By Ben Keeton

Healthcare finance is the primary topic of interest as healthcare continues to evolve. Physicians and healthcare providers want to focus on treating their patients and working toward a healthier population. The financial teams work on a separate, but important, process to ensure the rules are being followed for a wide array of issues, including proper claims submission, timely payments and accurate reconciliation.

Clearly, healthcare finance is top of mind. The American College of Healthcare Executives (ACHE) conducted their annual survey with hospital CEOs and “financial challenges” ranked as the top issue. Their top five concerns were:

• Medicaid reimbursement
• Increased cost for staff and supplies
• Reducing operating costs
• Bad debt
• Transition from volume to value-based payments

Medical News recently spoke with local healthcare finance experts to gauge the challenges they face in the changing environment here in Kentucky.  Below are highlights from our conversations:

Dale Skaggs, director in charge of the Louisville, Ky.-office of Blue & Co., sees an increase in client concerns around the financial side of healthcare.  His clients are increasingly concerned with keeping up with governmental mandates. Healthcare is one the most highly regulated industries and the cost of compliance can be very high.  His clients often face personnel shortages and increased complexities and costs due to the implementation of electronic medical record systems.

Steve Oglesby, CFO and co-interim CEO of Baptist Health, agreed and added that the degree of uncertainty in healthcare is higher today than ever before.  Uncertainty in health policy, government reimbursement, development of value-based models, site neutral reimbursement and the influence of new competition due to new technology has created a greater need for the CFO to be more deeply involved in strategic planning, development and leadership.

Oglesby expanded, historically the CFO was involved in business planning process through evaluating the return on investment in traditional bricks-and-mortar projects.  These were easy to quantify and evaluate.  Today, with the changes in the care delivery models, the evaluation of clicks, instead of bricks, is more difficult.  The evaluation of providing care through technology models such as telemedicine or virtual hospitals requires the integration of technology with customer behaviors.  Today, the business planning model involves linking technology with the customer to deliver high quality care that is convenient and low cost.

Adam Shewmaker, director of Healthcare Consulting Services with Dean Dorton Allen Ford, believes that many of his clients are very much in tune with cost, quality, outcomes and other related indicators.  Shewmaker said that most hospitals are experiencing significant financial losses associated with the acquisition of physician practices over the recent years.

Shewmaker said, “Our data shows that most hospitals lose on average $100,000 per employed physician annually.  Nationally, the losses can be much higher.  Those types of financial pressures are real and unsustainable for most organizations.  We’ve helped clients better manage these costs and identify opportunities for improved integration between the physician practice and the hospital or health system.”

According to Shewmaker, physicians and hospitals are very much aware of these realities and expending considerable amounts of resources on improved technology, leveraging mid-level extenders and improving physician/hospital collaboration.

Healthcare Trends

In discussing healthcare trends, Oglesby said that there is downward pressure on revenue.  “From government payors due to constrained budgets, from employers demanding lower premiums, from commercial insurers in response to premium pressure, from consumers who are now responsible for a greater portion of their medical costs.”  He believes that this downward revenue pressure will continue to challenge the CFO to help providers develop ways to deliver quality care in a cost-effective manner.

Skaggs also talked about trends and the alternating focus on revenue cycle improvement and cost reduction. Skaggs said, “We may go a few years and focus our energies on revenue cycle improvement and then the next few years switch to a focus on cost containment. There is such uncertainty in the potential ramifications of a ‘repeal and replace’ of the Affordable Care Act, many of our clients are now looking intensely at both areas.”

Volume Matters

In addition, with all the talk of value-based versus volume-based payment models, Skaggs believes that volume still matters. “Our clients, many of whom are in rural communities, are looking for creative and appropriate ways to keep their client base in their catchment area coming back for services rather than going to larger hospital twenty or thirty miles down the road. Conversely, larger hospitals may be looking to buy smaller hospitals in that geographic range to be considered as feeder source for the more sophisticated services that are found more often in an urban setting,” Skaggs said.

Opportunities Abound

While there are many challenges in healthcare finance, there are plenty of opportunities to reduce costs and improve care.  Ogelsby believes that telehealth and virtual hospitals can enhance our ability to reach patients.  He said, “Today, it is too costly to continue to invest heavily in bricks-and-mortar as the only way to deliver care.  We need to treat patients in the lowest cost setting possible but also with the highest clinical value.   To do this, we will need to use technology and move the delivery of care closer to the customer and keep them out of the higher cost hospital settings unless medically necessary.”