For many hospital CFOs today, the healthcare financial environment might feel like Wheel of Fortune. Stiff competition requires their organizations to be at the top of their game; there are numerous different components needed to solve their daily puzzles; and if things go awry, "bankruptcy" could be only a spin away.
Susan Green is CFO of Lowell (Mass.) General Hospital and has managed the finances of the 217-bed non-profit hospital for the past five years. She says hospital CFOs can be pulled in a variety of different directions these days due to competing priorities, but there are six central themes every CFO should follow that could lead to operational and personal success — none of which involve Pat Sajak or Vanna White.
1. Take board meetings seriously. Ms. Green's days start early in the morning around 7:00 or 7:30, and they could go very late into the evenings. Peppered within every hospital CFO's agenda are meetings — board of trustee meetings, monthly financial meetings, physician organization board meetings, etc. — but these should not be viewed as dreaded time drags.
Ms. Green says hospital financial officers must be well-prepared to deliver an accurate financial representation of the organization to the board and stakeholders, and full transparency — a buzz phrase of the times — is central to that message.
"I work to determine what the key message should be before I go into the meeting," Ms. Green says. "Obviously, you share good news as well as address any concerns or questions there may be. [LGH is] doing extremely well financially, so my message has been one of strength and capital spending. It is a very different message when things are not going as well. You must be clear and concise, and report the good with the bad."
2. Stay connected to the community. In March, LGH and Saints Medical Center, also in Lowell, entered into a definitive merger agreement. Hospital mergers and other major hospital decisions need the backing and support of the community, and Ms. Green says there is no better way to nurture a supportive community than by remaining active within it.
Ms. Green sits on the boards of several different local organizations, such as the American Textile History Museum in Lowell. It is this type of effort that demonstrates to the public the organization and its executives are committed to the area's well-being. "It's about community involvement and staying connected to the community to make sure LGH has a seat at the table with the other major not-for-profits in the city," she says.
3. Make capital planning a big priority. Building and equipment replacement costs are the cornerstone of every hospital's financial balance sheet and could play a factor in the merger and acquisition market. In order for a hospital to be positioned for future growth, it must have the right capital planning projects in line, and hospital CFOs must make sure the correct emphasis is given to the appropriate projects, Ms. Green says.
LGH is more than halfway through its Legacy Project, a $100 million capital initiative that will add a six-story tower with 60 new inpatient private rooms, a surgical day care center, three new operating rooms and a new emergency department, among other features. The expansion will not only help LGH in terms of its market position, but it will also help the hospital's debt ratings, as its assets are more up-to-date. "This expansion will touch 80 percent of patients that come through Lowell General," Ms. Green said. "That took a lot of planning with architects and others to figure out what we could afford to do and what made the most sense in terms of our patients' future needs."
4. Be diligent in payor negotiations. Commercial payors have started to pay hospitals based on quality measures, in addition to services rendered, and hospital CFOs must be able to handle the new format.
For example, Massachusetts has been a hotbed of innovative hospital-payor contracts. Partners HealthCare and Tufts Health Plan, two behemoth-sized healthcare organizations in the Boston area, reached a new contract agreement expected to reduce healthcare spending in the area by more than $105 million over the next four years. LGH and its physician hospital organization have an "Alternative Quality Contract" with Blue Cross Blue Shield of Massachusetts in which the physicians and hospital are paid for the quality of care they provide, not just the quantity. The AQC is designed to incentive physicians and hospitals to keep their patients healthy and managed chronic disease. Since entering the AQC, LGH has reported flattened costs and increased screenings for diseases such as breast and colorectal cancer. These emerging payor contracts will require hospital CFOs to stay ahead of the curve when it comes to value-based reimbursement.
"Payor negotiations in Massachusetts are a lot about how much leverage you have in the marketplace," Ms. Green says. "But it shouldn't be all about dollars. It should also be about the value you get for the dollars. We feel payment should be tied to quality, and we are working diligently to identify, measure and improve those quality measures."
5. Work closely with physicians and clinicians by breaking out of silos. One of the most contentious areas of hospital management today is how well executives can work with physicians, and vice versa. Hospitals CFOs, just like other members of the executive team, must remain proactive in fostering a more stable and reciprocal relationship with physicians.
For example, Ms. Green says she and her staff have worked closely with the Lowell General Physician Hospital Organization, which is a non-profit organization comprised of 280 physicians who partner with LGH. Together, the two organizations give the community a more integrated healthcare delivery model from the primary care base to the full spectrum of key hospital specialties.
The physician-executive relationship can also be enhanced through collaboration on projects within the hospital, which could include everything from capital planning to the all-important meaningful use standards and standardization of electronic health records. Ms. Green says LGH has been able to meet Stage 1 meaningful use for Medicare and Medicaid through a positive working relationship with physicians and nursing executives. She was able to make sure the project stayed within the bounds of the hospital's budget, while the physicians and other clinicians gave their direct input of how the EHR system should be designed.
6. Be flexible, and support the hospital's overall mission. Although several components of a hospital involve specialization, such as the different service lines, hospital CFOs must be attuned to staying flexible and working on several projects at once. Hospital CFOs must be willing to do whatever it takes to ensure a positive financial future for the hospital while staying within the framework of the organization's mission and vision.
"I don't think there's a typical day," Ms. Green says. "They're all different. Your typical [hospital] CFO does not sit in an office and just do financial audits. We're collectively making the best decisions on resource allocation, physician relationships, payor contracting, capital investment, staffing as well as focusing on quality and keeping the patient in mind at all times."
