I recently had the pleasure of talking to Pat Moran, President of the First Illinois Chapter of HFMA, headquartered out of Chicago and with more than 1,300 members, the second largest chapter in the nation.
Pat not only stays keenly aware of current issues impacting healthcare, but his organization also focuses on outreach and education to help hospitals handle these challenges while operating at best practice levels, including 9 full day educational programs and 12 free monthly webinars.
In fact, the HFMA Leadership Conference on Value is taking place March 29-30 in Chicago and will focus on today’s significant healthcare challenges and prepare financial, clinical, and operational leaders to provide stewardship for their organizations with an emphasis on value rather than volume.
Pat, health reform is obviously hot right now, Congress recently passed a new Doc Fix, and shrinking reimbursements are nothing new. If you were to give hospital executives one piece of key advice for navigating the current healthcare landscape, what would it be?
Cathy Jacobson, past national chairperson for HFMA and current President of Froedtert Health, says that the #1 issue facing every hospital CEO is how to get reimbursed for services. I completely agree. And nothing impacts reimbursement more than a healthy revenue cycle.
I think there are many key financial issues facing hospitals today, including revenue cycle, debt load, investment income, and reducing losses from employed physicians. There are others of course, such as supply chain and personnel management, but for today’s purposes, I’m going to focus on those first few.
If I had to give a hospital leader one piece of key advice for navigating the healthcare issues you described, it would be this: Realize that the revenue cycle does not operate in a silo, and it affects nearly every other aspect of your hospital’s ability to navigate internal and external influences.
Let’s look at a broader context. Because of the financial crisis that occurred in the fall of 2008, one of the major challenges most hospitals have today is how to manage their debt, much of which is in the form of variable rate bonds. Bondholders are now monitoring hospitals more closely and radically changing their bond rates, which makes hospitals’ interest expense fluctuate and negatively affects their ability to expand or invest in HIT. Cash days on hand and A/R days are major components of bond ratings. As a hospital’s revenue cycle improves, their cash days on hand will increase and A/R days will decrease, greatly improving the hospital’s bond rating—translating into possibly millions of dollars in reduced debt expense load. Additionally, a healthy revenue cycle that maximizes reimbursement and maintains higher levels of cash allows hospitals greater freedom to make strategic investments.
A colleague and friend of mine, Vince Pryor, former chapter president of HFMA and Senior Vice President and CFO of Edward Hospital and Health Services in Naperville, IL, says it well: “Revenue cycle is the gift that keeps on giving.”