Becker's Hospital Review

12 12 THOUGHT LEADERSHIP The $2.5B+ capital project UC San Diego Health CFO Lori Donaldson is most excited about By Alia Paavola L ori Donaldson serves as CFO of University of California San Diego Health, overseeing a budget of more than $3 billion and paving the financial strat- egy for the academic health system. Ms. Donaldson was appointed finance chief of UC San Diego Health in July 2010, aer serving as the academic health system's con- troller for 13 years. She first joined the orga- nization in 1990. Under Ms. Donaldson's leadership, UC San Diego Health has consistently posted operat- ing margins in excess of the industry average. Here, Ms. Donaldson shares her top priorities for 2022, the capital project that excites her the most and her top piece of advice for other health system finance chiefs. Editor's note: Responses were edited lightly for length and style. Question: As CFO of UC San Diego Health, what are your two top financial priorities for 2022? Lori Donaldson: COVID-19 made it clear to many CFOs how quickly the financial performance of a healthcare system can be immediately impacted when public health orders required the shutdown of many clinical services. Our most important fi- nancial priority is to ensure adequate cash reserves to sustain the delivery of care during the pandemic and to continue to support the tripartite mission of the only academic health system in the San Diego region. Like most health systems, UC San Diego Health lost revenues and incurred expenses that were not fully recovered through federal or other external funding sources. is resulted in the de- lay of several capital projects that will address our capacity limitations through expansion of our am- bulatory locations throughout the region to better serve our patients. In addition, continued improved financial performance is necessary to build cash reserves to support debt capacity for our Hillcrest redevelopment and other strategic investments. Our second top financial priority is to redesign our funds flow among the three missions of UC San Diego Health. Changes to the Medi- care Physician Fee Schedule and the effects of COVID-19 have impacted the benchmarks we use for physician productivity and com- pensation. New value-based payment programs are also driving the need to reevaluate the principles and mechanics of our funds flow model. In May 2021, we launched a multidis- ciplinary initiative we refer to as "strategic align- ment" to evaluate and make recommendations to modify our funds flow to ensure the future model is simpler and more transparent, sup- ports margin growth, aligns with our strate- gic priorities and supports all three missions of the university. Q: What capital projects does UC San Diego Health have in the works that ex- cite you the most? LD: UC San Diego Health operates two major campuses in San Diego, in Hillcrest and La Jolla, as well as ambulatory locations across the county. Encompassing approximately 60 acres, the UC San Diego Hillcrest Campus is located 13 miles south of the university's La Jolla campus and is a critical regional resource, providing care for all patients, including those who are under-insured or uninsured. In November 2019, UC San Diego received approval of the Hillcrest Long Range Development plan by the UC Board of Regents. is multiphase plan is a collaboration between the UC San Diego campus and the health sys- tem to redesign, rebuild and revitalize the Hill- crest campus. is multiyear redevelopment is planned to replace the more than 50-year-old Hillcrest inpatient hospital, rebuild parking and other infrastructure, bring much-needed hous- ing for staff and the community, and significantly expand ambulatory clinical facilities. e first phase of this project was approved by the UC Board of Regents in September 2021 and includes an outpatient pavilion and park- ing structure. As the existing hospital must continue to operate throughout construction, building a new hospital requires a complete redevelopment of the campus through a thoughtfully sequenced plan. e majority of the existing buildings, both temporary and permanent, will be demolished. New devel- opment is anticipated over approximately 15 years in five major phases, and will be imple- mented in a manner that reduces construc- tion impacts to the surrounding community while also ensuring that the existing critical campus functions remain operational. I am very excited about this project, as it will provide significant space for multispecialty cancer clinics, infusion and radiation oncol- ogy, allowing UC San Diego Health's National Cancer Institute-designated cancer center to expand in scale of services and new modal- ities of treatment. e facility will also pro- vide multispecialty clinics, an ambulatory surgery center, advanced imaging and labo- ratory services. e total phase 1 project bud- get of $550.3 million would be funded from previously issued bonds, external financing, campus funds, operating leases and hospi- tal reserves. An estimated $2.5 billion to $3 billion will be invested in the entire Hillcrest Campus redevelopment project. Q: Beyond financial knowledge, what skills are essential for health system CFOs to thrive in today's health care landscape? LD: Health system CFOs must have a full un- derstanding of clinical operations, be strategic thinkers and excellent communicators. e CFO's role goes well beyond fiduciary responsibil- ity. Today's health system CFOs must have the ability to identify growth opportunities and be willing to take business risks in order to adapt to new care models and competition from non- traditional market players. In my role as CFO, I frequently present complex financial informa- tion to a variety of internal and external stake- holders. A CFO must be resourceful and have the ability to inspire trust, as the decisions CFOs make or recommend must be viewed as being in the best interest of the health system, its pa- tients and the community we serve. Q: What advice would you offer to an- other healthcare CFO and why? LD: I am extremely fortunate to have worked for UC San Diego Health for 30 years, of which the past 11 have been in the CFO role. roughout my career, the scope of the CFO role has expanded significantly. Today's CFOs are responsible for leading an interdisciplinary team that covers essential business functions that are very different in nature as well as be- ing a strategic partner to the CEO. Revenue cycle, supply chain, accounting, budgeting, contracting and business analytics are all very different, complex functions that require deep expertise in both the relevant subject matter and the regulations that are unique to health- care. In order to succeed as a healthcare CFO, you need to build a strong team of experts who have the depth of knowledge to successfully manage these functions and be nimble strate- gic thinkers who can adapt to the constantly changing academic healthcare environment. Building such a team requires strong collabo- ration with human resources to recruit talent; however, that is not enough. Health finance professionals are eager to learn and add value to their organization so the CFO must ensure the team has access to tools, training, coaching and mentorship to enable professional growth. e CFO must also provide a working envi- ronment that promotes trust and values indi- vidual contribution. n

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