In the Future, Will Hospitals Have a Chief Medical Financial Officer?

In 2010, Bonner General Hospital was facing an important financial and clinical conversion.

The 25-bed critical access hospital located in Sandpoint, Idaho — a stone's throw from Lake Pend Oreille — was paid under Medicare's prospective payment system at the time. Bonner General previously had 48 beds, but it met CAH status, pending the reduction of inpatient beds, because it was located far enough from the next closest hospital via mountainous roads.

Norilina Harvel, CFO of Bonner General for the past nine years and a 15-year veteran at the hospital, says the cost-based reimbursement and clinical efficiencies gained through CAH status were the primary drivers of the effort. One year later, in 2011, CMS granted Bonner General the conversion.

But it was that process in which Ms. Harvel realized, conversion or not, that her role as a healthcare finance executive was changing. In a way, she knew she had to become more of a clinically focused financial leader.

Where value-based healthcare comes in
When Bonner General was still operating as a PPS hospital, it had to plan for the biggest components of healthcare reform, Ms. Harvel says. If it didn't receive CAH status, it knew it had to adopt the principles of value-based care. Quality metrics, patient satisfaction scores and other components of value-based purchasing were becoming the gospel of the day, and Medicare started penalizing hospitals that didn't meet the mark.

Ms. Harvel knew she needed help, so she turned to the most obvious stakeholder: clinicians. Who better to help give insight on how to reduce readmissions, improve quality metrics, help recruit other physicians and cut clinical costs than those on the frontlines?

"I started getting more involved with the medical staff because of [value-based purchasing] in the event we didn't become a critical access hospital," Ms. Harvel says.

Bonner General has more than 50 active staff physicians, and she knew they held the key to the hospital's future financial success. But she faced a bridge that many other healthcare financial executives find they must cross: How can I better partner and communicate with physicians?

Medical and fiscal stewardship
Ms. Harvel says a case-in-point of how she's been able to meld financial and clinical goals occurred last August. Bonner General opened a wound center, but not at the behest of the administration.

Instead, a new, younger physician recognized the hospital was losing some wound patients to the nearby market in Spokane, Wash. "He said there might be an opportunity to be in that market share," she says.

Together, the administration and clinical teams created the wound center program, and they've built up the volume gradually. Today, Ms. Harvel says she and the physician go over the revenue stream, expenses, marketing opportunities, quality scores and other issues to ensure the wound center is successful for the community. It's that two-way conversation, she says, that has made all the difference.

The common goals for both
Kenneth Cohn, MD, a board-certified general surgeon and the CEO of Healthcare Collaboration, has worked extensively with Ms. Harvel. Most recently, he gave a keynote address on engaging physicians to cut costs while maintaining quality and participated on a panel presentation during a fall meeting of the Idaho Chapter of the Healthcare Financial Management Association. Among the items discussed were how hospital leaders can have strategic, financial conversations with their practicing physicians and nurses.

"Some of the comments afterward were: 'I've been dreading having conversations with physicians, but this gave me the courage to have these conversations,'" Dr. Cohn says. "It's about giving doctors a more proactive role in strategy and identifying physician finance champions."

Ms. Harvel, who is president of the Idaho HFMA, agrees. Furthermore, she says ultimately, all conversations between clinicians and financial managers should answer the same question: How will this affect patient care?

"What I recognized is the conversation has to be about their patient. What's the benefit to their patient? If you focus it on the patient, [physicians] are more receptive," Ms. Harvel says. "There's this automatic resistance to financials. That was one thing I've really tried to bring as HFMA president to my membership: Do not just focus on numbers. Let's focus on the purpose here. We're here for the patient. I do see physicians are more receptive if that's how it's framed."

The chief medical financial officer?
Ms. Harvel says she and the hospital's clinicians work diligently every day to strengthen its value-based purchasing goals and build solid lines of communication. She even conducts rounds to get a better sense of how the care teams operate.

Dr. Cohn says hospital leaders of the future will use those types of strategies as a template. In fact, he believes more organizations could more formally incorporate a clinical/financial leader into the C-suite.

"At some point in time, just like there is a chief medical information officer, there will be a chief medical financial officer," Dr. Cohn says. "Whether it's a title and full-time job, I don't know. But hospitals that move in that direction will have a leg up on their competitors."

More Articles on Healthcare Finance and Clinical Issues:
4 Key Lessons on Variation and Cost Reduction From Adena Health System
The State of Healthcare Finance: 9 Major Survey Findings From Hospital CFOs
The Costs of Care: Why Physicians and Finance Executives Need to Work Together

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