Mass General Brigham CFO on slashing spending by $70M, expanding its footprint

Boston-based Mass General Brigham released a plan May 16 to cut spending by $70 million a year, and it received the green light this month for $2 billion in capital improvements after scrapping a plan for three outpatient surgery centers.

CFO Niyum Gandhi shared with Becker's some details on its capital projects and cost-reduction proposal, as well as healthcare's biggest financial challenges and his advice for other CFOs.

Question: What are the biggest financial concerns facing hospitals and health systems right now? 

Niyum Gandhi: The biggest financial challenge facing hospitals and health systems right now is inflation. Healthcare was not built to withstand inflation at the rates that we are seeing right now. While our costs increase with inflation like those of any organization, our revenues are not indexed to inflation, given the majority of our patients are on government insurance, such as Medicare or Medicaid, and the overwhelming need to keep healthcare affordable and accessible for our patients. 

Additionally, in most cities and states, hospitals and health systems are often the largest employers, and we have a responsibility to provide fair wage increases to our employees, especially in times of economic uncertainty. For example, Mass General Brigham has rapidly accelerated wage increases for our lowest wage employees to help them deal with the quickly rising costs of living. This support is critical given our employees are still bearing the burden of the continued pandemic.  

Q: What advice would you share with other hospital and health system CFOs and why?

NG: These are truly unprecedented times. More than two years into the pandemic, with an uncertain economic climate and record financial pressures, it is more important than ever to be nimble and creative. The tools that have helped us weather prior financial challenges are not the tools we should necessarily default to today. We won’t collectively be able to cut our way out of the challenges facing the industry right now. Instead, new sources of revenue and margin, creative business partnerships, and other previously less traditional approaches to addressing market dynamics will be needed to traverse the period ahead of us.   

Q: As chair of the recently launched Climate and Sustainability Leadership Council, what are the council's goals and how do you plan to achieve them?

NG: The three pillars of our work are eliminating our contribution to climate change and pollution, promoting environmental justice and health equity, and transforming climate and sustainability through research and education. In each of these areas, we've begun our work to define key guiding goals and measurable objectives over the short, medium and long term. 

Under the first pillar, we're conducting a comprehensive assessment of our climate impact — across all scopes of our business — and will use that not only to help define our high-level objectives around greenhouse gas neutrality, but also specific targets and objectives across the core drivers of climate change. We have made significant progress in reducing our emissions over the past decade, but we have many more years of work ahead of us to achieve our overall objectives, so having specific interim targets will help focus our efforts.

The other two pillars are critically important to us as well, as they align with our core missions of community health, research and education. We are similarly in the process of defining measurable key results in these pillars to focus our work across the entire organization in order to both maximize our positive impact on the health of the communities that we serve and scale our impact on sustainability more broadly.

In parallel, it is equally as valuable and critically important to push forward with on-the-ground initiatives, such as reducing red bag waste, shifts in anesthetizing gas use, etc., to drive overall performance and culture change. All of this work is important in its own right, but it is also critical to share with employees and patients who increasingly care that we talk the talk in this space and demonstrate our own progress in this area in order to be a trusted voice of change.

Q: Mass General Brigham outlined in January a five-year, $8.1 billion capital spending plan. With plans withdrawn for three surgical centers, can you describe any other changes to the capital spending plan?

NG: Mass General Brigham's planning, including capital spending, supports our strategy to build an efficient and integrated care model that allows patients to receive the right care in the right place throughout their lives. Each component of the capital plan we shared earlier this year ties into that mission. For example, we recently proposed and received approval for two transformative projects that will improve the standard of care for our patients at Massachusetts General Hospital (MGH) and increase access to Brigham and Women's Faulkner Hospital (BWFH). This approval clears the way for MGH and BWFH to enter the final planning phase for these significant and important campus renovations that will improve access, quality and the overall patient care experience.

Importantly, we have built flexibility into our long-term planning that allows us to regularly refresh our outlook and shift around specific projects based on our assessment of what will best serve the community. Patients are at the center of everything that we do at Mass General Brigham, and our commitment is always to respond to the needs of the patients who rely on us for care.

Q: Mass General Brigham was ordered to submit a cost-reduction plan to state regulators this month. Are there any key strategies in the plan you can share with Becker's?

NG: This week, Mass General Brigham submitted a plan to the Health Policy Commission (HPC) to reduce our spending by $70 million a year, a level that will meaningfully impact the cost growth trend. This plan is consistent with our commitment to transform the future of healthcare, making it more affordable and accessible, and ultimately lowering the cost of care for our patients. We are focused on a number of key strategies to reduce our spending, including reducing utilization, shifting care to lower cost sites, price reductions and enhancing our accountability through value-based care. 

We look forward to working with the HPC to do our part in delivering sustainable solutions to cost growth, while remaining focused on improving health and wellness overall for our patients throughout their lives.

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