Finance executives shared their worries and strategies at the HealthLeaders UpNext CFO Exchange.

For upcoming CFOs the road ahead is paved with numerous challenges, from labor scarcity to optimizing care access to organizational collaboration. For those preparing to step into this critical role, networking is the key to gaining perspective and planning outside-of-the-box strategies.

The HealthLeaders UpNext CFO Exchange dove into several topics to provide invaluable insights into these challenges for upcoming finance leaders.

Optimizing Care Access

Mayo Clinic CFO Jim Wilson, recalled a time when he couldn’t get an appointment for specialty care at his own health system and how frustrating the process was. The experience gave him some insight into what patients deal with when trying to schedule their care.

One of the primary concerns among healthcare CFOs is ensuring patients can access quality care without burdening the financial health of their organizations. Rising operational costs, coupled with unpredictable reimbursement rates, have led many healthcare providers to rethink their service delivery models. CFOs will need to explore innovative strategies for balancing patient access with fiscal responsibility, such as the use of telemedicine and other tech to optimize scheduling, expanding outpatient care options, and increasing collaboration with insurance companies to enhance reimbursement rates.

Clinical Buy-In

Another topic that dominated discussions at the exchange was ensuring that clinical teams understand the financial and operational challenges that CFOs must manage.

Historically, the clinical and financial sides of healthcare organizations often work in silos, which is how several financial leaders described the current state of their organization. Experts highlighted the importance of fostering communication and collaboration between these teams to improve efficiency and long-term reduce costs.

Wilson explained the process of communicating to his clinical team that he wants to make sure the value of what they do is recognized, and how they understand that better when they have a financial understanding of the challenge.

Tonya Johnson, Director of Financial Operations at Emory Healthcare, said she wants to help her clinical team understand how their work impacts the bottom line. Future CFOs must consider the training and education that goes into developing this type of mindset for their clinical teams.

There has to be “someone from both sides” she explained, who can translate that value back and forth between clinical and financial teams.

Wilson said CFOs will need to explore strategies for educating clinical staff about the financial impact of their decisions. For instance, managing the utilization of expensive diagnostic tests or medications can have a significant effect on an organization’s bottom line, or how many patients are put into observation.

When clinicians understand the cost implications of their choices, they are better equipped to make decisions that align with financial sustainability without compromising patient care. Additionally, CFOs will need to discuss the importance of involving clinical leaders in budget planning and resource allocation, ensuring that financial strategies align with the overall goals of clinical excellence.

 

The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at our LinkedIn page. 

To inquire about attending a HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com. 

Preventative care, robust technology, and dedicated clinicians are key ingredients in the recipe for successful value-based care.

Advocate Health generated $135.7 million in savings in 2023 from two top federal programs. The health system, the third largest non-profit in the country, realized these savings through its affiliated accountable care organizations (ACOs).

By participating in the Medicare Shared Savings Program (MSSP), which generated $128.6 million in savings, and ACO REACH, a health equity program that generated $7.1 million. Advocate Health reached almost $898.1 million in savings through CMS programs since 2012.

Key tactics to achieving these savings include robust care management, clinical programs that help support patients who are managing chronic conditions, automated technology that keeps patients engaged after a hospital stay to help reduce readmissions and ER visits, and additional care transition services.

Finding success in value-based care is not always easy, but high patient engagement is a must, says Advocate Health's Chief Population Health Officer, Don Calcagno. Automated follow-up is essential, giving patients a nudge to take control and fully understand their health journey.

Advocate Health uses tailored, automated technology to follow-up with patients after their visits.

"A patient's role is critical to success in value-based care," Calcagno says, adding that health literacy is, unsurprisingly, a challenge. Care teams must take charge to help patients understand the complexities so they are in the best position to navigate their health journey.

A dedicated team is a blessing, he says.

Building a dedicated team means having clinicians involved in every step of the care process. Calcagno says this doesn't just mean talking about numbers, but identifying how many care opportunities were achieved,  and where the gaps still lie.

