensure they are proactive in creating collaboration opportunities for their health systems.
Here's how CFOs are currently feeling about Medicare Advantage.
Medicare Advantage payers are getting a rate increase, and providers feel the unease.
MA plans are set to receive a 4.33% payment increase from 2025 to 2026. Some plans could see a more than $21 billion pay increase in 2026 under a plan proposed by the Biden administration last week. Since a new administration jumped into office on Monday, plans could still change, and analysts expect the ultimate pay increase to be even higher under the Trump administration. Major MA payers like UnitedHealthcare, Cigna and Humana would all benefit from the increase.
Providers are seeing this increase as unfair, wondering why insurers are getting an increase as physicians get left behind, and while medical costs continue to rise. Prior authorization, the continuation of increased denials, and other administrative burdens have plagued providers in Medicare Advantage for years. MA enrollment has also been steadily increasing, which generally puts providers on the short end of the stick with lower margins. The increase suggests government reimbursement could be catching up with the increase in utilization among the Medicare population, putting minor stress on payers' earnings.
Late last year, the Department of Health and Human Services Office of Inspector General released a report finding MA insurers pocketed $7.5 billion from risk-adjusted payments in 2023.
Politico released a list of spending reform options which includes Medicaid, site-neutral payments, and the Affordable Care Act. MA and pharmacy benefits managers are not on the list. Providers will need to pay close attention as the new administration swiftly lays out new policies and reversals.
Who’s Saying What
The American Medical Association (AMA) emphasized how physicians treating Medicare patients are seeing cuts for the fifth straight year. Outrage is setting in, although it may have never left.
"It's unbelievable they're giving insurance companies that had record profits an increase while at the same time cutting payment to physician practices that are struggling to survive," said AMA President Bruce Scott, M.D., in a statement. "This contrast highlights the urgent need for Congress to prioritize linking payment to physician practices to the cost of providing care."
Mary Beth Donahue, CEO of lobbying group Better Medicare Alliance, said the following in a statement last week:
"President Trump can immediately deliver on his promise to protect Medicare for seniors by examining these policies, including ensuring the rates keep up with increasing medical costs and that the final rate notice provides much needed stability for seniors."
The CFO To Do List
Many CFOs are, unsurprisingly, fed up with MA and the constant hurdles from payers.
Generally, MA has faced criticism from both sides, for denials and overpayments. This goes without saying, but CFOs must ensure they go over contracts carefully. Stay on top of payers' tactics as much as possible, especially as the country and economy shift under the Trump administration.
To go a step further, CFOs should ensure they are communicating with their senators about these policies and the effects they have, especially for major health system CFOs that serve large populations.
As more hurdles and policy changes come about, CFOs will have to conjure their fighting spirit to protect the fiscal health of their organizations and staff.
An investment here could have big implications for drug costs, value-based care, and population health.
Seventeen health systems are investing in a genomic database that could significantly drive down clinical costs.
Truveta, a Washington-based software company, unveiled the Truveta Genome Project on January 13. The large collaboration aimed at creating a diverse database of genotypic and phenotypic information could transform billions of data points with industry-leading normalization and aid in everything from drug discovery to accelerating value-based care.
Health systems like Advocate Health, CommonSpirit Health, Henry Ford Health, Northwell Health, Providence and Trinity Health have all invested in the project.
The project is taking shape through two health companies:
-Illumina, which does DNA sequencing, which is investing $20 million.
-Regeneron, a biotech company focused on medicine creation, which is investing $119.5 million.
Regeneron’s investments are enabling the discovery and development of new therapies, as well as new solutions for healthcare delivery and population health management.
Together, Illumina and Regeneron, and the 17 health systems have invested $320 million in Truveta preferred equity at a valuation exceeding $1 billion, according to Truveta.
Additionally, Microsoft Azure will be the exclusive cloud provider for the Truveta Genome Project.
Why Does It Matter?
The process: Truveta, alongside its health system partners, will gather leftover biospecimens from routine lab tests that are linked to de-identified medical records for genetic research that will remain anonymous. Then, the first 10 million volunteers will have their exomes sequenced by the Regeneron Genetics Center.
