Becker's Hospital Review

9 CFO / FINANCE OhioHealth CFO shares 3 strategies for financial success By Madeline Ashley C olumbus-based OhioHealth CFO Michael Browning, a 30- year veteran of healthcare finance, has helped six of the eight health systems he's worked at undergo financial turnarounds. Mr. Browning told Becker's that while OhioHealth would not be considered a turnaround given its solid portfolio; he is focused on growth and operational excellence at the system. "CFOs are known as strong finance people, but I think to be a really good finance person, you have to understand operations and strategy to be successful in today's environment," Mr. Browning said. OhioHealth had a 6.6% operating margin for fiscal 2024, with a goal of 6.7% operating margin in fiscal 2025. To achieve these targets, Mr. Browning emphasized three key imperatives: grow your business, maximize reimbursement and be efficient. In the first quarter of fiscal 2025, the three months ended Sept. 30, OhioHealth saw operating income of $252.8 million at a 14.2% margin, up from a $105.3 million and a 7% margin in the first quarter of fiscal 2024, according to a financial report shared with Becker's. Total revenue for the system was $1.8 billion in the fiscal first quarter, up from $1.5 billion during the same period in fiscal 2024, while total expenses were $1.5 billion in the first quarter, also up from $1.4 billion during the same time period in 2024. OhioHealth saw a net income in the first quarter of fiscal 2025 of $563 million, up from a net loss of $46.4 million over the same period in 2024. Its long-term debt was $1.9 billion, and the system had 522 days of cash on hand as of Sept. 30. "With a strong balance sheet, we're able to invest 100% of our earnings back into patient care, and this is why we focus really hard on making sure we have strong margins," he said. e health system aims to acquire its 16th hospital, Morrow County Hospital in Mount Gilead, Ohio, but is also part of three joint ventures, bringing the number of hospitals that the system operates to 19. "We're in the due diligence process with Fairfield Medical Center, and we're hoping to wrap up the process on that one soon, so that will make the 20th hospital if all goes well from that acquisition," Mr. Browning said. Looking to the future, Mr. Browning said he is keeping a close eye on industry challenges, including inflation, labor costs and potential shis in Medicare and Medicaid policy under the new political landscape."With the change of presidency and Republican Congress, there's risk that we can face significant change over the next several years," he said. "We have to closely monitor potential changes, not only to reimbursement, [but also] the federal regulations that could change reimbursement." Mr. Browning then highlighted the evolving role of a CFO in healthcare, and pointed to how CFOs are historically known as "number crunchers." However, he contended that, beyond mere bookkeeping skills, a strong understanding of the business, strategy and forward thinking are essential in supporting health systems. n Health system margins 'encouraging' while hospitals report dip: 10 notes By Laura Dyrda H ealth system margins trended up in October after three months of declines, according to data from Strata Decision Technology. However, hospitals saw operating margins further narrow month over month. "It's encouraging to see that health systems had even minimal gains to start the fourth quarter, given the performance declines they experienced throughout Q3," said Steve Wasson, chief data and intelligence officer at Strata Decision Technology. "At the same time, the decrease in operating margins for individual hospitals reflects the need for organizations to remain vigilant as they contend with unrelenting increases across both labor and non-labor expenses." The data was gathered from surveys completed by leaders from 1,600 hospitals and more than 135,000 physicians on their performance in October 2024. Ten takeaways: 1. Average health system margins increased from 1.6% in September to 1.8% in October. Year to date hospital operating margins dipped to 4.9% from 5.1%. 2. Large hospitals with 300 to 499 beds had 2.9 percentage point margin increases while hospitals with 200 to 299 beds had the smallest margin increase at just 0.9 percentage points. 3. The average EBITDA margin for hospitals was up 1.6 percentage points year over year, and 1.2 percentage points month over month. 4. Hospital expenses climbed 4.4% month over month and 8.5% year over year on average. 5. Hospitals reported an average 10% increase in non- labor expenses year over year. Drug expenses jumped 15.2% and supply costs were up 13.2%. 6. Labor expenses increased 4.4% month over month and 6.5% year over year. 7. Outpatient visits increased 12.8% month over month and 8.6% year over year in October. Outpatient revenue jumped 12.7% year over year. 8. Inpatient admissions were up 3.7% month over month and 4.7% year over year. Inpatient revenue increased 5.9% year over year. 9. Emergency visits dropped 3.1% month over month and 1.4% year over year. 10. Gross hospital revenue increased for the 18th consecutive month, jumping 8.1% month over month. Overall revenue increased 11.2% year over year in October. n

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