"Alternative reimbursement models like CMS' MSSP and CMMI's REACH are complex and involve a lot of numbers,"  he says. "We never lose sight of the fact that these numbers represent real people with real health care needs."

While Advocate Health also focuses on preventative care, the most critical factor to success in value-based care is network culture.

"The network of providers needs to be aligned to the objectives of the value-based care model," Calcagno says.

Once there's that alignment, he says, people, processes and technology can come together to make the role of the clinician easier, unburdened by administrative minutia.

"From a clinical perspective, we need to focus on preventative care so [that] we catch disease early, chronic disease management so [that] we get the patients chronic disease under control, and episodic care so [that] when acute care is necessary it is efficient and effective," he says.

Technology is also critical for this type of care model to succeed, whether it's EMRs, automation and AI, or data analytics.

"The challenge is to understand what is vapor-ware vs. real technology that can immediately make an impact," he says.

Calcagno says the best approach blends human and artificial intelligence.

"Table stakes for value-based care is having a robust data intelligence platform that allows you to integrate data from disparate systems to create a longitudinal patient record that can drive reporting, actionable intelligence and advanced analytics," he says.

While rewarding providers through financial incentives plays a role, it should not be the driver, he says. That's how health systems will improve quality.

Even though Advocate has been on the VBC train since the early 2000's, it hasn't always been easy or straightforward. The journey has come with mistakes, lessons and stumbles that have allowed the system to grow.

Expect that the process will be iterative, Calcagno says.

"A consistent commitment to transforming health care, not pivoting when times get tough, is key to getting buy-in across your network," he says.

For other health systems looking to emulate what Advocate has achieved, Calcagno says  "value-based care can't be a side-hustle."

Health systems can run some simple tests such as budgeting the savings from alternative models, investing in infrastructure, and participating in CMMI programs to get a handle on where a VBC model could go.

The bottom line is commitment, he says.

"Your organization needs to be comfortable failing from time-to-time," he says. "Not everything you do is going to work, but that is part of the exciting journey of improving the healthcare ecosystem."

Traditional finance strategies and isolated decision-making won't cut it. 

The role of the healthcare CFO is evolving.

No longer just the financial gatekeepers, today's CFOs are thrust into an unforgiving landscape where the stakes couldn't be higher. With the entire fiscal health of the organization resting on their shoulders, they must make critical decisions in the face of economic turmoil, shrinking margins, and escalating labor costs. And in the rare cases when hospitals do fail, the CFO will be in the conversation about why.

Is this responsibility too big for one person? Many healthcare CFOs are burning out and leaving, crushed by the weight of expectations. On top of this, CEOs are now asking themselves if it's too risky for the entire financial wellbeing of a healthcare organization to rest on one person.

Teamwork

A key factor in the success of the modern-day CFO is a strong, dedicated team. CFOs will need close-knit collaborations with not only executive staff, but also clinical staff. With so much of healthcare happening outside the finance office and in direct care, CFOs must have an understanding of the clinical challenges and technology needs to truly drive financial success for the health system. Clinician input is essential to make the most informed decisions.

For executive staff, CFOs need to know where their colleagues from other departments can help. This includes collaborating with CTOs and CIOs to determine the best tech investments, collaborating with CMOs and CNOs for insight on clinical challenges, working with RCM teams to know where inefficiencies lie, and partnering with the CEO to build a comprehensive roadmap for the organization.

"I have to be able to push back; I have to be able to develop that trust before I let go of that authority and power," says the CEO of Bristol Hospital, Kurt Barwis. "And more importantly, I have to instill a really strong understanding that, 'No, you're not just going to make those kinds of decisions in isolation.'"

Soft Skills

One of the biggest foundational pillars of smooth collaboration is strong communication. When CFOs can effectively communicate the ins and outs of their financial plan for the organization, that's when other departments and colleagues can provide operational and clinical insight.

