Issue link: https://beckershealthcare.uberflip.com/i/164052
Special CFO Roundtable 16 entity, Covenant Health Network, will be critical to achieving effective care coordination across a large population. Q: What is the most important financial decision you have made this year, so far? Mr. Bogen: Going into 2013, we knew we were going to face a significant deficit unless we did something about our benefit plan. We have traditionally had a solid pension plan, and our annual expense as a result of the significantly low discount rates had gone from $13 to $14 million in 2008 to $23 million in 2012. Our annual expense in 2013 was going to go up to $28 million. We found that freezing the pension plan service helped bring it down to about $7 to $8 million. It was a decision that was made in 2012, but it directly affected 2013. Q: What is the best career advice you have ever received? Mr. Glenning: A person I used to work with once said the only thing he paid me for was my judgment. That comment has caused me to pause many times over the years and think about its meaning. It was not intended to mean technical knowledge and people skills are unimportant, rather its intended meaning was to say the value lies in the exercise of good judgment, to be conscious of all the variables that go into a good decision. I've found that advice to be helpful on many occasions. Mr. Kasberger: To not be afraid of taking risks and challenging the normal way of doing things. Change is continuous, and improvement also has to be continuous. The healthcare industry is changing everyday and we have to say current with that. We have to change our methodologies. Mr. Glenning: At the beginning of the year, we decided to fully fund our defined benefit plan. That plan had seen some stresses over the last few years that left it under-funded causing significant fluctuations in our pension contributions. Fortunately, we have excellent banking partners who helped us craft a fixed rate loan at a rate lower than the expected PBGC premiums. This allowed us to fully fund the plan while smoothing out and reducing the cash needed. It was a good opportunity for both HackensckUMC and our employees during this period of uncertainty. Ms. Mitzner: The best career advice I've received would probably focus on the attributes of resiliency and collaboration. Career success and satisfaction can be improved with a constant reinventing of oneself to include investment in new skills and capabilities. This leads to resiliency, which has proven helpful in an industry under increasing change. Also, nurturing an ongoing desire to collaborate and be a part of something regardless of formal role. That is where the learning takes place and surprising opportunities can sometimes develop. Q: What are some of the financial challenges facing your organization, and how do you plan on overcoming them? Q: What, in your opinion, is the most overlooked aspect of healthcare finance that CFOs should keep in mind? Mr. Bogen: Going into the insurance exchanges and with the penalties being deferred for at least year, the concern is that people will move from employer-sponsored plans to insurance exchanges. There is a lot of pressure put on insurance companies to bring down cost of insurance and, in order for that to happen, providers are asked to take heavily discounted payments. Mr. Kasberger: Healthcare CFOs need to really look at the revenue cycle not in the traditional sense, with regard to patient registration and billing, but also in terms of physician documentation, contract compliance and medical records. The lifeblood of the hospital is billing for services rendered. Certainly what we are trying to do is to strengthen revenue cycle processes. The expense reductions that we are looking into are in anticipation of lower revenues and lower use of hospitals. In Long Island, inpatient admissions are down year-to-year. Part of the problem is that whether you believe in health reform or not it has the ability to create significant winners and losers. Ms. Mitzner: The roles a CFO can play in the organization can be greater than ever. There is a great rotation occurring in the underpinnings of healthcare economics. Healthcare is transitioning into a risk-based model, and the underlying economics are moving from an inefficient to an efficient marketplace. Transparency, price sensitivity and the increasing role of the consumer are fueling this rotation in economic drivers. Strategic financial leadership and strong risk management are critical skills needed to successfully navigate the change. Ms. Mitzner: We're really looking at the challenges of the future and realizing our vision amidst drastic change. Our main obstacles are less financial in nature, and more about culture and transformation around improving care and implementing new models. In an increasingly risk-based market, financial performance will follow effective and integrated care models. That said, financial challenges persist. The very business that we are trying to change is the one producing the current, mostly fee-for-service revenue to fund that change. Managing the pace of change for both the investment in care models and resulting implications on revenues is a significant financial challenge. Additionally, broader headwinds also pose significant challenges as revenue trends move from an "inflation-beating" to "inflation pacing" environment. That downward pressure on revenue trend during a period of significant strategic investment requires a new point of view around cost transformation and process redesign across the care continuum. Back to culture and transformation — employee engagement and physician partnerships will be critical to success. Additionally, more now than ever, CFOs must be able to lead effective partnerships. In many markets, care coordination and impacting the cost of healthcare in a meaningful way can only be accomplished through effective partnerships with others. Lastly, the responsibility is great at this moment of change in the healthcare industry. Private healthcare and the innovation that resides in private industry are at risk as the industry transitions into an even more governmentally influenced market, be it through exchanges, regulations or other elements of healthcare reform. Our success is critical not only for sustaining private options in healthcare, but also for delivering our mission in the provision of improved coordinated care and health outcomes for vulnerable populations. n Optum is a leading information and technology-enabled health services business dedicated to helping make the health system work better for everyone. Optum comprises three companies — OptumHealth, OptumInsight and OptumRx — representing more than 35,000 employees worldwide who collaborate to deliver integrated, intelligent solutions that work to modernize the health system and improve overall population health.