3 challenges facing hospital CFOs — and how they're overcoming them

Hospital and health system leaders are thinking outside of the box to overcome the challenges they face today. From launching innovative programs to striking partnerships with nontraditional healthcare players, provider organizations are adapting to the new healthcare ecosystem.

Physician recruitment, regulatory compliance and financial pressures were a few of the challenges raised during a recent CFO advisory call hosted by Becker's Hospital Review. Though much of the call focused on the pressures facing healthcare organizations, the conversation had a positive tone. The participants discussed how hospitals are overcoming or embracing the following three challenges:   

Challenge No. 1: Capital expenditures take a bite out of cash flow. Many hospitals and health systems today have outdated facilities and equipment. They need to spend money on updates to keep the doors open, which often requires putting off investments in new technology or machines to provide better patient care.

The financial strain on some healthcare organizations is leading to interesting partnerships, according to Joseph Demont, CPA, a healthcare CFO and consultant for Warbird LLC, an Atlanta-based firm that helps hospitals, health systems and physician practices identify and solve financial and operational challenges. In the area of capital rationing, for example, if there are two competing hospitals in the same geographic area, financial pressures may be so great on both facilities that a partnership involving both may be necessary and possibly the best solution.

"There might be some new healthcare technology that neither system alone could properly afford and might not even have enough patients to pay for the machine. But everyone wants the best, the greatest and the fastest. That pressure may force entities into some sort of partnership. The one organization buys the unit and then both entities funnel that patient care through the one entity that has the machine. The financial pressures are real," Mr. Demont said.

"Relatedly," said Mr. Demont, "reduced reimbursement, payment reform, an aging population and aging infrastructure — all of this puts additional pressure on public health and religiously based healthcare organizations whose mission includes treating and caring for the most vulnerable and least-able-to-pay populations."

Challenge No. 2: Lack of physicians makes recruitment harder. In 2019, the Association of American Medical Colleges forecast that the U.S. could see a shortage of 122,000 physicians by 2032, including a shortfall of more than 55,000 primary care physicians. Some markets are already facing a shortage of physicians, forcing hospitals and health systems to compete for a small pool of candidates.

"There's a shortage of primary care physicians in our marketplace, a significant shortage," Bayhealth Senior Vice President and CFO Mike Tretina said during the call.

Bayhealth, a two-hospital system based in Dover, Del., aggressively recruits physicians, but it is also taking other steps to overcome the physician shortage in its market. The health system is launching graduate medical education programs in primary care, internal medicine, surgery and emergency department.

"We're initiating the GME programs in those areas to hopefully train and retain some physicians in our area," Mr. Tretina said.  

Challenge No. 3: Hospitals face new competitive threats. Hospitals and health systems are facing new competition from companies like Walmart, Walgreens and CVS, which are pushing further into healthcare by offering easily accessible clinics. Mr. Demont said these new competitive threats have the attention of hospital executives.

"We're not so above the confusion that we don't recognize this could be a significant potential threat," he said. "We're constantly looking to see if these 'Minute-Clinics' put a significant dent … in our own urgent care clinics or even in our emergency departments."

Though some companies are pushing more into healthcare delivery, others, like Amazon and Google, are striking partnerships with hospitals and health systems. Mr. Tretina said Bayhealth is open to the possibility of partnering with companies that could help it improve care or expand offerings such as telehealth.

"One of our strategic goals is to always evaluate affiliations with trusted partners to elevate the services in our community," Mr. Tretina said. "We're actually open to figuring out if we can do something with Amazon or Google down the road."

 

 

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