The Truveta Language Model, an AI system designed to process and standardize large volumes of genetic and clinical data, built on Microsoft's Azure, is a key ingredient. By applying AI to this dataset, researchers hope to better understand genetic contributions to health and disease.
This database differs from ones that preceded it. There’s been a lack of large and representative datasets in healthcare that are fit to apply current AI tech to uncover connections between genetics and medical outcomes.
With more information comes more options and more informed medical outcomes that accelerate efficiency and operational excellence.
This project could be huge for the healthcare industry. With more precise datasets focused on genetics, healthcare could cut back on the massive drug discovery price tag ($25 billion last year, by the way), and accelerate tailored medical research, inching the industry towards value-based care models.
Why CFOs Should Pay Attention
Not only are projects like this vital for advancing research for more informed and generally better medical decisions, they also work towards driving down costs and accelerating care models that will benefit the entire industry.
Many CFOs have expressed high confidence in the economy this year, and are feeling more comfortable with taking risks and investing. When able, CFOs should look to invest in projects like this that further the advancement of medicine to help better the overall healthcare industry outlook. Healthcare is a group effort, and in the long term projects like these are helping the entire industry, which can collectively help drive down costs.
CFOs are displaying a notably positive outlook for the economy and the future of their health systems. That optimism stems from several key factors, including the anticipated impact of the incoming administration, the accelerated adoption of artificial intelligence (AI), and an economy primed for new investment opportunities.
According to a recent Deloitte survey, 72% of CFOs in all industries have a positive outlook for the 2025 economy. In healthcare, that may translate to growth, enhanced operational efficiencies and improved patient care.
Now, healthcare CFOs know that they run a health system first and a business second, so jumping onto the bandwagon of a bullish market requires thought and caution so that financial decisions do not harm patients. To do this, CFOs must be diligent in how they stay informed and navigate the year ahead.
The Real Benefits of AI
CFOs must reimagine business practices as well as operations through AI. With a constant expanding and shifting AI market, CFOs must invest in AI that will help their organization thrive in its specified goals.
Healthcare staff should only be doing tasks that only they can do. By tasking staff with these types of duties, providers can win back time and operational efficiency, lending a hand to a refined financial outlook.
With the rise of agentic AI, CFOs can explore the deeper benefits that AI can bring, like improving access to information, performing complex tasks, and delivering actionable insights, all with minimal human intervention.
A Good Risky Time
Sixty-seven percent of CFOs surveyed by Deloitte say now is a good time to be taking greater risks. This percentage, stemming from CFOs across different industries, shows an even more complete picture for healthcare CFOs to examine.
After so much unpredictability around the election, many CFOs and CEOs are relieved it’s settled. They now have a much better idea of what to expect and prepare for with the incoming administration.
With this mindset in play, will 2025 be the year of M&A deals?
Dealmaking can allow provider organizations to reach their full potential through an influx of capital and resources, and CFOs and CEOs are focused on a few key initiatives here, such as expanding access and improving technology.
This mindset may be partially due to lower interest rates and the perception that the new administration might be more lenient on antitrust enforcement.
Keeping A Cash Balance
Despite all the talk around investment, risk, and M&A, many CFOs are looking to improve their cash balance. Although the positive economic outlook under the new administration is taking shape, the fact is, we’re not there yet.
Keeping a well-funded cash balance and reserve fund will still be crucial for CFOs
And they will still need to walk the tightrope of making savvy investment decisions to drive their organization forward, while maintaining a strong safety-net, coupled with a recipe for a smooth patient experience.
There is a rise of imposter syndrome across upcoming finance leaders as they approach new roles, and they need the tools to reinforce the skills to combat it. Imposter syndrome and feelings of self-doubt can hinder executive leadership and lead to an unconfident staff. Upcoming finance leaders can explore a few strategies to deal with imposter syndrome including mentorship and focusing on a growth mindset.
Check out this infographic for the top tips on combating imposter syndrome as a finance leader.
Hospital CFOs must stay vigilant about price transparency rules to avoid financial penalties.
