Challenges at the Michigan-based health system include revenue cycle optimization after the installation of a new medical record system and finding ways to match cost increases with the rate of general inflation.
Matthew Cox, CPA, MBA, has a lengthy list of goals as the new senior vice president and CFO of Spectrum Health, including optimization of a new electronic medical record, expansion of consumer-oriented programs such as online platforms, containing costs, and increasing risk-based contracting.
Prior to joining the 13-hospital Grand Rapids, Michigan-based health system, Cox served as senior vice president of finance operations at Phoenix-based Banner Health. Spectrum also owns a 783,000-member health plan, Priority Health.
HealthLeaders Media spoke recently with Cox, who is succeeding Ron Knaus after his retirement. Following is a lightly edited transcript of that conversation.
HLM: In 2018, what are Spectrum’s primary financial challenges?
Cox: Tactically, we just went live on Epic clinical and billing systems in our Grand Rapids hospitals, and our community hospitals and the remainder of the health system will go live in May. So, in my first 90 days, I will create a comprehensive assessment of the current state of revenue cycle. After that assessment, I will put together a 24-month work plan. We understand that we won't be able to maximize the functionality all at once, so we have asked our consultants to help our revenue cycle leadership develop a 24-month work plan to keep our improvements on track.
HLM: Why are you conducting the comprehensive assessment?
Cox: As a result of this system conversion, we have experienced a temporary increase in receivables, as expected. I expect we will see receivables return to historical levels by the end of our fiscal year in June.
We need to make sure we are optimizing the system, so it is easy for our providers and employees to use, and we get bills out to patients with the information they need in a way that's not confusing.
Patient-balance responsibility, co-pay and coinsurance, and pricing transparency in healthcare is not on par with other industries, and that is something I am going to be working on.
HLM: What is Spectrum's primary strategic challenge?
Cox: Strategically, the biggest challenge is shared with the entire industry—our insurance products and clinical services are becoming too expensive. The prices of services continue to outpace general inflation.
The entire industry is ripe for disruptive innovation, and we have to be better at controlling our costs and eliminating unnecessary utilization, then pass those improvements on to our customers.
There are a couple areas where we have been reducing costs. We have MedNow, where you can do virtual visits, and that helps drive down costs.
By implementing [the] Epic [medical record system], we are reducing duplication. When you have an electronic medical record that spans the entire health system, the providers can see the services that have already been done with patients, so they can avoid ordering unnecessary or duplicative tests.
We need to maintain our current financial strength, while lowering the cost to patients. Spectrum will continue to be strong into the future, but we have to operate in a way where our costs do not increase at a rate much greater than general inflation.
HLM: This year, what do you think are the biggest financial opportunities for Spectrum?
Cox: We're one of the few integrated health systems in the country that has a large and successful insurance company, which gives Spectrum operational and strategic advantages such as having our costs for patients lower than comparable health systems.
We also can continue to expand price transparency through Priority Health's cost estimator tool, which is an example of making healthcare easier and more affordable for patients.
We want to increase Spectrum's risk-based contracts with all major payers. We do a good job now on risk with Priority Health; but beyond that, we have very few risk contracts.
HLM: What are examples of consumerism growth at Spectrum Health?
Cox: We have MedNow, the MyHealth patient portal, and the Strive wellness platform, which are higher-end primary care that help patients manage their health. We've also got new integrated-care campuses that are close to patients' homes.
HLM: What is the key to managing growth?
Cox: You need to increase the level of benchmarking and financial accountability. This is an overarching goal: As we grow, I want to make sure there is strong financial rigor and our managers are held accountable to the plans that they put together. We want to be best in class when we grow and benchmark ourselves against the best in class performers.
I also want to increase the number of our partnerships, joint ventures and collaborations, both nationally with large companies that have deep experience that we might not have, and locally. We want to increase our collaboration with other organizations in our communities that provide healthcare services to the same population.
HLM: What have been the key elements of managing Priority Health profitably?
Cox: Managing utilization, managing our network to make sure we have people who are striving to provide a high-value service, and being price-competitive.
Most consumers pick health plans when they are not sick, and most consumers pick plans based on price. So, price is important, but when patients utilize health plans, you want them to be happy with the network, the services, the billing, and all the blocking and tackling at their health plan. We focus on all of that: making sure the coverage is affordable and it operates well, so our customers are happy.
Christopher Cheney is the CMO editor at HealthLeaders.