Jeff Costello has been CFO of South Bend, Ind.-based Beacon Health System since 1995. Over his nearly three decades with the health system, Mr. Costello has worked to adapt to constant change within healthcare.
From turning operating margins around to tackling cybersecurity threats and investing in new technologies, Becker's connected with Mr. Costello to discuss some of the Beacon's biggest challenges and solutions implemented to keep Beacon fiscally healthy.
Editor's note: Responses have been lightly edited for clarity and length.
Question: How have you noticed the CFO role evolve over the last two to three years?
Jeff Costello: As CFO, my role encompasses three core areas: managing financial operations, proactively overseeing the balance sheet and contributing to the strategic direction of our health system by partnering with the executive leadership team and our health system board.
Throughout my tenure at Beacon, I have found that adaptability, foresight and an action-oriented mindset are not only important, but also indispensable for navigating the ever-evolving healthcare landscape and driving organizational success. The CFO role has evolved significantly, requiring an intense focus on driving financial performance. One more recent area in the industry that has become particularly important is revenue integrity — ensuring our health system realizes its entitled revenue.
Q: What is the biggest financial challenge that Beacon Health System is facing right now and what strategies have you implemented to combat this?
JC: Recent years have presented significant challenges. In 2023, we successfully turned around our operating margin from a negative 1.1% in 2022 to a positive 3%. However, 2024 has brought renewed pressure on our margins, demanding constant attention to financial improvement initiatives, encompassing both revenue growth and expense reduction.
As we navigate 2024-2025, our biggest financial challenge remains maintaining a healthy operating margin amid an increasingly complex healthcare landscape. Cost reduction remains a top priority. We’ve implemented innovative length of stay initiatives to lower costs and boost efficiency.
Additionally, we're addressing cost reduction through a combination of other strategies: optimizing our revenue cycle, enhancing investment performance, managing debt effectively and continuously identifying opportunities for efficiency.
Q: A recent Deloitte survey found that the current economy has trumped cost reduction concerns for CFOs. Why do you think this is and what is your top healthcare concern right now?
JC: The Deloitte survey highlighted cybersecurity as the second biggest organizational priority and concern for financial leaders in 2024. The Change Healthcare cyber breach has elevated the cybersecurity topic across the healthcare industry, and we continue to invest in cybersecurity technologies at Beacon. The study also found that two-thirds of financial leaders plan venture investments in health or non-health startups in the next two years. We are considering these options in an effort to realize other forms of revenue.
Despite these challenges, Beacon Health System remains committed to our local communities. Despite the regulatory hurdles and scrutiny, Beacon considers mergers, acquisitions, partnerships and alliances as opportunities to continue to grow. Healthcare is inherently local, and we're proactively monitoring and responding to local economic drivers. We continue to invest in the communities we serve and live out our mission to provide quality healthcare.