Since Congress enacted the Hospital Price Transparency rule in 2021, the Centers for Medicare & Medicaid Services (CMS) has issued fines to 17 hospitals, some nearing $1 million.
Most recently, Jackson Memorial Hospital was fined $871,122 in July 2024, Baytown (Texas) Medical Center was fined $50,711 in December 2022, and West Chase Houston Hospital was fined $44,251 in December 2024.
These hefty fines to providers for failing to comply with federal price transparency rules underscore the increasing scrutiny on provider pricing practices. The penalties are part of a broader push by the federal government to ensure that healthcare prices are accessible and understandable for patients.
But these fines are not just a matter of regulatory compliance; they represent a growing concern for hospital CFOs and finance teams across the country. If they continue, these penalties can have significant financial and reputational consequences for health systems.
The Price Transparency Mandates
The price transparency laws require hospitals to publicly display their standard charges for all services. This includes prices for both insured and self-pay patients, and for the first time, hospitals must publish machine-readable files containing a comprehensive list of prices for items and services. Additionally, hospitals are expected to provide clear, consumer-friendly information that allows patients to estimate the cost of care before receiving services. The goal is to empower consumers to make more informed decisions and stimulate competition within the healthcare market.
But compliance has been sluggish, forcing CMS to ramp up enforcement over the past few years, issuing fines for hospitals that fail to comply or provide incomplete, inaccessible, or unintelligible pricing information. The most recent penalties reflect CMS’ commitment to holding healthcare systems accountable for transparency and pushing the industry toward greater accountability.
Some experts argued that, given the complex nature of healthcare billing, it’s too difficult for hospitals to list accurate pricing online. There was some push-back in the industry at the onset, but health systems are becoming more adept at meeting the rules.
While the task of updating price information does not fall to the CFO specifically, a massive fine could wreak havoc on a hospital’s finances. CFOs should ensure their organization can avoid this whenever possible.
The Financial Impact
For CFOs, the fines represent more than just a regulatory headache. The financial repercussions are real, with penalties escalating based on the size of the health system and the nature of the violations. Hospitals are required to pay fines for every day they remain out of compliance, making it crucial for finance teams to stay on top of these regulations. Even more, non-compliance with price transparency laws can damage one’s reputation. As more patients and insurers demand pricing clarity, failing to meet transparency rules could lead to a loss of business, lower patient satisfaction, and potential legal challenges.
The financial penalties could also indirectly impact other areas of hospital operations. Resources that might otherwise be allocated to improving patient care or operational efficiency could now be diverted toward compliance measures or paying fines. Additionally, the reputational damage could affect negotiations with insurers and suppliers, potentially reducing reimbursement rates or increasing operational costs.
The CFO To-Do List: Navigating Compliance
To avoid the fines and reputational damage associated with price transparency violations, CFOs should take several proactive steps to ensure compliance with CMS rules:
Review and Update Pricing Information Regularly: CFOs must ensure that their health system’s pricing data is current, accurate, and easily accessible. Regular audits of pricing files and consumer-facing tools should be conducted to ensure they meet CMS requirements.
Invest in Technology Solutions: Many health systems are investing in software and platforms that help manage and display price data efficiently. These tools can help ensure that pricing information is updated in real-time and is presented in a user-friendly format. CMS also has provided hospitals with resources to help them comply, such as an online validator tool and a template for creating machine-readable files.
Develop a Dedicated Compliance Team: Maintaining transparency is not a one-time effort but an ongoing process. CFOs should consider establishing a team dedicated to compliance, ensuring that all relevant departments (finance, IT, marketing, and legal) are aligned with the transparency goals.
Train Staff on Legal and Operational Requirements: It’s essential that the finance team, as well as other departments, understand the nuances of the price transparency regulations. A little training here will help prevent inadvertent violations that could lead to costly fines.
Communicate with Stakeholders: Open communication with patients, insurers, and other stakeholders about price transparency efforts can foster goodwill and mitigate any negative publicity.
Looking to upgrade your IT system? See how this CFO braved the pricey transition.
