Roundtables

L ast year, Moody's Investors Ser- vice, Standard & Poor's Ratings Services and Fitch Ratings re- leased almost identical reports saying 2014 would be a very challenging year, financially, for hospitals and health systems. Although many providers have weathered the past few years with solid profitability metrics and strong cash flows, expense growth continues to rise faster than revenue growth. Add in value-based contracting, the evolving rates from health insurance exchanges, the impending two-mid- night rule, ICD-10 — and healthcare executives may wonder how they can keep the hospital doors open. Here, four hospital CFOs from across the country discussed how they are handling the big revenue squeeze, what they are doing to control costs and why layoffs are increasingly becoming part of the healthcare conversation. e four participants are George Eighmy, CFO of Bristol (Conn.) Hospital; Dan Moncher, CFO of Firelands Regional Medical Center in Sandusky, Ohio; Dave Nelson, CFO of two hospitals within the Western Wisconsin Division of Hospital Sisters Health System; and Rich Rico, CFO of Sky Lakes Medical Center in Klamath Falls, Ore. (Editor's note: Story has been edited for length and clarity.) Question: Controlling costs is one of the most-heard refrains we hear from hospital and health system executives today to offset stagnant revenue growth. What are some of the biggest cost-controlling strat - egies being implemented at your organization, and what are the main drivers of those strategies? Is out- sourcing processes, at least those not critical to the hospital's mission, part of the solution? George Eighmy: Healthcare is a rapidly changing and dynamic field. We started using lean technologies and theories to help us with process improvement and to really dissect what employees are doing and cull out the processes they don't need to do anymore. We got rid of the non-val- ue-added processes so we can focus on the value-added services. Labor-relat- ed, we need to blow up the old para- digm that jobs are set in stone. Jobs are not set. ey have to change and adapt to the new environment. We're a smaller hospital, and we don't have the breadth of expertise in certain areas, and we go out to the market for certain needs. We outsource some coding, revenue cycle components because there are companies that do it better than us. Have we considered outscoring a whole department? No. Some other hospitals in the area here have gone that route and found it doesn't work as well. Dan Moncher: Cost containment and cost control is the number one priority for us and has been for many years. To say there is only one item — we don't really have that, but we are trying to take a more aggressive look at supply chain. We've done studies and have had consultants help us with physician preference items. We've been down those paths. We've also hired a direc- tor of pharmacy to help with that… so we're just really getting started on digging and seeing what we can do on our own at this point. We are a Premier hospital and have been with them for 10 years. From an employee standpoint, we believe we're pretty well-staffed. We've always taken the attitude where we don't want to have to make significant, difficult decisions, so we scrutinize staffing decisions on an ongoing basis. We've done that for years. We've seen other organizations go through multimillion-dollar layoffs, and we use that as leverage with our management teams to say that's a path we don't want to go down. We also refinanced our debt in 2012, Hospitals Feeling the Squeeze: 4 CFOs on today's Most Pressing Financial Issues "we scrutinize staffing decisions on an ongoing basis. We've done that for years. We've seen other organizations go through multimillion- dollar layoffs, and we use that as leverage with our management teams to say that's a path we don't want to go down." Dan Moncher, CFO of Firelands Regional Medical Center in Sandusky, Ohio Written by Bob Herman

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