West Orange, N.J.-based RWJBarnabas Health saw a substantial financial turnaround in the first six months of 2024, with an operating income of $106 million versus a loss of $4.7 million last year, according to its most recent financial report.
Frank Pipas, executive vice president and CFO for RWJBarnabas Health, attributed the health system's financial turnaround to strategies that have improved growth, services and quality despite increased costs across the healthcare industry.
Becker's connected with Mr. Pipas to discuss how the health system has worked to turn its finances around and to share the system's investment plans to strengthen its market position.
Editor's note: Responses have been lightly edited for length and clarity.
Question: What strategies has RWJBarnabas implemented to improve financial health?
Frank Pipas: The significant turnaround we are experiencing this year is attributable to strategies that have been put in place over the last several years. RWJBarnabas Health continues to drive increased accountability as it relates to quality, service, growth and finances. All of which are critical to maintaining the health system’s position as the largest provider of healthcare in the state of New Jersey.
The focus on service line development and growth is driving our investment decisions, which has translated into increased volumes across the system. There is still much work to be done as the costs have grown at an accelerated pace relative to our revenues since the onset of the pandemic, but with leadership align[ed] as to where we need to go and the dedication and hard work of the tremendous team we have here, I am confident we will get there.
Q: From strategic cost reductions to revenue growth and payer battles, health systems are facing many challenges. What is the biggest challenge you are tackling in your role as CFO? What is your game plan?
FP: The biggest challenge facing many healthcare providers today is managing the need for continued and future investment as the industry comes out of a period of depressed margins as a result of the pandemic and the corresponding workforce shortages. Since the pandemic in 2020, many providers have seen escalation in costs that is outpacing revenue growth. This phenomenon has put pressure on providers operating margins over the last several years and required health systems to lean into their balance sheets to maintain the appropriate levels of both capital and operational investment.
As an organization, we made the conscious decision to continue to invest throughout the pandemic in those long-range strategies we believe are core to our mission. We have reinforced the need for fiscal discipline and have aligned our strategic priorities in an effort to rebuild the operating margins, which, in turn, will foster our ability to continue to make necessary strategic investments.
Q: What advice do you have for hospital and health system financial leaders looking to get their organization's margins up?
FP: The most effective way to drive any operational improvement is alignment. It is imperative to ensure the leadership team is aligned on the organizational objectives and the workforce understands and supports where the organization is going. Communication cannot be overemphasized as it is critical to have “buy in” on what an organization is trying to accomplish and the plan of execution.
Our leadership team, under our President and CEO Mark Manigan’s direction, has a clear understanding of where we are and where we need to go. More importantly, the leaders and team members can see the path to get there. I have been impressed with the caliber and dedication of the team I get to work with day in and day out, and know we have the ability to deliver on the commitments we are making.
Q: Looking to 2025, does the health system have any exciting plans/partnerships down the line?
FP: The health system is always looking for opportunities to strengthen its position in the market and we take an opportunistic view when it comes to partnerships. There are many exciting plans on the horizon as we continue to build out our service lines, and further integrate and mature our academic affiliation with Rutgers. The objective is to make investments that will prove to be accretive to both our mission and our margin as we look forward.