The healthcare industry has traditionally been slow to change, but it's changing rapidly now, and health systems need to adapt and evolve to grow, according to Kyle Fisher, CFO of Indianapolis-based Community Health Network.
Forty percent of hospitals are still in the red and fighting to rebound from ongoing financial and workforce challenges. CFOs need to expand their vision to ensure their hospitals and health systems can compete in the evolving healthcare landscape.
"Whether you're in a strong, competitive market or a rural setting, CFOs must expand their vision," Mr. Fisher, who has served as Community CFO since 2018, told Becker's.
Mr. Fisher sees the future of health system CFOs falling into four key buckets.
"Certainly on the traditional financial side, you've got to be a catalyst," he said. "My job is to help the financial and now strategic conversation escalate across our company. I've always been involved in strategy since I've been at Community Health Network in addition to all the traditional financial disciplines: financial reporting and accounting, supply chain, revenue cycle, payer contracting."
He also oversees marketing and communications, business development, corporate strategy and corporate innovation.
"One part of me is a catalyst, another is a strategist. Then I've also got to be an operator. I've got to make sure my team operates and fulfills their responsibilities," Mr. Fisher said. "Finally, I spend a lot of time being a steward of our assets, and the CFO has to preserve and report. We have bondholders out there; we're rated by Moody's and S&P and we have to make sure our bondholders are happy.'"
Within this four-legged construct in mind, Mr. Fisher rebranded his team as "the financial health group."
"Because if you have all of those disciplines functioning together, you've got your pulse on the financial health of the organization," he said. "Whether CFOs are operating in a big metro area or rural, they need to have their pulse on all those buckets — not just doing the traditional financial reports and accounting. Because there could be innovations, strategies or disruptors that enter your market, or they may not even be in your market now with the likes of Amazon's One Medical providing primary care all over the country."
Community, a 10-hospital system, is ahead of budget from an operating margin perspective and continues to see patient volumes rebound.
"We are also seeing the rise in expenses (salary/wages, direct costs, drug and supply costs, etc.). These cost increases are being passed on to us, but we can't just pass them on to the patient," Mr. Fisher said. "We are managing that and are continuing to cut costs out of the system. With a combination of solid operations, volumes coming back and strong discipline to financial management, we are in good shape for 2024."
Community recently announced plans to build a $335 million hospital in Westfield, Ind. The planned 425,000-square-foot-facility — which will include an ambulatory surgery center, medical office building and 100-bed patient tower — is just one of the areas CHN plans to grow in the coming years.
The health system's strategic growth plan is broken down into three categories: Delivering on its promise of "exceptional care, simply delivered," expanding its reach and shaping its future.
"We're predominantly a Central Indiana health system; we have a partnership with MD Anderson in our oncology service line and we are extending our services and brand beyond our core market, but we need to grow," Mr. Fisher said. "We aim to grow within the state of Indiana and within the region."
Health systems also need to innovate, and Community is zeroing in on the tech space. Artificial intelligence is a particularly exciting area for health system leaders.
"We're experimenting in the autonomous coding space, using AI to advance radiology and the revenue cycle," Mr. Fisher said. "We're an Epic shop, so there are a lot of AI functions available to us through our EHR. Our big focus is on the patient experience and access. We're looking at applications in that arena to make it easy to get in to see us and also so our providers can spend more facetime with the patient."
Community is pursuing partnerships with companies such as Amazon and Microsoft but is relying on its financial strength to grow its footprint.
"We're not looking to be acquired or acquire anybody at this point because we think we've got the financial strength and strategic vision to continue to be successful," Mr. Fisher said. "We're independent, so we have our own local board and executive team and make our own decisions, which is critical for our success."
However, within its strategic plan, the health system does regular ecosystem reviews, and it is paying close attention to the evolution of certain disruptors.
"They're entering our market, going after the top of the funnel, easier entry into healthcare, such as primary care," he said. "There are a lot of deals happening, including venture capital buying hospitals and practice groups. We're in some joint ventures that have a VC element to it, but we're more interested in partnerships to either improve what we're providing for the benefit of the patient."
Merger and acquisition activity is gathering momentum across the country after a lull during the pandemic, but M&As are not something the health system is considering currently.
"At some point in time, we're probably going to be in that conversation if somebody finds us or vice versa. But right now we're very content with the path we're on," Mr. Fisher said. "We monitor the deals going on in our region. The cross-state deals are intriguing, with some health systems seeking increased breadth, and I don't see that slowing down."