With New Pressures, CFOs Are Pivoting Forward

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There has never been a more challenging time in contemporary U.S. healthcare for CFOs and other senior finance leaders in patient care organizations. The COVID-19 pandemic has caused tremendous stress on hospitals and health systems in particular, with their high operating costs, particularly around staffing, and most particularly around nurse staffing—though also related to the staffing of health IT teams, and even the finance office in hospital organizations itself.

The statistics are clear: hospital finances remain at risk, as of mid-2022. Indeed, the Chicago-based Kaufman Hall consulting firm found this spring in its “National Hospital Flash Report: April 2022,” authored by Erik Swanson, and released on May 2, that, while some positive signs had emerged by March of this year, and “hospitals saw early signs of relief as outpatient volumes and revenues returned and expenses eased with fewer high acuity patients, even so, the latest performance results suggest a long road ahead with actual hospital operating margins in the red for a third consecutive month as organizations struggle with inflation, national labor shortages, and other operating pressures. The median Kaufman Hall year-to-date Operating Margin Index was -2.43 percent in March.”

Those issues were at the heart of the Healthcare Innovation July/August cover story, entitled “CFOs Look at the Staffing Shortage Crisis—and Its RCM and Automation Implications.” In that cover story, we quoted fragments of a report published this spring by the Chicago-based Healthcare Financial Management Association (HFMA), entitled “CFO of the Future: The new and improved healthcare finance leader of tomorrow,” authored by Lisa A. Eramo. In the report, Eramo wrote that “Jennifer P. Marion, FHFMA, CPA, CGMA, senior vice president and CFO of Franciscan Alliance, Inc., in Mishawaka, Indiana, said productivity and strategic resource management are top priorities that will continue to occupy her time going forward. In particular, she is an executive sponsor of the organization’s new enterprise resource planning (ERP) system that replaced its previous manual and rudimentary process. ‘We need to get timely, actionable information, and we previously spent so much time closing the books,’ she said. ‘We needed to change our computer systems and our operating model to allow more time for strategic financial planning. We also wanted our coworkers, through automation, to work at the top of their abilities.’ For example, in the revenue cycle department, the organization uses a number of robotic process automation tools to automate a number of manual activities. Why? It enables staff to research problems and make suggestions for improvement. ‘When you automate manual tasks, it also improves coworker satisfaction and reduces turnover,’ Marion said. ‘It’s rewarding for coworkers to be trained to the next level so they can be promoted and continue to grow.’”

In preparing the July/August cover story, Editor-in-Chief Mark Hagland interviewed a number of experts on where the industry is right now, particularly individuals involved in executive finance issues in hospitals and health systems. One of those experts was Richard L. Gundling, senior vice president of the professional practice at HFMA. Below are excerpts from that interview with Gundling.

Would you agree that, after two years-plus of the COVID-19 pandemic, hospitals and health systems, with their high operating overheads, are finding themselves, overall, financially fragilized, and working to stabilize themselves? And that some hospital-based organizations are faring better than others right now?

That’s exactly right. We all came through the pandemic differently, usually based on our strengths going in. We knew that the smaller and rural hospitals were fragile going in. And more broadly, healthcare took a big hit; and the reason hospitals came out somewhat whole was because of a lot of cash infusions from the federal government.

And there was essentially a ban on elective procedures early on; but elective surgeries are where most hospitals are able to make their margins. And when that part left, it was devastating for most hospitals. And they pivoted quickly to telehealth, doing it in all kinds of different ways.

And hospital-based organizations have been affected along multiple dimensions, correct?

Yes, that’s right. Hospitals are many times the largest employers in their community, and thus are impacted by national trends. And the bulk of workers are nurses and clinical staff. But IT, finance staff, housekeepers, and food service” are also being affected. Hospitals, he notes, “are feeling the pain of hiring housekeeping and food service staff that hotels and restaurants are competing for.”

So what’s the solution to these staffing shortage-driven issues that look to be long-term in healthcare? Won’t artificial intelligence and other technologies become essential going forward?

Yes, that’s right. If the workers are not going to be there, healthcare is going to look at artificial intelligence and what robotics can do. And where there’s a nurse who did follow-up calls, maybe a part of that is done by a robot.” In other words, technology will inevitably need to be leveraged for a variety of purposes related to anticipated ongoing staffing shortages, especially of nurses, but also of others.

And that might involve, for example, the opportunity to move your hospital system’s call center staff geographically?

Absolutely. It lends itself to be able to be done wherever. Privacy and security must be maintained, but yes, it’s possible. The financial services industry does it, of course.

How do you see this landscape evolving forward over the next few years?

I see [physical plant] right-sizing happening. Maybe hospitals don’t need so much physical space; I see flexing happening, and more telehealth. And our population is aging. So needs will go up. And then the whole telehealth question; hospitals will embrace that much more. My mom is 85; maybe if my mom has a procedure, maybe she can do a follow-up via telehealth.

In other words, programs such as hospital-at-home programs, will continue to expand?

Yes. And it’s where people want to be anyway. We have infusion pumps and remote monitors. And even 95-year-olds have access to Wi-Fi. With hospital at home, it’s also a matter of training and preparing the family for that. We’re kind of isolated from a lot of that stuff, the normal progression of life, in the United States. It’s a changing culture for us, and it’s a good thing. Just having the choice is important. And I think what we learned from the pandemic is that many older people were dying alone in hospitals.

What will happen in the next few years?

We’re going to focus much more on the consumer. The waiting room is going to be a thing of the past or much smaller.

What will be some of the key strategic investments going forward?

What I’m hearing from healthcare leaders is that they’ve had to pivot very quickly in their decision-making, during the pandemic. And what people learned is that, yes, we can do it. We pivoted very quickly; and in the case of telehealth, we knew that that was a good idea. But we needed the payment change to trigger it.

 

 



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