CFO Bob Flannery explains his targeted approach to resource allocation.
Adopting data analytics may seem like a daunting task for health systems, but under the right leadership, it can drive better decision making.
An evolving factor within the CFO role is collaborating with other departments and understanding their needs. How can executives effectively communicate with other leaders to ensure resource allocation to high impact areas?
On this episode of HL Shorts, we hear from CFO and HealthLeaders Exchange member Bob Flannery, (UW Health) about the impact of data analytics on resource allocation.
Many providers have had it with the government plan, and dozens have already left it this year.
In the upcoming weeks the Senate Permanent Subcommittee on Investigations will release a report on Medicare Advantage following up on the concern with MA plans' prior authorization requirements, including the use of AI.
"Anybody following our hearings and public comments knows our findings will be very dramatic and powerful," Richard Blumenthal, a Democratic senator from Connecticut and chair of the subcommittee, said during a press conference on Oct. 2.
"What we have found is, essentially, there is no advantage for people in Medicare Advantage, all too often."
Last year, the committee sent letters to CVS Health, UnitedHealth and Humana to seek internal documents detailing how these payers managed claims, including their use of AI in the claims process. These payers, among others, have been accused of using AI to improperly deny care.
Recently MA plans have faced scrutiny from lawmakers over several issues, including prior authorization requirements, overpayments and misleading marketing.
As the tension around Medicare Advantage grows, CFOs are taking note not just of the current MA challenges, but also the ones that lie ahead.
According to Doug Watson, Allina Health, a CFO is at a huge disadvantage if they don’t understand how MA programs work at the insurer level.
Population Health & Medicare Advantage
HealthLeaders spoke with Rick Gundling, Senior VP for Content and Professional Practice at the Healthcare Finance Management Association (HFMA). Gundling says in today’s healthcare regulatory landscape, hospitals are going to have to figure out how to stay afloat with less.
“Medicare Advantage payments are not expanding, so you're trying to do this on a much tighter rope, and I think that causes a lot more pressure,” Gundling said.
Gundling also highlighted how these challenges will have greater effects on smaller rural health systems, and cost cutting strategies will need to be more aggressive.
“You're on a much tighter margin,” Gundling said. “You don't have the same financial resources.”
With a rapidly aging population, low birth rates, and Medicare Advantage reimbursement challenges, the healthcare environment has created a perfect storm for health systems and they will need to prepare for the intensive care of a senior population, including implementing different care strategies that focus on this population’s specific needs.
However, coupled with the reimbursement challenges, the industry has seen 27 providers ditch the plan this year so far. According to Gundling, the trend is leaving health systems with fewer options, turning hospitals into “de facto collection agencies.”
As CFOs search for long term solutions amid MA woes, Gundling says they will have to turn to Medicaid funding and look for efficiencies. Gundling says CFOs will need to ask themselves: “Should we narrow down the types of services that we're providing if we can't afford it?”
This will go beyond cost cutting but will involve strategic look at how health systems provide care and understanding the regulatory structure of insurance.
CFOs need a game plan for investing and adopting data analytics.
Adopting data analytics may seem like a daunting task for health systems, but it can drive better decision making, especially when it comes to reviewing large datasets and allocating resources.
CFOs and HealthLeaders Exchange members Pat Keel (CFO, St. Jude’s Children’s Research Hospital) and Bob Flannery (CFO, UW Health) shared what works for their health systems as they prioritize data and 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 must recognize the importance of adopting analytics to optimize outcomes for their organization.
Also be sure to check out the accompanying article here.
Adventist Health CFO John Beaman explains how he separates strategy from financial ratings.
A credit downgrade can significantly impact a hospital’s financial health and operational viability. For healthcare CFOs, navigating this turbulent terrain requires strategic foresight and proactive management.
So far this year, 19 health systems have received downgrades from Fitch Ratings or Moody's Investor Service in 2024. The challenges leading to these downgrades vary and range from increased debt and revenue loss, to declining volumes and labor expenses.
Adventist Health’s downgrade (from “A” to “BBB+”) was primarily driven by a big leverage increase that the system is taking on, partially to support the acquisition of two hospitals from Dallas-based Tenet Healthcare.
HealthLeaders spoke with Adventist Health CFO John Beaman about what it means for a hospital to receive a downgrade.
