CFOs will need to continue to be strategic as they aim to maintain healthy operating margins and a strong balance sheet.
Stacey Malakoff, the CFO of New York-based Hospital for Special Surgery (HSS), recently spoke with HealthLeaders on the three financial initiatives she will be focusing on to ensure financial success in 2024. And, while the priorities themselves are important, following some guiding principles is key to strategic decision-making.
“My ‘north star’ in setting financial priorities is to support our commitment to be the best place in the world for patients and the best place for professionals in healthcare to advance their careers,” Malakoff says.
This "north star" is what led Malakoff to her three financial priorities for 2024. See them below and read the entire story here.
How to best leverage it is something organizations are learning on the fly. But for healthcare leaders and workers, it's just as important to understand what technology can't and shouldn't do.
Tackling those misconceptions is critical, explains University Health's vice president of health information management and revenue cycle Seth Katz.
Katz spoke with HealthLeaders about implementing technology in revenue cycle, why automation is not a plug-and-play solution, and medical coding as the next strategy to leverage.
The CFO of the Hospital for Special Surgery details its three financial priorities for 2024 and why other finance leaders should do the same.
2023 was a tumultuous year for hospital and health system CFOs. Even though CFOs saw some financial relief as revenue increases offset rising expenses and operating margins began to stabilize, 2023 was far from easy.
Unfortunately, 2024 is likely to be just as bumpy.
CFOs will need to continue to be strategic in 2024 as they aim to maintain healthy operating margins and a strong balance sheet. In this article, Stacey Malakoff, the CFO of New York-based Hospital for Special Surgery (HSS), details the three financial initiatives she will be focusing on to ensure financial success in 2024 and why other CFOs should prioritize the same.
When planning financial goals for the new year, CFOs need to think about 2024 in the context of long-range strategic plans and financial projections, Malakoff says.
“It is imperative for CFOs to continue to maintain healthy operating margins, strong philanthropy, and a strong balance sheet—all while still making the critical strategic investments that will ensure future success,” according to Malakoff.
Here are three of HSS’ 2024 financial priorities that other CFOs should consider as well:
Its people and culture
More so than ever, it is imperative that HSS invests the appropriate resources to ensure that it can recruit and empower the most talented clinical and ancillary staff to ensure the highest quality patient experience and support planned expansion and growth, Malakoff says.
“Empowerment includes investments in professional development, employee engagement, safe work environment, and wellness and resiliency,” Malakoff says.
For example, HSS is approaching its fourth year with a best-in-class, internal wellness program led by a U.S. Special Forces veteran who is also a nurse.
Patient access
“We have lots of opportunity to expand access as demand for HSS expertise is high and growing throughout the NYC tri-state area, nationally, and internationally as consumers and employers increasingly understand the importance and variability of quality in musculoskeletal health,” Malakoff says.
That’s why HSS is investing in the transformation of its NYC main campus to a more ambulatory setting and complex joint/spine center. HSS is also opening new regional locations, increasing capacity and service offerings at several current regional locations, and expanding its physical footprint in Florida.
“Additionally, we invest in improving access to knowledge in many ways, such as the HSS eAcademy which provides continuing medical education to specialists in 145 countries,” Malakoff says.
All of these major investments need to be made in a carefully planned manner to ensure the highest standards of care and prudent financial management, she says.
Operational efficiency
A continued focus on efficiency is imperative given expense inflation and other economic pressures affecting healthcare providers, Malakoff says.
“Investing in our priorities requires that we find efficiency and economies throughout the organization,” she says. That’s why, Malakoff says, HSS’ financial and operations leadership teams are collaborating to capitalize on synergies and address needs that have been reshaped significantly by the rapidly changing environment.
“One example of this is our focus on optimizing space and capacity utilization across all facilities and service lines,” she says.
For HealthLeaders' Revenue Cycle Technology Week, we followed up with the CFO of Advocare to see how its revenue cycle technology is performing one year later.
Improving net collection rates and overall revenue cycle management processes is top of mind for revenue cycle leaders and adding in new solutions and automation to streamline those operations has been a must for many organizations.
In September 2022, Todd Mallon, CFO of Advocare, one of Pennsylvania and New Jersey's largest independently physician-owned and physician–governed multi-specialty medical organizations, implemented new technology to streamline the health system's revenue cycle management operations.
A year later, HealthLeaders caught up with Mallon to see how it’s revenue cycle technology is performing.
At the time, after implementing new technology from eClinicalWorks to help with its revenue cycle management operations, Advocare saw a 99% net collection ratio. As the industry standard ratio for net collections is 95%, Advocare was operating well above average and experiencing the positive effects of that change across all of its care centers.
But how have operations changed in the last year?
“Our net collection ratio remains over 99% even as we grew to over 700 providers and 160 care centers,” said Mallon.
But, Mallon says, part of the system’s continued success is thanks to even more new technology.
Advocare added in healow Payment Services this year, allowing patients to pay their bills online or by text.
