Financial strategy in an ever-changing healthcare environment: 3 experts discuss

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Healthcare leaders must employ an effective capital strategy to ensure the vitality of their organizations, especially as more hurdles are presented by political uncertainty, market disrupters, shifting patient needs and a focus on value-based care.

At Becker's Hospital Review's 6th Annual CEO + CFO Roundtable in Chicago Nov. 14, a panel of financial executives — including Cheryl Sadro, executive vice president, chief of business and CFO of Galveston-based University of Texas Medical Branch; Brent McDonald, head of healthcare strategic advisory services and managing director at Bank of America Merrill Lynch; and Kelly Rakowski, senior vice president, advisory and collaborative services at Premier — discussed the importance of effective capital strategy and the challenges associated with financial planning in an ever-changing healthcare environment.

Mr. McDonald and Ms. Rakowski weighed in on some of the biggest challenges impacting financial planning and capital strategy.

"There's an inflection going on right now … where there's more impetus and much faster growth on the outpatient side so the forecasting of needs for inpatient beds is an interesting challenge … A lot of our clients [healthcare leaders] … were focused on the next construction project … because having cranes up looks like success … but with the conversion to outpatient, its changed the way so many healthcare leaders spend capital.," Mr. McDonald said.

Ms. Rakowski agreed with Mr. McDonald's insights and added a few of her own.

"Political uncertainty is flowing through and making determinations and assumptions about what's happening on the top line very difficult. [It] is the shift from volume to value. There are not only uncertainties regarding the payment models and understanding the impacts, but there are also uncertainties regarding the unintended consequences of different strategies. Additionally there are very different competitors. Today you aren't just thinking about your fellow providers, now you must plan for and think about very different entries into the market [such as venture capital]-backed alternatives, technology … among other disrupters," she said.

Each expert chimed in on one piece of advice to drive better financial planning and capital strategy.

"In terms of strategy, we need to continue to evolve … You need to [learn] not go after the shiny light in the sky or the shiny rock … whatever that may be …  and instead stay focused … find out what works in your organization, communicate your strategy extensively and be inclusive. Get the data, have the facts and make decisions off of those," Ms. Sadro said

"I'd say discipline and nimbleness for opportunities that are transformative, market changers. Be ready for it and pre-prepare your board for these opportunities," Mr. McDonald said.

"Stay close to your mission as you plan … the further you get away from your mission and your vision … it becomes more challenging …  the organization then isn’t equipped, it doesn't have competency and it gets confusing when you divert," Ms. Rakowski added.

"Political uncertainty is flowing through and making determinations and assumptions about what's happening on the top line very difficult. [It] is the shift from volume to value. There are not only uncertainties regarding the payment models and understanding the impacts, but there are also uncertainties regarding the unintended consequences of different strategies," she said.

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