Switching IT systems is a hefty task, and not one that CFOs are usually ready to take on. But for health systems struggling with operations, especially in revenue cycle, a new system might be exactly the transformation needed to thrive.
UMass Memorial Health CFO Sergio Melgar spoke with HealthLeaders about how his organization made the switch. UMass has achieved Epic's Gold Star Level 10 recognition for its use of the platform. (See how transitioning to Epic helped take UMass Memorial Health from working in disconnected silos with struggling operations, to fluent organizational synergy, and improved margins.)
Implementing an IT system switch is a huge financial (and stressful) undertaking, and CFOs looking to make this change must understand the steps for sufficient preparation. Here’s a breakdown of Melgar’s advice when he was in the trenches of the transformation, including crafting the right mindset, and the key tactics that cannot be overlooked.
Waking Up To the Change
The first step to implementing change is realizing when one needs to happen. If your health system is struggling with poor operational metrics and working in silos, (even effectively), it’s likely time for a change.
To help lead that change with other C-suite execs, CFOs will need to have a clear, long-term, strategic mindset. Melgar says to think about the big picture items. If training will cost a certain amount, that’s that, he says. CFOs can’t think the process will lead to a complete transformation in a year or two. Instead, Melgar urges CFOs to think about everything in the long term. CFOs also must have the resources, and can’t think ‘we’ll just be financially strained this year.’
“That means where's the liquidity coming from?” Melgar says. “So your balance sheet has to be prepared for it.”
Be Prepared for Staff Challenges
Taking an entire organization from one IT system to another is also challenging on a staff level. Melgar says to be prepared for staff challenges with training, but also general change.
“They're leaving their old job and they're going to a new one,” he says. “That is a little bit emotional for some folks because it's not what they know.”
Melgar says UMass changed a lot of its IT organizational structure, making a few employee changes, but also brought in more experienced staff that had done this transition before.
Be prepared for the cost here,
“You do need to put a lot of money into the training,” Melgar says
The “Continuous Improvement Philosophy”
Another key element to pulling off a successful long-term transition, Melgar says, is logging into the “continuous improvement philosophy.” This pairs strategic, long-term thinking with searching for improvement every step of the way. CFOs may find improvements in places they didn’t expect.
One example Melgar gave was how UMass’ corporate costs were a percentage of the total cost of the transition. While not all corporate structures are the same, Melgar says its corporate structure over the 11 years that he’s been at the organization, has transitioned from most of the services that were previously local.
“So we haven't decentralized,” he says. “We've actually centralized more so conceptually. We are effectively doing more centrally. While that has been happening, our cost of the overhead compared to the cost of the total has dropped.”
Be Patient
The long-term game is filled with speed bumps and barriers, and CFOs must be patient in waiting for financial results. Melgar says CFOs may find themselves breaking through unexpected barriers in this time:
“You'll need to sort of break through more, call it personal barriers, than necessarily the system barriers,” he says.
Melgar said the system itself no longer was the barrier, but barriers arose from the “the human element that is in there and will always be there,” more so than the system.
Melgar says to also be prepared to brave the “valley of despair” in the first year with Epic as it goes live — it will likely be a rough year. With less-than-exciting margins and uneasiness as the organization jumps into the new system with real patients and claims, CFOs will need to practice patience as they wait for the investment to pay off.
The CFO Guide
Melgar emphasized the role his management system played in the transition, saying, “I think our management system is certainly probably the driving force, but without Epic, I think we would not have made the progress that we've made.”
“So perhaps it's been a catalyst,” he says. “I would say that our management system certainly is the key because we were creating ideas and transforming long before Epic. But once Epic went in, it was really the catalyst that I think propelled us to do more and more.”
Three final tips from Melgar and his experience with the transition:
Transform
“You need to invest in transformation because you don't want to put Epic on the practices that you currently have. You want to transform what you do.”
Keep it simple
Getting too complicated, Melgar says “is a common mistake, because if you do, if you think you can do it better and you customize it, you customize it again. The upgrades become more challenging, just plain and simple”
Modernize
“You have to modernize.” Don't think you're going to put Epic on an old computer, Melgar says. “If you stay current, you're going to ride this to success.”
