Becker's Hospital Review

9 CFO / FINANCE to take care of their team members. I admired that. When I was interviewing, they told me this, and I thought, 'wow, the CFO was probably losing his mind because it was such a costly move.' But they saw it as an investment. ey had been in business 65 years, and many employees had been there 30 to 40 years. ey said, "We're not going to abandon you at this time." Because they kept employees, when all that volume came back months later, we were ready. Not only that, but you could see — and still do — hospitals realizing they're losing money on the inpatient side, so they close a unit or two, shrinking capacity. If you look at the stats, a number of hospitals have a gap between staffed beds and licensed beds. We staff all of our licensed beds. at's costly, sometimes requiring premium pay when there's a nursing shortage, but it ensured our community had somewhere to go. By doing that, and by expanding our emergency department, which has grown tremendously — from 60,000 visits a year when I first arrived to 83,000 and growing — we ensured a commitment to the community. ey responded, and it created inertia, turning us into more of a hub for our community. So I think that's it: growth has come from just being there, investing in services, even when they don't always yield big financial results. Q: Where are the core areas NKC Health aims to grow over the next 12 to 24 months? AJ: We've found the areas in which we are growing organically. We've identified where we do really well — specific service lines where we've invested in world-class surgeons and physicians — and we're doubling down on those efforts. We're expanding in certain areas and have invested tens of millions in capital. We have five or six service lines we're focusing on. We can't grow much more on the inpatient side, but we're always here for the community, and we're seeing more shi to outpatient. Just over the last year, we've gone from our business being mostly inpatient to 61% outpatient, so the move is happening. We're working to build and hire to keep up with it. Over the next 12 to 24 months, we're focused primarily on growth, and secondarily on improvements like labor management. At our June 30 fiscal year end, I reported to my board with a smile because in one year, we reduced premium pay by 70%. at's such a wind in our sails as we look to strengthen margins, build the balance sheet and reinvest in the community. So that's really what we're doing: blocking and tackling. at will never go away. We've always got to get more efficient, and we'll use technology where we can. We're never going to be on the cutting edge of technology as a small system, but we look to our partners like Mayo Clinic to see what works and what doesn't, and what's worth our time. We've found some neat solutions there, but really, it's about going back to the basics: serving the community and focusing on internal efficiencies. n Hospital indirect expenses mount: 20 statistics by department By Laura Dyrda P urchased services spending has increased across all departments in recent years and health systems are taking a closer look at the data to identify trends and opportunities to improve vendor contract management. Kaufman Hall gathered monthly spending data by department to break down recent trends and found big upticks in financial and accounting, marketing and IT spending. Here is the average monthly change in spend by department: Acute care hospitals • Facilities: 6% • Financial and accounting: 9.5% • Healthcare technology management: 7% • Human resources: 8.5% • Information technology: nearly 8% • Marketing: 11% • Materials management: 5% • Patient care services: 5% • Support services: 5.5% • Utilities: 6.5% Academic medical centers • Facilities: 8.5% • Financial and accounting: nearly 12% • Healthcare technology management: 8.2% • Human resources: 9% • Information technology: nearly 8% • Marketing: 18% • Materials management: 4.5% • Patient care services: 9% • Support services: 6.5% • Utilities: 8.5% "As the industry evolves and margins continue to decline, the success of a health system's financial sustainability may depend on how they strategically and thoughtfully manage indirect expenses," wrote Blaine Douglas, Vizient senior vice president and general manager of indirect spend and purchased services, wrote in the article. "Thoughtful stewardship requires more than occasional audits or reactive decisions — it demands a coordinated, data-informed approach that spans departments, aligns with organizational goals and adapts to changing market dynamics." n

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