CFO Outlook for 2013 Grim

Karen Minich-Pourshadi, for HealthLeaders Media , December 27, 2012

Nick Vitale
Executive Vice President and CFO
Beaumont Health System
Royal Oaks, Mich.
Number of beds: 1,714

What are the key areas you'll be watching in 2013?

Preparing for healthcare reform. Near the top of my list is preparing for healthcare reform and actually figuring out what healthcare reform will mean, postelection, to the healthcare community in terms of payments and our relationships with physicians.

Mergers and acquisitions. We'll be watching to see what the elections mean in terms of consolidation and contraction to the healthcare industry. Our area is over-bedded and we expect to see more consolidation and contraction, especially as we see more reimbursement changes.

Clinical integration strategy. Beaumont predominantly uses a private practice model but we do have a high number of employed physicians, and we're employing more primary care physicians. We're looking to work more closely with our private doctors on clinical integration. We'll be working with the Federal Trade Commission to get our partnerships recognized as clinical integration entities and look to our managed care to help us efficiently manage. We are finding more physicians want to be employed and provided with back-office services. We're building a toolbox solution to work with our doctors to help them address their needs.

Which strategic undertakings from 2012 do you feel could greatly influence the organization in 2013?

Physician alignment and integration. Clinical integration is challenging. We've been working with two nonhospital-employed but hospital-affiliated physician organizations to bring these organizations together and improve their relationship. But we're also looking at physician alignment in terms of cost control and transitions of care. We want groups to try different things to reduce readmission rates. We also want to work with our physicians and groups on population management. We believe payers, in the future, won't be interested in paying by episode but will want to pay by population, and they'll reward systems that can demonstrate more value and quality.

Managing change. I've been doing this for 32 years; there's always new and challenging stuff on the horizon, but it always seems like through hard work and a lot of research and analysis we've always figured out a way to address the issues and move forward in a positive way. I know there's a lot of handwringing about healthcare reform … but healthcare as an industry isn't going anywhere.

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?

We have changed how we compensate our physicians, starting back in 2009, but it has taken two years to get it fully implemented. It's structured around clinical, administrative, research, teaching, and strategic components and is mission-based compensation. For instance, the clinical component uses RVUs for metrics while our administrative component uses time value units.

It took a while to get the physicians to understand and buy into the new model, but it seems to be working well. For our private doctors we're looking at quality metrics and working with them to maintain quality, which will help them to do better financially with the payers.

Also, we've established an affiliation with a medical school—the Oakland University William Beaumont School of Medicine—and we had our first class of 50 students in 2012, but we had over 3,200 applicants. This year we have 75 students from a pool of 3,700 applicants. We are proud of the fact that the accreditation body came in and found no areas to issue citations. We think our affiliation will help us with recruiting physicians eventually.

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