“I want to reinforce the importance of rating agencies. I do find my interactions with them valuable when we talk to them at least every year,” Beaman said. “[But] they have a good objective view of the entire industry.”
CFOs should strive to not villainize rating agencies but welcome their objective view of the organization.
“[A rating] may or may not be the complete story of the journey,” says Beaman. “so a downgrade could be on the path to a long term sustainable position that leads back to a higher grade over time. I don't see the downgrades, per se, as a testament of the long term, sometimes they definitely are, but not always.”
Sometimes, Beaman says, it’s okay to intentionally go for a new strategy or operation even though it may result in a downgrade. Long-term stability should be the key piece of the puzzle.
“I separate strategy from the ratings because there are times where a system may make an intentional decision,” he says, adding that while the decision may result in a downgrade, it may be stronger for it in the future.
Beaman sees these ratings an “objective look at the current position.” He also believes CFOs must find the balance of realizing that the rating indicates the journey the system is on, and being confident in where they are steering the system to be in the next three to five years.
Come Back with A Plan
While a credit downgrade may not be the end of the world, it still requires a focused strategy to get back on track. There are a number of items that can result in a downgrade, such as a diminished financial or enterprise profile, staffing challenges, rising operational costs, fewer admissions, and management turnover.
To regain stability and avoid future downgrades, CFOs need to have a clear picture of their financial performance. Ensure there are clear financial metrics in place, as well as monitoring for performance against best practice benchmarks.
CFOs should also look for performance gaps are in their organization so they have a clear understanding of where the core issues lie. Consider assessments from third parties to point out complicated challenges. These assessments can also show improvement opportunities for the organization, and from there CFOs can create a detailed plan to tackle each issue.
Lastly, don’t forget to leverage technology. Many CFOs, including some HealthLeaders Exchange members, have expressed how implementing automation within their revenue cycle has helped significantly. Don’t overestimate a challenge, the solution could be simpler than initially expected.
Partnerships may help hospitals and health system’s accommodate the demand for behavioral health services.
Behavioral health has gained significant attention, much of it due to a growing mental health crisis following the COVID-19 pandemic. As the need for a restructuring of mental and behavioral healthcare presses on, the challenges faced by hospitals cannot be ignored.
From rising demand for services to regulatory complexities and staffing shortages, the hurdles are considerable. However, partnering with specialized behavioral health providers could offer hospitals a strategic advantage—both clinically and financially.
The Hunt for Care
Many health systems face the decision of turning away patients seeking behavioral or mental health care or admitting them without the means to care for them.
This is an issue Doug Watson, CFO of Allina Health, has run into before.
“It still is a challenge where we have patients that are in the hospital that don't have a primary medical issue,” he says. “They either have behavioral health, mental health or neurodivergent issues and there's nowhere else for them to go, and they end up on our doorstep in the hospital.”
With such a high demand for mental and behavioral healthcare, patients are often left in care-limbo while health systems try to find a care destination for them.
“And then,” Watson said. “There's can be, in some cases, hundreds of days before you can find an appropriate place for them to go.”
This challenge begs the following question: should more health systems partner with behavioral health providers? CFOs can make a big difference in what the care model looks like for behavioral health patients that come through their doors in search of appropriate care.
These specific types of partnerships can not only greatly help patients and care outcomes, but it can also be a win-win for the health systems in several ways, according to a 2022 report from VMG Health.
Hospitals and health systems can increase patient satisfaction, reduce costs, reduce admissions, streamline performance and even enhance staff retention by creating partnerships to care for these patients. By partnering with a team of experts for behavioral/mental health care
hospitals can provide more training programs and support for their staff members.
Facilitating a partnership like this could even lead to reduced burnout amongst staff and greater job satisfaction because they are able to focus on the care they are trained to give.
Building Sustainable Partnerships
To forge effective partnerships, hospitals should focus on identifying reputable behavioral health providers that align with their mission and values. Consider the provider’s experience, staffing capabilities, and ability to integrate care seamlessly into existing hospital operations. Financial arrangements, such as shared savings models or bundled payments, can also be explored to ensure mutual benefits.
The inability to meet behavioral health needs can lead to increased emergency room visits, higher readmission rates, and a general strain on resources. By embracing this integrated approach, hospitals can not only enhance their service offerings but also secure their position as leaders in a holistic, patient-centered healthcare in their community.
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.
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.
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