It's no secret that hospitals and health systems continue to deal with rising costs, leading to many healthcare finance leaders looking for solutions to offload some of that pressure.
From focusing on transparent communication to leveraging automation and investing in value-based care, these are the tactics Becker's heard from health system CFOs when asked about how leaders can work towards balancing these costs to keep their organization's finances in a strong place.
Question: How can hospital CFOs balance rising operational costs with stagnant or decreasing reimbursement rates to ensure financial stability?
Editor's note: Responses have been lightly edited for clarity and length.
Will Flett, Chief Financial Officer, ThedaCare (Neenah, Wis.)
Will Flett: ThedaCare promises to be a proactive partner in health, in part by delivering high-quality, affordable care. By being good stewards of our financial resources, we are able to invest in our care teams, the latest technologies and our facilities, ultimately enhancing access to care for our communities.
At ThedaCare, our vision is about understanding the people in our communities, getting ahead of health events before they occur, and providing care immediately when health issues begin. To help combat decreasing reimbursement models, we must be proactive in shifting from fee-for-service to value-based care delivery.
We are taking steps to change the healthcare landscape with efforts such as implementing various technology to empower patients to be proactive with their health journeys and increase time our teams have for patient care. Another way is by managing patient flow to increase safety, experience and access while lowering costs for both the patient and our health system.
Derek Goebel, CFO, Altru Health System (Grand Forks, N.D.)
Derek Goebel: Our approach is collaborative, prioritizing early engagement to address the needs and concerns of all parties involved. By focusing on transparent communication and aligning contract terms with best-practice care delivery models, we aim to achieve contracts that support high-quality patient care while maintaining cost-effectiveness.
Additionally, we incorporate economic safeguards, such as CPI thresholds, to allow for renegotiations in response to significant inflation, ensuring the contracts remain viable and sustainable over time.
Kevin Hammons, CFO, Community Health Systems (Franklin, Tenn.)
Kevin Hammons: In today's operating environment, financial leaders must be deeply involved in operational initiatives that create greater efficiency. Examples include leveraging automation, technology and even AI to reduce administrative costs, innovating around care delivery to optimize staffing levels and reduce costly contract labor, and focusing on standardization to help eliminate unnecessary variation.
At CHS, we are also enhancing decision support through the implementation of an integrated Enterprise Resource Planning platform and using the data and insights from this work to identify more opportunities for savings.
Traci Morris, CFO, Essentia Health (Duluth, Minn.)
Traci Morris: At Essentia Health, we’re continually working to align the cost of care with the reimbursement we receive.
Our finance team is working to support clinical operations by providing transparency into the cost of service and sharing insights where there are opportunities to improve efficiencies and reduce costs, all while providing high-quality care to the patients we’re privileged to serve. We continue to develop tools that our clinicians can use to provide expert care in a financially sustainable manner.
By investing in value-based care, we’re simultaneously improving our quality of care while reducing our costs. For example, from 2018 to 2021 we removed more than $100 million from the cost of care. For Medicare patients alone, we saved taxpayers nearly $60 million in healthcare costs over the past five years.
We also work with operations to assess and support new technology, innovation, and advance digital health (telehealth, virtual visits, remote patient monitoring and consumer self-service) to improve our patients’ experience, their quality of care, and overall efficiency. We are also investing in digital technology (automation, predictive analytics and generative artificial intelligence) to streamline our delivery of care for our patients.