“Patients don’t have to log into their portal to view and pay their balance, which has significantly increased our collections rate. It seamlessly integrates into the EHR, putting everything we need in one place,” Mallon said.
This means that Advocare is able to keep up payment collections and cash flow even as it continues to grow.
Mallon says they have had a positive ROI for all new technology they have implemented, giving the system the confidence to invest in even more new technology in the future.
Aside from the near perfect net collection ratio, Mallon said having a true partnership with your technology vendor is key. For Mallon, having that partnership has improved its revenue cycle communication and allows for constant collaboration.
“The team is available whenever we need them, which has been vital as we’ve brought on more providers and opened more care centers. No matter the situation, they are willing to help us make changes to our system and achieve greater efficiency. This has been key to our continued success,” Mallon said.
For HealthLeaders' Revenue Cycle Technology Week, Henry Ford's VP of revenue cycle explains how the technology saves them time and money.
In honor of HeathLeaders' Revenue Cycle Technology Week, we are spotlighting some of the best stories in revenue cycle technology.
Among the many uses for AI technology in the healthcare space is in medical coding, which affects both clinical and revenue cycle processes.
Detroit-based Henry Ford Health recently expanded its collaboration with CodaMetrix to include patient bedside visits, where abstraction takes an average of 40 minutes per patient and accounts for 20% of the health system's overall coding costs.
"Inpatient hospital stays due to serious medical conditions, injuries, surgical procedures, and medical emergencies such as strokes, heart attacks, broken bones and burns, routinely require bedside physician consultation," the health system said in a press release announcing the CodaMetrix deal. "Evaluations and management of patients at the bedside, by hospitalists and other specialists, as well as bedside procedures, need to be abstracted into medical codes for reimbursement. Depending on health systems’ policies, the coding function is usually performed by physicians, medical coders, or both. In scenarios where physicians are responsible for coding, not only is it an extra burden, but it increases the number of missed opportunities for accurate reimbursement."
To learn how AI can be integrated into the bedside procedures, HealthLeaders spoke virtually with Joann Ferguson, RN, BSN, MBA, CRCR, vice president of clinical revenue cycle at Henry Ford Health.
For HealthLeaders' Revenue Cycle Technology Week, hear why the AVP of revenue cycle management at Geisinger Health System says the IT department is key.
In honor of HeathLeaders' Revenue Cycle Technology Week, we are spotlighting some of the best stories in revenue cycle technology.
Most revenue cycle leaders have started implementing automation in one sector or another of their department, but while automation may seem like a simple fix, collaboration is usually needed with teams beyond the revenue cycle.
More leaders are bringing in their IT teams to help streamline their revenue cycle automation, and as Christy Pehanich, AVP of revenue cycle management at Geisinger Health System, says, collaborating with IT and merging skill sets is a necessity in optimizing revenue cycle automation.
For HealthLeaders' Revenue Cycle Technology Week, hear how the VP of finance and revenue cycle at PMHA worked to secure more revenue and reduce denials.
In honor of HeathLeaders' Revenue Cycle Technology Week, we are spotlighting some of the best stories in revenue cycle technology.
As finance and revenue cycle leaders fight against poor operating margins, reduced reimbursement, and inflated expenses, developing and executing a strategic path to a financially sustainable future is essential.
Nicole Clawson, VP of finance and revenue cycle at Pennsylvania Mountains Healthcare Alliance (PMHA), feels these same pressures at her health system—a collaborative network of independent community hospitals located primarily in Western and Central Pennsylvania.
When budgets are tight, leaders need to be strategic when investing in technology. Because cost efficiency is so important, healthcare systems and hospitals alike need to get a lot of bang for their buck when considering technology—ROI is always key.
Clawson has the same thoughts since the PMHA mission is to enhance the ability of its member hospitals to provide patient-centered community-based care and to maintain their status as independent community hospitals.
To help ensure financial stability, the revenue cycle division at PMHA includes an overall approach to standardization and process efficiencies focusing on people, process, and technology, Clawson explained to HealthLeaders.
CVS Health is cementing itself as huge competition to hospital and health systems.
All (healthcare) eyes have been on CVS Health for a while, but with strong financial growth in 2023's third quarter, it's cementing itself as a huge disruptor for hospital and health systems.
CVS Health recently reported strong financial results for the third quarter, achieving $2.3 billion in profit. Total revenues increased to $89.8 billion for the quarter and reached $264 billion for the year, marking a 10.6% increase compared to the previous year.
On top of this, the company generated $16.1 billion in cash flow from operations.
What does this mean for hospital and health system CFOs who are looking to compete with the retail giant? Here are four major impacts this news has on healthcare CFOs:
Market disruption: CVS Health's continued growth and financial performance positions the company as a significant disruptor in the healthcare market. Hospital CFOs should closely monitor CVS Health's expansion into various healthcare services as the retail giant is likely to affect patient volumes and service offerings in your area.
