Douglas Arvin, West Market vice president and CFO of Essentia Health, has deployed multiple strategies to improve access and margin performance over the last few years.
He shared with Becker's his recent successes and where he sees payers and providers coming together around the common goal of better, more accessible and more affordable care in the future during an episode of the "Becker's Healthcare Podcast." He also talked about growth and where the credit market is headed.
"As the finance person, I"m focused on the credit market and what's going on with healthcare today with increased costs, often declining reimbursement levels that aren't keeping up with inflation on the cost side, and how the credit markets are really looking at healthcare overall, and to support our growth as we go forward," he said. "We know the major rating agencies all have concerns about the healthcare industry and the headwinds we face, and so that is another trend we stay close to and I stay focused on with regard to cash performance and debt management as we go into the future."
Here is an excerpt from the conversation.
Note: This interview has been lightly edited for clarity and length.
Question: What is one change that you've made with proven great results?
Douglas Arvin: In healthcare, we're not price setters; we're price takers. That gap between reimbursement growth and cost growth is something we face and puts a lot of pressure on the labor market, which is very competitive. That puts a lot of pressure on margins to continue to support growth, and so a key area that we work on here is performance excellence. Some might call it lean or process improvement, but it's a focus on improving our access for patients, improving our cost of care and driving our quality improvements and aligning quality to our total cost of care. We can take advantage of that particularly in our reimbursement arrangements.
I'm proud of the work we're doing. We've seen year over year cash flow margins and operating income margins improve within the West Market, and that's been a very positive thing for us. I'm also particularly proud of our team's efforts…with payers in our marketplace and how we've changed the paradigm a little bit on those relationships. They've become a two-way street that we are looking more for win-win solutions that help the payer, provider and mostly are focused on the patient and customer.
We have aligned around some new goals with our major payers in this market focused on total cost of care improvement, quality improvement, patient experience improvement and other key network development that will enhance our market share position. It will also enhance our ability to meet patient needs in an appropriate way, and create greater access to our important healthcare services.
Q: How do you think about growth in the next 12 to 24 months?
DA: As an overall strategy, access is an important function of growth and at the highest level is how we define it, but I think it's in the tactics of how you get there. One of the things we've jumped in to improve would be our work with our ACO, which is a certified ACO, and grow our attributable lives. We're further along the line in terms of this focus and what that does for us is going to create greater access. It's going to improve quality outcomes for patients because we're focused on not just the fee-for-service moment, but then actually on how to improve their lives, improve their healthiness overall. That's something we're certainly focused on across our regions and doing great work with. We are aligning our providers and payers along that line.
Those first two things go together as we can really change the shift from fee-for-service to more value-based work. We can certainly improve our access and we can also find the right mechanisms for proper reimbursement to support the key things from our growth strategy, digital platforms and how to access patients where they are from a scheduling and reg perspective. Our outreach in the community to connect with people and their needs with our healthcare providers is something we have great focus on.
We also look at alignment with our providers a little bit differently; we're not just a build or buy system. We're looking for ways to align with our providers and create growth or synergies around that to help develop market share and enhance our health system. We don't have major building programs planned at this point, but a lot of focus on connecting with the patient where they are and bringing services to them.