The U.S. healthcare system is undergoing a period of profound transformation, and few leaders are navigating it at the scale and complexity of Cleveland Clinic CFO Dennis Laraway. With cost pressures mounting from every direction, Mr. Laraway believes that now is the time for health systems to lead, not just react. From navigating declining federal reimbursement to rethinking labor productivity and deploying AI in meaningful ways, he sees this era not just as a challenge, but as a defining leadership moment for the industry.
In a wide-ranging conversation with Becker’s, Mr. Laraway outlines three converging forces that have his full attention: healthcare legislation and payment reform, enterprise-wide cost transformation, and the accelerating adoption of emerging technologies such as AI.
While Cleveland Clinic — like many systems — is facing persistent reimbursement pressure, he emphasizes that financial resilience must be built internally: managing costs to utilization, improving operational discipline, and creating scalable efficiencies across labor, supply chain and shared services.
Mr. Laraway recently joined the Becker’s CFO and Revenue Cycle Podcast to discuss the trends he is paying most attention to, how Cleveland Clinic is transforming amid industry challenges and what excites him most about the future.
Editor’s note: This is an excerpt from an episode of the Becker’s CFO and Revenue Cycle Podcast. Responses are lightly edited for length and clarity. Click here to listen to the full episode of the podcast.
Question: What are the three key trends you’re paying most attention to today and why?
Dennis Laraway: The health sector as a whole, which makes up nearly 20% of GDP in this country, is very fertile ground for activity, emerging technologies and transformation. It’s even entering a new phase of industrialization that hasn’t really occurred in healthcare the way it has in other industries over the years.
With that as a backdrop, here at Cleveland Clinic — and for me personally — we’re closely following a few major converging forces. First is healthcare legislation: what’s happening in Washington and how that impacts states across the country. This includes payment reform, changes in payment methodologies and revenue models, and especially the shift from fee-for-service, volume-based care to value-based care. That journey, which has been underway for years, is now being folded into more impactful legislative and payment reforms.
The punchline is that federal dollars going toward healthcare are going to come down. We’re going to see reduced federal funding of programs. The government’s risk in fee-for-service care — utilization risk, claim risk, volume risk — is budget risk, and they’re looking to mitigate it. That means price and payment pressure from CMS and from federal support for Medicaid programs nationwide. Government reimbursement pressure is going to continue, whether we like it or not. And for many health systems, including Cleveland Clinic, 50-60% of hospital utilization is tied to Medicare and Medicaid. That kind of pricing shift has everyone’s attention.
Alongside that comes our response; what I’d call cost transformation. If there’s price pressure and revenue pressure, we must turn inward: to our expense base, labor, non-labor costs, and the efficiencies and synergies we can act on. That’s leadership. That’s what we’re here to do. Getting leaner across the enterprise — improving labor productivity, supply chain performance, consolidating back-office services — these aren’t new strategies, but they’re more important than ever. Creating reproducible standards and reducing variation are key to improving systemwide efficiency, and that’s something we’re very focused on.
The third leg of this stool is the technology transformation itself. The healthcare sector has long lagged behind others — from banking to manufacturing — in adopting technology, including robotic process automation and AI-driven systems. One reason for that is our historically thin operating margins. Outside of the federal investments that came with the Affordable Care Act — particularly for electronic medical records — dollars for tech transformation have been limited.
But we’ve come a long way, and AI is now very well represented in the health sector. As I mentioned, healthcare is fertile ground for innovation, and that’s certainly true for AI, robotics and other technologies that can help us scale — expanding patient coverage, boosting transactional volume, improving speed and accuracy. That supports cost transformation, which is a key part of our response to payment reform and healthcare legislation. These three forces — legislative changes, cost transformation and technology innovation — are deeply interconnected here at Cleveland Clinic, and I imagine they are for many of my colleagues across the country as well.
Q: When it comes to reducing costs — whether on the vendor, supply or labor side — has anything proven especially effective at Cleveland Clinic? There may not be a silver bullet, but are there strategies that have stood out in terms of real impact recently?
DL: We can never pay too much attention to how efficiently we use our workforce. We want to be among the best employers in the country — or the world, for that matter — and be seen as the employer of choice in our communities and across the healthcare sector. That means offering competitive compensation and benefits, maintaining a strong environment of care and fostering a positive workforce culture. Those things are top of mind every day.
But alongside that, we also have to make sure we’re using our workforce at the top of their license — across every labor category and job class. That includes bedside productivity, nursing standards and patient ratios, operating room efficiencies, and back-office and transactional productivity. We have to do both: create a great workplace and operate with efficiency. This is a complex undertaking for large systems like ours — particularly given our presence in multiple markets, both domestic and international — but it’s fundamental work. When done well, it supports everything else.
