CFO Leadership Strategies for a Rapidly Changing Healthcare Environment

Archelle Georgiou, M.D. Medical Correspondent

Tim Morgan, MBA, BSN Chief Operating Officer, B. E. Smith

James Schuessler, MHA Former Interim CEO, Seton Medical Center

Mark Madden Senior Vice President, Executive Search, B. E. Smith

• Learn how the Affordable Care Act influences

and changes the role of finance leaders

• Understand the executive leadership skills required of

CFOs to be successful in the rapidly changing healthcare

environment

• Learn how to leverage your core talents for career growth

Session Focus

2

• Leadership in the Era of Affordable Care

– Tim Morgan, Chief Operating Officer, B. E. Smith

– James Schuessler, Former Interim CEO, Seton Medical Center

and Seton Coastside

– Mark Madden, Senior Vice President of Executive Search, B. E. Smith

• Q & A

• Working Session: “Finding Your Genius”

Approach to This Session

3

Leadership in the Era of Affordable Care

11,688,500

5

6

7

Access Expansion

for Consumers

Cost Controls for Payers

Value-Based Purchasing

for Providers

Cliff Notes to Affordable Care Act

8

Access For Uninsured

9

• Individuals < age 26:

Access to parent’s plan

• Medicaid Expansion

• Working poor, chronically

ill, minorities

– No denial for pre-

existing illness

– Financial subsidies

133% to 400% FPL

$46K/$96K

Access Expansion Increase Costs

10

Coverage of vulnerable

population

• More chronic health conditions

• More mental illness

• Decreased compliance

Increased Medical Cost

Increased Insurance

Premiums

• 2014: $3,800

• 2015: $3,900

• 2016: $4,400

• 2024: $6,900

Medical Costs 84% Reserves 1%

Admin 12%

Profit 3%

For every $100 of premium,

$84 is spent on medical care

Cliff Notes to Affordable Care Act

11

Defined Benefits

80-85%

MCR

Cliff Notes to Affordable Care Act

12

Market Dynamics Influenced By ACA

13

Access Expansion

for Consumers

Cost Controls

for Payers

Value-Based Purchasing

for Providers

Tight

Utilization Mgmt

Narrow Networks

Lower Unit Cost

Integrated Care Systems

“The fee for service reimbursement model as

we know it today is dying quickly; we just don’t

know the date of the funeral yet.”

- Rich Umbdenstock (AHA President & CEO)

14

Payers Are Imposing Tighter Controls

15

1980’s Style

Utilization Management

Narrow Networks

..and Negotiating (Hard)

16

• Demanding lower unit cost in exchange for volume

• Introducing value-based purchasing for commercial population

• Self-insured employers

– Direct contracting

– Directing care

The Market Is Consolidating (Fast)

17

Hospital Deal Volume

Source: PwC’s Deal Practice, March 2014

Significant M&A in

hospital sector since

2009

• $1.9 billion in 2012

• $18.6 billion in 2013

Affiliations/Partnerships

• Leverage assets

• System volume

• Integrate care

Access Expansion

for Consumers

Cost Controls

for Payers

Value-Based Purchasing

for Providers

Market Dynamics Influenced By ACA

Tight

Utilization Mgmt

Narrow Networks

Integrated Care Systems

Lower Unit Cost

What will it take to survive and thrive?

18

B. E. Smith CNO Survey

19

Managing to a Price vs. Setting a Price

20

Medical Cost Forecasting

What is the total cost of care? What is the distribution of cost? Who is accountable for what?

(Big) Data/Analytics • Clinical

• Operations

Relationships with operations &

clinical experts for analysis/insights

Cost accounting • Functional areas

• Physicians

• Other partners/platforms

Balanced negotiations • “Coop-etition”

• Constructive conflict

Shared risk arrangements • Designing

• Managing

Transparency • Ability to explain financial analysis to

non-financial audience

Managing People vs. Driving Procedures

21

Population Management

How do we attract and maintain healthy populations? Who is achieving better outcomes? Why?

What are the opportunities for clinical improvement?

(Big) Data/Predictive Analytics • Population segmentation

• Marketing as science

• Patients as guests

Outcomes • Clinical

• Financial

• Partnership with Chief Medical Officer

• Focus on safety, quality & satisfaction

• Framework for supporting innovation

Health System Integration • IT investments

• Ongoing exploration of trends

and opportunities

“Doctors who do

better… not more”

Integrating Clinical, Operational & Financial Strategies vs. Failure

22

Operating Efficiency

Are we optimizing RCM opportunities? Are we eliminating waste?

Are patients being treated in most cost efficient setting?

(Big) Data/Analytics • Compliance/Reporting

Quality and compliance as

financial functions

Operating Processes

(not just budgets)

Be present—in OR, ER, ICU

Partnership with CNO & COO

Comparative Effectiveness • Preference sensitive capital purchasing

• Alternate care sites

Tough decision-making

Communicate value impact

Ability to get buy-in & alignment

M&A Strategy, JV, Partnerships Future vision for healthcare

Access Expansion

for Consumers

Cost Controls

for Payers

Value-Based Purchasing

for Providers

CFO Leadership Strategies in Health Reform

Tight

Utilization Mgmt

Narrow Networks

Integrated Care Systems

Lower Unit Cost

Operating Efficiency

Medical Cost Forecasting

Population Management

23

Question and Answer

Working Session: “Finding Your Genius”

• a very smart or talented person

• a person who has a level of talent or intelligence that is very rare or remarkable

• a person who is very good at doing something

• great natural ability

• remarkable talent or intelligence

ge·nius

26

Who Is A Genius?

27

Finding Your Genius

28

Step 1: Accomplishments

29

Time: 5-7 minutes

Definition

•Measureable

•Tangible

•Occurred at a specific point in time

•Can be personal…but not vague

- Avoid: “I am a good father.”

Accomplishments

1.

2.

3.

4.

5.

Step 2: Energy/Emotion, Impact, Skills

30

Time: 10 minutes

Energy/Emotion: How did

each accomplishment make

you feel? Beyond “proud” or

“successful.”

Impact: Why was each

accomplishment important?

Skills: What skill (beyond

obvious educational

knowledge) was core

to each accomplishment?

Identify the common

theme that emerges in

each category

Impact

1.

2.

3.

4.

5.

Impact

Energy/

Emotion

1.

2.

3.

4.

5.

Energy/

Emotion

Skills

1.

2.

3.

4.

5.

Skill

Step 3: Finding Your Genius

31

Time: 10 minutes

•Identify a partner

•Probe, poke, “peel the onion back” (5 minutes/person)

• How do you do it?

• What steps do you take that allow

you to excel?

• Others’ attempts have failed.

What do you do differently?

What don’t they do?

• Why is this easier for you than others?

Genius Skill

Step 4: Using Your Genius

32

Time: At Home

• How can you use Your Genius within your current role?

• What initiatives within your organization would benefit from Your Genius?

• Identify other career opportunities where Your Genius would allow you to excel.

Impact

Energy/Emotion

Skills

Genius

Using Your Genius

Finding Your Genius:

Closing Comments

Thank You! Tim Morgan, MBA, BSN tmorgan@besmith.com

877.802.4593

Mark Madden mmadden@besmith.com

877.802.4593