CFOs must also be able to establish strong trust with their colleagues, and that flows both ways. Staff shouldn't feel like executives are hovering over their shoulders, and executives shouldn't feel the need to do so.

When CFOs demonstrate clear communication and trust, their leadership role will shine through and garner the faith and reciprocated trust of their staff.

Don't Fear the Future

The skills a CFO needed 10 or 20 years ago are not the same today. With an increasingly tense economic landscape that includes inflation, labor market woes, regulatory pressures and growing payer disputes, a modern healthcare CFO must be well-versed in leadership, (including all the soft skills that accompany it,) operational oversight, and strategic operational vision.

For more insight into what's needed to succeed as a modern CFO, check out this cover story.

Value-based care goes much further than managing cash flow differently.

As healthcare increasingly shifts toward value-based care (VBC), CFOs are facing both challenges and opportunities.

Value-based care emphasizes improved patient outcomes while managing costs, something easier said than done. The transition requires CFOs to rethink their financial strategies to not only ensure the health system’s sustainability, but also to strengthen its role as a vital community partner.

HealthLeaders spoke with HFMA Senior Vice President for Content and Professional Practice Guidance Rick Gundling to get some insight into what goes into value-based care financials and where CFOs need to focus.

Being a Community Partner

The success of value-based care is based in part on being a successful community partner. Through VBC, CFOs can help health systems invest in community-based interventions that address health disparities and improve the well-being of underserved populations. This might include partnerships with local organizations that provide resources for social services, transportation, mental health support, and preventive care initiatives.

These efforts not only benefit the community but can also result in long-term financial benefits by reducing the overall demand for acute care services and improving population health metrics.

Moreover, by being good stewards of public health, health systems foster trust within the community. This trust can translate into stronger relationships with patients and better patient retention.

Involved community partners provide not only timely primary care, but preventative care as well. CFOs can support this strategy through funding for health and wellness initiatives, such as health tracking apps and programs that encourage patients to take more control over their own health. The argument to support funding for these initiatives includes reduced urgent care, emergency and long-term chronic care costs.

Payers, Claims and Population Health

To succeed in VBC, health systems must develop strong partnerships with insurance companies and other payers. CFOs should work with payers to create contracts that incentivize quality care that aligns both parties’ goals. Examples include data sharing, setting transparent performance targets, and participating in collaborative initiatives to improve population health management.

However, it’s important to note that not every patient is going to fall in line with a health system’s VBC cost projections.

“The reality is when you're managing a population, there are going to be some patients that are outliers that are just going to be high cost,” says Gundling.

This is where reinsurance can come into the picture, Gundling says. This can give providers some peace of mind in addressing consistently high claims. 

Reinsurance can help CFOs manage the financial burden of catastrophic or high-cost patient cases, such as ones that involve complex surgeries, long-term care, or rare diseases. By purchasing reinsurance, a hospital can transfer some of the financial risk of these high-cost cases to a reinsurer. Reinsurance allows CFOs to stabilize finances and avoid budgetary strain from unpredictable, large claims.

“You have that reinsurance on that 3% of the population, but then focus your efforts to manage the care on those 97% of the population,” says Gundling.

Rick Gundling, HFMA Senior Vice President for Content and Professional Practice Guidance

Aligning Financial Incentives

Under VBC, providers are typically rewarded for achieving specific quality and outcome metrics, such as reducing hospital readmissions or improving chronic disease management.

CFOs should work with payers to ensure that financial incentives are appropriately structured. Consider detailed risk-sharing agreements, where health systems are paid based on their ability to reduce costs while maintaining high-quality care.

CFOs should also focus on aligning physician compensation with quality performance to drive desired behaviors across the organization. And they can collaborate with CMOs to jumpstart physician initiatives to align with new care models.

If value-based care is designed correctly, with a focus on aligning financial incentives and population health, everybody can win, says Gundling. 

 

Stay tuned for Part 2 to learn how CFOs can get down to the nitty-gritty of value-based care and what other tools and strategies can set a system up for success.