Becker's Hospital Review

35 Some key metrics identified by CFOs Admissions and readmissions Community benefit information for tax exemption preservation for nonprofits Covered lives, premium revenue and cost per member (if the organization runs a health plan) Daily cash balance and cash collections Daily census Daily emergency department activity Gross revenue and payer mix of revenue HCAHPs Healthcare complexity codes Length of stay by service line Maximum debt service coverage ratio Observation stays Occupancy by service line Operating margin Outpatient registrations Patient experience Patient populations that drive costs the most Productivity and operational efficiency Staff overtime Surgeries Unrestricted days cash on hand Variance between actual and bud- geted FTEs MORE ONLINE: Want more information on healthcare finance? See the following articles available at www.BeckersHospitalReview.com. n "Is this the end for hospital charity care?" (September 2014) n "Moody's: Cleveland Clinic will issue first century bond in nonprofit healthcare" (September 2014) n "CFO perspective: Finding savings in the annual operating budget" (September 2014) Financial Management dicators differ depending on various factors, such as whether their health system also runs a health plan. However, there are several broad categories that CFOs across the board seem to view as crucial. For instance, Bob Glenning, CFO of Hackensack (N.J.) University Medical Center, says trends in inpatient and outpatient volume will always be important, despite the transformation from fee- for-service to value-based payments. "It's the lead- ing economic indicator," he says. "If I know my volumes are strong, then it's likely that my revenue will be strong." Similarly, Don Trippel, CFO of Hugh Chatham Memorial Hospital in Elkin, N.C., says he pays at- tention to surgeries and the census on a daily ba- sis: "The volume-driven functions are obviously a big part of it." Cash also comes up frequently as a focal point. Mr. Glenning says he spends considerable time moni- toring days cash on hand, collections and overall cash trends, in addition to determining "what I think is going to move cash to the organization and away from the organization." In addition to a balance score card of metrics tracked monthly, Fred Savelsbergh, CFO of Dallas-based Baylor Scott & White Health, says he also focuses on cash production, in addition to revenue. "We have a target and a goal for cash production and revenue that shows up on my dashboard daily," he says. The growing prominence of quality on the CFO dash- board Mark Bogen, CFO and senior vice president of fi- nance of South Nassau Communities Hospital in Oceanside, N.Y., also reviews reports on cash (in- cluding daily deposits), revenue and indicators of inpatient volume. He also ventures outside of the territory of the expected indicators of profitability and fiscal health. "I feel that everything that goes on in the hospital impacts finance," he says. "I've become extremely sensitive to the clinical quality indicators." Like Mr. Bogen and Mr. Brennan of Geisinger, many hospital and health system CFOs seem to have a quality element in their dashboards, es- pecially if their organizations have launched value-based initiatives and population health management efforts. Dennis Dahlen, CFO of Phoenix-based Banner Health (which is par- ticipating in Medicare's Pioneer ACO model), tracks the performance of his system's popu- lation health management enterprise. Banner sorts patients into different cohorts, depending on whether they're part of a full-risk or shared savings model. He looks at how much business Banner has per cohort, premium revenue and administrative costs, among other measures. "We break it down similar to the way an insurance company would," he says. Figuring out the CFO focus going forward Mr. Bogen says he's still trying to determine what his ultimate CFO dashboard will look like in an era of population health management and value-based payments. Still, he predicts he and his colleagues overseeing health system and hospital finances across the country will need to tweak the indicators they look at or identify entirely new ones. "I think the biggest thing is CFOs…they're going to have to continue to get out of their comfort zone with the traditional financial indicators that predict revenue, that predict cash flow, and be more aware of where we're headed, how many lives are we cov- ering and the utilization and the outcomes attached to the clinical pathways that we're allowing access to," he says. "I know that's a tough thing to get used to, but quality and outcomes are where it's at, so you've got to be in that loop." n By Helen Adamopoulos

• Cover