Health systems face continued weak margins, high expenses and low reimbursements for the next year, which means CFOs, COOs and revenue cycle leaders are thinking differently about their strategy for financial stability.
"We head into 2024 facing many of the same headwinds as 2023, including the risk of recession, an uncertain regulatory landscape and staffing pressure and burnout among clinicians amidst rising patient demand," Wasif Rasheed, chief revenue and growth officer at Renton, Wash.-based Providence told Becker's. "Top-of-mind priorities for our leadership team will be simplification and deconstruction to ensure caregivers are as well positioned as possible to support our patient communities and that Providence is oriented around what our health system can do best."
Executive teams are grappling with meeting patient needs by offering more services outside of the hospital, including virtual care, remote patient monitoring, hospital-at-home and a more robust ambulatory network. The transition to more outpatient and virtual care, especially outpatient surgery, upends the operating model hospitals have relied on for decades, revolving around inpatient care and high-reimbursing surgical procedures.
Lisa Moore, executive vice president and COO of Santa Barbara, Calif.-based Cottage Health said her system is investing in this transition.
"While we are experiencing the financial headwinds that the entire health system is facing right now, we are turning our attention to building our ambulatory platform and ensuring that our patients are not only served by, but delighted by, their experience of high quality care in our hands," Ms. Moore said. "Naturally, this means that we are also committed to creating a setting in which providers and members of the care team are honored to serve. We are approaching this work with a spirit of innovation and collaboration to continuously iterate the way in which we achieve these goals."
Shelly Schorer, CFO of the Chicago-based CommonSpirit Health's California division, said she is focused on financial moves that will maintain access and quality of care while also being mindful of cost control as inflation outpaces reimbursement.
"This is not really new for a CFO, but I believe our shift to partner with operations and strategy to form a collaborative approach to change will be enhanced," she told Becker's.
Fitch noted in an Oct. 2 report that weak margins will likely continue through 2024 due to inelastic revenue models and high labor costs. Hospitals are focused on payer contract negotiations, reducing length of stay, consolidating less profitable service lines and cutting unnecessary spending, according to the report.
"In the forthcoming years, resource management will primarily center on strategy and the procurement services spectrum around purchased services," Sean Poellnitz, chief resource officer of Renown Health in Reno, Nev., told Becker's. "Moreover, there will be a notable shift in the mindset of health systems, with a greater emphasis on asking the question 'Should we?' rather than 'Can we do something?'"
Executive teams are keeping the patient and workforce top of mind while also thinking about the future and investing smartly to support growth. There are some hospitals and health systems spending millions to add inpatient capacity, develop more ambulatory sites and fuel innovation for healthcare delivery transformation.
While Fitch reported weaker margins, the firm also noted remaining fiscally conservative can do more harm than good. Waiting too long to re-engage in a strategic financial and capital planning can render the hospital irrelevant if it falls too far behind others in the community.
"The capability to effectively oversee resources will mirror the diligence and approach of Fortune 500 companies," said Mr. Poellnitz. "At the same time, the pressure on margins amidst ongoing dynamic and global disruptions will remain a consistent theme."