This article appears in the December 2012 issue of HealthLeaders magazine.
The coming year portends to be financially uncertain for hospitals and health systems and represents the foundational linchpin for meeting 2014 deadlines for mandates such as health insurance exchanges and ICD-10. Chief financial officers will be juggling more initiatives than ever before. Last year, when we asked several financial leaders for their predictions for healthcare in 2012, the common response was an expectation that organizations would have to continue to slog uphill through national economic strife and unsteady state reimbursements and patient volume declines.
The picture remains equally intense for CFOs in 2013. Financial leaders must contend with the same the challenges from 2012 while ramping up to meet more deadlines. As healthcare organizations put the 2013 strategic plans into action, four hospital CFOs offer their insights and forecasts.
Senior Vice President and CFO
South Nassau Communities Hospital
Total number of licensed beds: 435
What are the key areas you'll be watching in 2013?
Forecast challenges. There's no question we're under attack from the federal and state governments as well as the commercial payers; with denials management, we're having to justify every single case—big or small—that gets admitted to the hospital. The amount of resources and time it takes is staggering. Even if we're successful, the delays in the cash flow and the situation with Medicare hurts us. From a resource and cash flow standpoint it also makes our ability to determine what our revenue will be challenging; it makes budgeting for 2013 that much more difficult. If you couple that with some of the healthcare reform deadlines coming up and the volume changes from inpatient to outpatient … and the federal budget issues with sequestration, then 2013 is going to be the single most challenging year for budgeting. I've never seen it as much of a moving target.
The quality agenda. We need to make whatever investment is needed to get our quality scores to where they need to be and wherever is appropriate as that has an impact on value-based reimbursements as well as public perception and physician and clinician recruitment. Still, we're limited in our ability to fund every initiative ... so as we budget for 2013 we have to balance the quality agenda against affordability and we must set clear measurements and use benchmarks and ensure we're getting the outcomes from those investments.
Technology investment. We went live with our computerized physician order entry system in June and we're trying to get our Stage 1 Meaningful Use dollars. In the past few years we've made critical investments in IT and in our EMR, but every day it seems we're on virgin territory. Just when we think we've got all the technology and people in place, we find that something else significant needs to be added. Our EMR is still only partially done and our ambulatory component is being pushed back as well as clinical documentation until we see our EMR up and running. So IT is a day-to-day expense and we keep making the investment in the hopes the returns present themselves.
Which strategic undertakings from 2012 do you feel could greatly influence the organization in 2013?
Maintaining independence. It's continuing to have the ability to operate as a community hospital long-term. We have a partnership with Winthrop South Nassau University Health System, but for the most part we've spent the past 16 years working substantially as an independent hospital with some convergent strategies. We've been talking about getting together in a more meaningful way and looking at enacting strategies on a larger scale. But when you have strategies that are for your organization as a standalone facility and then divergent strategies, it can make the organization feel disjointed.
Denials management. Also, for our denials management we hired a consultant to add to our overall case management program. We started it in August by looking at Medicare and Medicaid and we're hoping to move it into managed care. We've put a lot of emphasis on this program because for the first time ever our retrospective denials surpassed 1% of our operating revenue and cost us $5 million in lost revenue. Revenue is difficult to come by these days, so this is an area I'm wedded to seeing successful this year.
Healthcare reform is driving a lot of changes in the model of care; how are these changes influencing your physician recruitment effort or compensation structures for 2013?
Like many smaller hospitals we built physician compensation plans that are salary plus bonus, and the bonus was usually based on collections. Over the past couple of years we've moved to RVU-based compensation and our new community practices are part of those deals. But what gets difficult is most doctors are already feeling pinched financially or have lost dollars from their historic compensation.
Those who are looking to be employed are looking for income guarantees at current or historic levels, and that may be greater than the amount the office is producing. The RVU model has only been in place the past two to three years, and we're at least comfortable with it and understand it, plus we have the ability to capture the data and measure it. So for us in the short-term we'll stay with RVU-based comp, but we'll need to work on how it will fit with bundled payments or sharing jointly of revenue ... Understanding what compensation model to adopt that fits the new system of care is something were still behind on.