When Al Johnson was named CFO at Truman Medical Centers (Kansas City, Mo.) in 1999, one of his first goals was to establish a financial counseling center to accommodate the multitude of patients at Truman who are uninsured or underinsured. Although the challenges continue to mount as uncompensated care rises, the two-hospital, not-for-profit health system is thriving. Since Johnson took over the position, net revenue has increased $144 million, and what he calls a “safety net facility” has become a state-of-the-art facility. HRCM's Daphne Lawrence recently talked with Johnson, who was one of three finalists for the Kansas City Business Journal CFO of the Year Award.
DL: You have said that your role is one of the most difficult positions in the Kansas City area, why is that?
AJ: Well, I think it is because of the type of institution we are. We are the Kansas City safety net hospital. What you hear about today in healthcare is that there is a rising number of uninsured patients, and as a safety net of Kansas City, most of the burden of the uninsured falls on our shoulders. That's a very, very difficult thing to do financially.
DL: Are there any other public hospitals in the state, other than Truman? Are you part of any network?
AJ: We're not part of any network. We do have two campuses but we're not affiliated with any big major hospital stream. That's another thing that makes this challenging; cash flow obviously is always a major concern for us because you don't have a lot of surpluses like other major hospital systems do.
DL: So you do a lot of bad debt and charity care?
AJ: Yes, we do. In the last couple of years, it has been kind of scary. We've seen the bad debt and charity volumes continue to go up. In fact, we had one year where the bad debt and charity care write-offs increased — and this is in terms of cost, not charges — by $23 million in just one year.
DL: What year was that?
AJ: That was fiscal year 2006. We're on a fiscal year basis; our fiscal year ends June 30. What happened was the State of Missouri elected a new governor, Matt Blunt. One of the things that he campaigned for was cutting Medicaid, and he came in and drastically cut Medicaid eligibility and that hurt us extremely badly.
DL: What percentage of your revenue is Medicaid care?
AJ: About 45 percent is Medicaid. To give you an idea of what our patient demographics are, about 45 percent is Medicaid, about 20 percent is Medicare, about 10 percent is commercial, and the balance, 25 percent, is no-pay. They call it self-pay, but it's really no-pay.
DL: Have you implemented anything new or innovative to capture this?
AJ: I'll tell you where we've put most of our resources. When I got here, we started a financial counseling office. With the huge volumes of patients we have here, we noticed a lot of them were eligible or could have been eligible for Medicaid, but they never went through the Medicaid application process. We couldn't really rely on the state Medicaid workers to capture the percentage of those patients that are truly eligible for Medicaid.
When I say state Medicaid workers, I mean that they actually work here, but they're not employed by us. They're on site and their job is to take Medicaid applications and, if the patient qualifies, to get them on Medicaid. We relied on them and that was really not effective; there are still a lot of eligible patients that fell through the system, so we've implemented financial counseling staff. We now have a staff of about 28 individuals whose job is to interview patients and get patients through the Medicaid application process as best they can. That's helped us quite a bit. To give you an idea, we average about $9 million a year in additional reimbursement due to our financial counselors.
DL: Did you have any problems recruiting those workers?