Diversification and innovation:CVS Health's ability to adapt to changing consumer needs by expanding care access and lowering costs is a reminder for hospital CFOs to focus on diversification and innovation in healthcare services. Exploring ways to enhance patient care while managing costs is crucial for remaining competitive.
Medicare market: CVS' announcement of Aetna's 2024 Medicare products, along with a high CMS star rating accounced in October, emphasizes the competitive landscape in the Medicare market. At a time when payer/provider relationships are strained (especially with Medicare Advantage), hospital CFOs may need to assess their Medicare offerings and network strength to remain competitive in this space.
Financial considerations: Hospital CFOs should be attentive to CVS Health's financial strategies, such as acquisitions and debt management, as these actions can impact the broader healthcare market. Evaluating the financial health and stability of your organization is crucial, as always.
While there were several major impacts to the market, it wasn't a total win for the retail giant, though.
CVS Health is fighting higher-than-expected healthcare utilization along with other financial setbacks, interim CFO Tom Cowhey said during its investors call. This, Cowhey said, means investors should expect its 2024 earnings to be at the low end of the company's guidance.
Nonetheless, CVS Health's third quarter earnings demonstrate its continued expansion and influence in the healthcare sector. Hospital CFOs should use this information to inform their strategic planning, assess competitive pressures, and consider innovative approaches to patient care and financial management. Adapting to the evolving healthcare landscape is essential to remain competitive in the face of disruptive market forces.
2023 was a difficult year financially, but two challenges in particular were top of mind for one CFO.
The challenges that go along with maintaining the financial stability of a healthcare provider are vast and ever-evolving, but there were two major challenges in particular that weighed heavy on CFOs in 2023.
John McMahon, CFO for Elara Caring, chatted with HealthLeaders and detailed two major challenges that kept him up at night this year: wages and automation.
McMahon found that you can’t always beat the competition’s wages. So, in order to battle the increasing costs of labor, he had to place a focus on automation to make the organization a more desirable place to work than the competition.
From labor costs to payers, CFOs had their work cut out for them in 2023.
Hospital and health system CFOs are finally seeing some financial relief as revenue increases offset rising expenses and operating margins stabilize, but 2023 was far from easy.
CFOs faced three major challenges this year, and it’s clear these pain points will follow financial leaders into the new year. Here’s a review of those challenges.
Labor costs
Labor expenses were a top concern for CFOs in 2023. Staffing shortages across clinical and administrative functions forced hospital and health systems to rely heavily on contract labor, resulting in a majorly stressed bottom line.
CFOs found that throwing money at the problem—i.e., salary increases and bonuses—wasn’t sustainable to attract and keep talent, especially when competition is fierce.
The result? CFOs started to pull back on agency use and stepped-up retention efforts on a budget.
Poor margins and bankruptcies
CFOs continued to face poor margins in 2023. While the outlook is more positive than in past years, there’s still a long road ahead to financial recovery.
The median year-to-date operating margin index increased from 0.9% in July 2023 to 1.1% in August 2023, according to recent data. While these margins are still below historical levels, it's noteworthy that hospitals have consistently achieved positive margins since March.
While margins seemed positive overall, there were quite a few hospitals and health systems who didn’t fare well in 2023.
For example, McLaren St. Luke’s closed earlier this year following years of declining revenues and an unstable reimbursement environment.
"Hospital critics frequently focus exclusively on a fleeting period of stability, ignoring other available data that show the real costs of cascading waves of illnesses, inflationary pressures, and skyrocketing expenses for drugs, labor, supplies, and equipment," Ben Finder, director of policy research and analysis at the American Hospital Association said this year.
Looking at the big picture showed a much different story, he said.
Fitch, Moody’s, and S&P all released reports describing how nearly every metric of hospital and health system financial health declined in 2022, Finder said, and 2023 results might not be much better.
Contending with payers
Between denials and prior authorizations, providers felt a lot of push back from payers this year. Throughout the first half of 2023, payers were aggressively pursuing prior authorizations, creating tremendous administrative burdens. Also, the initial prior authorization/
precertification denial rates for commercial inpatient claims reached over 3% in 2023’s first quarter.
In addition to these struggles, thanks to economic headwinds made up of record inflation and operational challenges, hospital and health system CFOs were finding their backs against the wall in negotiations with insurers, feeling under the gun to secure favorable reimbursement rates in negotiations in 2023, and payers reluctant to capitulate.
One result of this was the public, drag-out war-of-words Prisma Health and UnitedHealthcare engaged in. Don’t forget there was also the fight between Bon Secours Mercy Health and several regional Anthem Blue Cross Blue Shield plans.
Providers started to realize they more leverage in payer negotiation than they think, but it requires willingness and preparation to pull certain levers.
Between going public with payer qualms or considering vertical integration, CFOs had a few options to secure the deal they wanted, and a lot of them were used to their advantage.
2024 will not be any less complicated, so stay tuned for trends CFOs need to focus on to ensure success in the new year.
