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HFMA/ANI Recap: CFOs Need to Become the Pilots of Healthcare

June 26, 2013
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Finance professionals gather at the HFMA/ANI conference

There were key lessons learned at last week’s Healthcare Financial Management Association's (HFMA) annual conference in Orlando, Fla., including the need for clearer transparency in healthcare, the intensification of healthcare reform, the soon-to-be reality of ICD-10, insights on how to transform payer-provider relationships, and many more revenue cycle trends.

While all of these things can be tied into the role finance professionals play in healthcare, perhaps nothing at the annual conference stuck with me more than the speech from Donald Berwick, M.D., formerly acting administrator of the federal Centers for Medicare & Medicaid Services (CMS) and a new official candidate for Massachusetts governor. Berwick spoke passionately to chief financial officers (CFOs) in the crowd, urging them to not wait for Washington D.C. to make changes, as we don’t have the time. "You can't say it can't be done. It can be done,” Berwick claimed. “It's not a problem of possibility, it's a problem of will,” he said.

And Berwick is right. It is a problem of will and resolve; he proved this by showing the audience seven examples of healthcare systems that work, starting with Southcentral Foundation’s Nuka System of Care in Anchorage, Alas. Nuka has what Berwick called “team-based care to the max,” delivering health, not just disease care. At Nuka, relationships are the key to healthcare; that patient care should be integrated, there should be same-day access to primary care; patients are partners in their own healthcare and there should be given ample opportunity to offer advice and feedback.

Has Nuka achieved results? In five years, emergency department (ED) use was reduced by 50 percent, hospital admissions was down 53 percent, utilization of specialists was down 65 percent, staff turnover rate was down 80 percent, and primary care utilization was down 20 percent. Overall, the quality rates were tremendous, said Berwick, and it is all done at two-thirds the cost of other providers. These are the kinds of things that CFOs all around the country need to be thinking of.

Another example is Denver Health, which implemented Lean production practices to increase efficiency throughout its system—and saved $180 million in five to six years, with the lowest case-mix adjusted mortality rate in the UHS Consortium.

Currently, there is a 400 percent difference in healthcare costs depending on what region of the country you live in, according to pricing data recently released by CMS. And in Massachusetts, where Berwick announced his plans to run for governor of the state, every line item in the state budget has decreased from 2000 to 2012 except for healthcare, which increased 59 percent.

Then there is ICD-10. The standard diagnostic tool will not only improve the medical billing process as a whole, but help patients get appropriate coverage and doctors get paid. The new coding will not be implemented until 2014, but getting ahead of it now should be a major focus for CFOs.

However, at the conference, Hamilton Shawn, executive director of The Advisory Board Company, a Washington, D.C.-based consulting firm, told me that there is still is an industry-wide feeling that people aren’t ready for ICD-10 from the healthcare system side. “Missing one thing can screw you up and make you fall behind if you and the vendor aren’t aligned, he said. “In reality, we’re probably six months behind from where we should be. The Office of the National Coordinator for Health Information Technology (ONC) has told us no more delays before, and now they’re doing it again. So there is a feeling that people have—‘Are we ever going to go through with this?’”

CFOs have plenty of work to do in this space, including making sure all vendor connections are in place, getting their physicians the proper training and education, and learning the coding dictionary so it’s not a foreign language at the time of implementation.

In today’s healthcare, we are increasingly seeing a consolidation of hospitals and physician offices, just like the financial industry saw in the recent past. With this consolidation, healthcare organizations gain improvements in budgets while still providing a high quality level of care. However, CFOs must be cautious to ensure that all patient needs are being provided for, while doing so in the most cost efficient way possible.

So at the conference, CFOs were urged by leaders such as Berwick to begin the process by finding areas of waste in their organizations—such as overtreatment, excesses in administrative costs, failure to coordinate care, and failures in care delivery—and concentrating on removing waste from these areas, one by one. Undoubtedly, CFOs will increasingly find themselves as part of the strategic IT choices made by healthcare organizations.  Are they ready for the challenge?

They sure better be. “You’re about to move right now from the engine room to the wheel house,” Berwick told finance professionals at the conference. “Whether you want to or not, you’re going to be pilots.”