Improving a health system's margins goes beyond cost-cutting in today's challenging healthcare landscape; it requires mastering the fundamentals and creating alignment throughout the organization.
Success begins with a disciplined approach to financial management, from daily productivity reviews to ensuring every leader understands their financial targets and how they tie into broader organizational goals. Effective communication and alignment between leadership and staff are equally critical, ensuring that everyone is moving toward the same objectives.
Here are five health system CFOs' tips to strengthen the bottom line:
Editor's note: Responses were lightly edited for length and clarity.
Cheryl Matejka, CFO, Mercy (St. Louis): It boils down to basic blocking and tackling in terms of financial management. I would encourage CFOs in that situation to go back and look at the basic financial systems and processes. Are you reviewing productivity daily? Do your leaders have the tools they need to manage their departments and the business? Does your executive team take time to review financial outcomes, not only at the end of the month but in the middle of the month? Does every single leader understand their financial target and how they relate to organizational goals? Deliberate, continuous improvement takes a lot of time and focus. It's not very sexy, but it's critical to financial success.
RWJBarnabas Health (West Orange, N.J.): 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 Manigans 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.
Vincent Tammaro, CFO and vice president for health sciences, The Ohio State University Wexner Medical Center (Columbus): Margins are tight, there's pressure from payers, there's widespread workforce shortages and not enough talent coming into the industry. This is where technology comes in. There's huge opportunities to scale, support patient care, automate clinical workflows and address gaps and transitions in patient care.
As an example, there's no reason why we shouldn't be using AI to do prior auths. Today we have a team of about 80 to 100 people across the system doing this. We still need those 80 to 100 people, but we should focus them on other, higher value parts of the business as opposed to following up on a prior auth that adds no value. That just allows us to keep the revenue we already had; it's not incremental revenue.
Gail Kosyla, CFO, Yale New Haven (Conn.) Health: Organizations should focus on growth initiatives as identified by their strategic plans. Growth initiatives should have targeted ROI — whether financial or mission-based, and where possible, should align pricing strategies in payer relationships. Consider optimizing systems of care, including partnering where it makes sense. Systems need to ensure that patients' needs are at the forefront. This may mean they need to stop doing services that are no longer aligned. Systems should also strive to reduce costs through standardization to achieve greater efficiencies and outcomes.
Scott Hawig, chief financial and administrative officer, Froedtert ThedaCare Health (Milwaukee): Continue to nurture a strong relationship between operational, clinical and financial leadership, balancing focused execution on daily operations with smart growth. We keep our focus on the most impactful opportunities to improve the health and well-being of everyone we're privileged to serve. Our unwavering commitment to quality also helps direct our focus on disciplined, smart growth.