As the challenges of rising operational costs and declining reimbursements continue to plague the healthcare industry, Steven Febus, CFO of Pullman (Wash.) Regional Hospital is leveraging partnerships and technologies to address them.
Becker's connected with Mr. Febus to discuss his proactive approach, the four key traits that make a strong financial leader in healthcare and the hospital's goal to secure a 4% margin in fiscal 2025.
Editor's note: Responses have been lightly edited for length and clarity.
Question: What do you believe is the largest financial challenge facing healthcare? How is Pullman Regional Hospital preparing to address it?
Steven Febus: The largest financial challenge in healthcare today, specifically in our market, is rising operational costs including labor, drugs and supplies. This — coupled with state laws relating to charity care and declining reimbursement rates from Medicare, Medicaid and commercial insurers — will be a significant hardship for many organizations in the future.
Many hospitals, including Pullman Regional Hospital, are also grappling with workforce shortages in their market, knowledge gaps, administrative burdens and inflationary pressures. We have started to address some of this with expanding the employee pool to remote workers and future opportunities in artificial intelligence development.
We will continue our efforts in addressing these challenges through several strategies:
- Community support and philanthropy: PRH relies on community tax support and donations to bridge financial gaps. For instance, the hospital raised $4.5 million in 2023 through its foundation.
- Operational efficiency: PRH integrates technology to improve workflows, reduce costs and enhance patient care. For example, we have adopted and implemented a single electronic health record throughout our hospital and clinics, and we have invested in simulation training programs to optimize operations.
- Partnerships for growth: The hospital collaborates with Pullman-based Washington State University through a family medicine residency program to address physician shortages in primary care while enhancing service offerings.
Q: What qualities and skills are essential for a strong financial leader in healthcare?
SF: Effective financial leaders in healthcare must possess:
- Financial aptitude: Proficiency in budgeting, forecasting and understanding complex reimbursement systems is critical for navigating thin margins. This past year we worked to train all basic financial acumen through a program to develop a baseline understanding for all leaders in order for us to build stronger discussions and improve results.
- Strategic thinking: Leaders must anticipate industry trends and align financial strategies with organizational goals.
- Adaptability and innovation: The ability to adapt to regulatory changes, technological advancements and market pressures is essential. This includes flexibility in how to align and support providers in our market. We have had to develop several different ways to support providers through global professional services agreements to employed models.
- Relationship building: Financial leaders should work closely with clinical and operational teams to ensure alignment between financial decisions and patient care priorities. It is important not only to train financial understanding, but a financial leader must also be willing to learn the needs of the community to support the overall goals and mission of the organization while managing costs effectively coupled with delivery of high-quality care.
Q: What strategies is Pullman Regional Hospital implementing to recruit and retain top talent amid industrywide staffing challenges?
SF: Pullman Regional Hospital employs several strategies to recruit and retain top talent beyond developing a Culture of Trust we also have:
- Residency programs: The family medicine residency program with WSU ensures a pipeline of skilled primary care physicians for the region. This is important to us because recruiting and retaining physicians in rural Washington is, and has been, a challenge.
- Competitive pay and employee benefits: PRH does a broad market survey approach to ensure we are competitive in our pay, as well we offer competitive benefits such as health insurance, tuition reimbursement and fitness discounts to attract staff.
- Commitment to zero layoffs: During crises like the COVID-19 pandemic, PRH pledged zero layoffs, fostering trust and loyalty among employees.
- Flexible training programs: The hospital partners with organizations like Laerdal Medical for simulation-based training to enhance staff skills without significant capital investment. We believe in mentoring employees and providing opportunities for advancement, knowing in a small organization professional growth can be challenging due to longevity and overall organization structure. We remain committed to training employees for future opportunities regardless of the direct benefit to PRH.
Q: What is your target margin for Pullman Regional Hospital in fiscal 2025? How do you plan to achieve this goal?
SF: Pullman Regional Hospital is working towards financial stability and targeting a 4% margin. Critical access hospitals like PRH typically operate on thin margins due to their not-for-profit status. As the healthcare leader in our community, we often offer a broad array of services to support the healthcare needs of our population; while some of these services are not financially sustainable on their own, they remain critical for the overall care of our community.
PRH's strategies to achieve financial goals include:
- Cost management: Tight control over labor costs, supply chain expenses and operational efficiencies.
- Revenue growth: Expanding outpatient services and integrating new specialties such as endocrinology and rheumatology through our expansion projects. Improved referral capture rates via process redesign to remove barriers to access.
- Community engagement: Leveraging philanthropy and taxpayer support for major projects like facility expansions that keep pace with community growth.
- Technology investments: It is our vision to be a community leader of integrated health and healing activities where our values guide and inspire, and science and technology quietly enable people to comfort, encourage and heal. This means PRH is committed to keeping our technological investments current.
By combining cost containment with strategic growth initiatives, PRH aims to maintain financial stability while meeting community healthcare needs and remain independent.