Susan Green is CFO of Lowell (Mass.) General Hospital and has managed the finances of the 217-bed non-profit hospital for the past five years. She says hospital CFOs can be pulled in a variety of different directions these days due to competing priorities, but there are six central themes every CFO should follow that could lead to operational and personal success — none of which involve Pat Sajak or Vanna White.
1. Take board meetings seriously. Ms. Green's days start early in the morning around 7:00 or 7:30, and they could go very late into the evenings. Peppered within every hospital CFO's agenda are meetings — board of trustee meetings, monthly financial meetings, physician organization board meetings, etc. — but these should not be viewed as dreaded time drags. Ms. Green says hospital financial officers must be well-prepared to deliver an accurate financial representation of the organization to the board and stakeholders, and full transparency — a buzz phrase of the times — is central to that message.
"I work to determine what the key message should be before I go into the meeting," Ms. Green says. "Obviously, you share good news as well as address any concerns or questions there may be. [LGH is] doing extremely well financially, so my message has been one of strength and capital spending. It is a very different message when things are not going as well. You must be clear and concise, and report the good with the bad."
2. Stay connected to the community. In March, LGH and Saints Medical Center, also in Lowell, entered into a definitive merger agreement. Hospital mergers and other major hospital decisions need the backing and support of the community, and Ms. Green says there is no better way to nurture a supportive community than by remaining active within it.
Ms. Green sits on the boards of several different local organizations, such as the American Textile History Museum in Lowell. It is this type of effort that demonstrates to the public the organization and its executives are committed to the area's well-being. "It's about community involvement and staying connected to the community to make sure LGH has a seat at the table with the other major not-for-profits in the city," she says.
3. Make capital planning a big priority. Building and equipment replacement costs are the cornerstone of every hospital's financial balance sheet and could play a factor in the merger and acquisition market. In order for a hospital to be positioned for future growth, it must have the right capital planning projects in line, and hospital CFOs must make sure the correct emphasis is given to the appropriate projects, Ms. Green says.
LGH is more than halfway through its Legacy Project, a $100 million capital initiative that will add a six-story tower with 60 new inpatient private rooms, a surgical day care center, three new operating rooms and a new emergency department, among other features. The expansion will not only help LGH in terms of its market position, but it will also help the hospital's debt ratings, as its assets are more up-to-date. "This expansion will touch 80 percent of patients that come through Lowell General," Ms. Green said. "That took a lot of planning with architects and others to figure out what we could afford to do and what made the most sense in terms of our patients' future needs."
4. Be diligent in payor negotiations. Commercial payors have started to pay hospitals based on quality measures, in addition to services rendered, and hospital CFOs must be able to handle the new format.
For example, Massachusetts has been a hotbed of innovative hospital-payor contracts. Partners HealthCare and Tufts Health Plan, two behemoth-sized healthcare organizations in the Boston area, reached a new contract agreement expected to reduce healthcare spending in the area by more than $105 million over the next four years. LGH and its physician hospital organization have an "Alternative Quality Contract" with Blue Cross Blue Shield of Massachusetts in which the physicians and hospital are paid for the quality of care they provide, not just the quantity. The AQC is designed to incentive physicians and hospitals to keep their patients healthy and managed chronic disease. Since entering the AQC, LGH has reported flattened costs and increased screenings for diseases such as breast and colorectal cancer. These emerging payor contracts will require hospital CFOs to stay ahead of the curve when it comes to value-based reimbursement.
"Payor negotiations in Massachusetts are a lot about how much leverage you have in the marketplace," Ms. Green says. "But it shouldn't be all about dollars. It should also be about the value you get for the dollars. We feel payment should be tied to quality, and we are working diligently to identify, measure and improve those quality measures."
5. Work closely with physicians and clinicians by breaking out of silos. One of the most contentious areas of hospital management today is how well executives can work with physicians, and vice versa. Hospitals CFOs, just like other members of the executive team, must remain proactive in fostering a more stable and reciprocal relationship with physicians.
For example, Ms. Green says she and her staff have worked closely with the Lowell General Physician Hospital Organization, which is a non-profit organization comprised of 280 physicians who partner with LGH. Together, the two organizations give the community a more integrated healthcare delivery model from the primary care base to the full spectrum of key hospital specialties.
The physician-executive relationship can also be enhanced through collaboration on projects within the hospital, which could include everything from capital planning to the all-important meaningful use standards and standardization of electronic health records. Ms. Green says LGH has been able to meet Stage 1 meaningful use for Medicare and Medicaid through a positive working relationship with physicians and nursing executives. She was able to make sure the project stayed within the bounds of the hospital's budget, while the physicians and other clinicians gave their direct input of how the EHR system should be designed.
6. Be flexible, and support the hospital's overall mission. Although several components of a hospital involve specialization, such as the different service lines, hospital CFOs must be attuned to staying flexible and working on several projects at once. Hospital CFOs must be willing to do whatever it takes to ensure a positive financial future for the hospital while staying within the framework of the organization's mission and vision.
"I don't think there's a typical day," Ms. Green says. "They're all different. Your typical [hospital] CFO does not sit in an office and just do financial audits. We're collectively making the best decisions on resource allocation, physician relationships, payor contracting, capital investment, staffing as well as focusing on quality and keeping the patient in mind at all times."
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