I’ll give you a quick punchline example from Cleveland Clinic. Through the third quarter of this year, ended Sept. 30, we exceeded our top-line revenue plan. And nearly 100% of that revenue growth over plan has dropped through to operating income and cash flow. That’s because of our tight focus on managing expenses to volume — not just to revenue. We could be seeing gains through pricing, revenue cycle improvements and other channels, but our approach is to align our expense base directly with utilization. That’s how we’ve improved labor productivity year over year, and it’s helping us translate top-line growth directly to the bottom line.
Another area that’s working well is the supply chain. We’ve made progress on consolidation, standardization and formulary adoption, especially by creating stronger alignment with our physicians and staff. When our physician partners are engaged and aligned with our supply and pharmaceutical formularies, we get better contract leverage, reduce variation and improve quality of care. It also helps us better control price and utilization.
Lastly, on back-office services, we’ve consolidated most of our enterprise support functions centrally here in Cleveland. As a global organization, we’ve realized real scale benefits from doing that. A quick example: our total enterprise shared services costs now represent just 8% of total revenue across our global footprint. That’s an all-time low for us, and it reflects the power of standardization and enterprise-wide consolidation.
Q: At the top of our conversation, you mentioned healthcare representing nearly 20% of GDP and touched on the potential of AI. From your perspective as CFO of Cleveland Clinic, what are you especially excited about when you think about the future?
DL: In this profession, in this industry, there’s opportunity all around us every day. We’re part of a sector that’s going through massive transformation. As I mentioned earlier, healthcare accounts for nearly 20% of the U.S. GDP, and it’s fertile ground for industrialization, technological transformation and the evolving role of AI. You can’t help but feel the opportunity that exists in moments like this. Leaders are made in transformative times.
One of the most exciting aspects is the partnerships emerging from this industry transformation. Many are visible today in the AI space. You see major companies — some of the biggest brand names in the world — crossing over into healthcare: Oracle, Google, Microsoft, and others. At Cleveland Clinic, we’re working closely with Palantir on operational synergies. We also recently announced a global partnership with Oracle and G42 in the Middle East focused on transforming care through a more AI-driven experience for patients, providers and stakeholders, reimagining how care is delivered and commercialized across countries.
There are also smaller, highly innovative collaborations happening. One example is our work with Ambience and its ambient listening technology. It’s enabling physicians to see patients without having to type on a keyboard. Instead, mobile-based tools transcribe and build the patient note, assist with coding and abstraction, and hold potential for applications across hospital care, specialty care and even revenue cycle connections.
Another example is in our revenue cycle itself. We’re partnering with Akasa to automate documentation queries, coding and abstraction — work that was historically done through manual labor, CDI nurses and email workflows. Now, it can be driven through AI-enabled workflows directly in Epic. That kind of shift represents real, tangible transformation.
Q: Payers have been using AI and automation in their workflows for quite some time. It feels like providers are now starting to catch up, embedding AI more meaningfully into the revenue cycle. How do you see this “AI arms race” evolving in the coming years as AI becomes more sophisticated and more deeply integrated into the revenue cycle by payers and providers?
DL: There’s definitely a bit of a double-edged sword effect here. In the provider sector, we’re often in a reactive position. We don’t control the purse strings, so we’re responding to claims rules, policy bulletins and edits that come from the payers — whether that’s government programs like CMS and Medicaid, or small, medium and large commercial payers across the communities we serve. We do our best to adapt, build billing and claim editors, and align with those changes to minimize friction.
But even with all that effort, we’re still facing denial rates of 15% or more — and that starts a cascade of rework: resubmissions, medical director reviews, appeals, and so on. It’s a process full of friction, and often it drags in the provider — the physician — and sometimes even the patient. It consumes time, energy and resources.
When you trace that whole process — from initial denial to final outcome — we eventually bring the net controllable losses down to below 2%. But the cost of getting from 15% to sub-2% is immense. It’s not sustainable. And frankly, it’s arguably not sustainable for the payers either. If both sides are watching the same report card — and the end result is that 13% of those denials are ultimately overturned — then that doesn’t seem like productive friction for anyone.
So whether payers are ramping up AI faster than we are, or we’re trying to “beat” each other’s algorithms and edits, that’s not the right game to be playing. The real opportunity is to collaborate and align — to do the right thing, agree on standards for claim and chart reviews, and maintain revenue cycle integrity in a way that works for both sides. That can happen through retrospective audits, joint operating committees, and true partnership — not by putting patients and providers in the middle of all that friction.
AI isn’t the full answer for either side. It’s a tool, but the real answer lies in collaboration.
