The changing healthcare paradigm: CFO conversations about reducing financial risk amid uncertainty

Hospitals and health systems face multiple challenges, necessitating a fundamental change in the healthcare delivery paradigm.

This shift to a consumer-driven approach to patient care that is higher in quality yet more efficient will in turn require a transformation in enterprise healthcare operations. 

At Becker's Hospital Review's 12th Annual Meeting, Nicole Rogas, president of symplr, and Kevin Smith, CFO of Luminis Health – a newly formed three-hospital system based in Annapolis, Md. – led a roundtable discussion sponsored by symplr about the challenges health systems face, the paradigm shift underway and implications for health system leaders. 

Four key takeaways from the discussion follow:

1. Health systems face multiple financial challenges. Margin pressures on health systems have skyrocketed. There is great uncertainty and unprecedented headwinds. "We're in uncharted waters," Mr. Smith said. Challenges include:

  • Labor shortages. There are widespread labor shortages and rising labor costs.
  • Increasing expenses. Labor, supply and drug expenses have all increased.
  • Profitable services down. Since the pandemic, many previously profitable services have been canceled or have lower volumes.
  • Surging competition. New competition is coming from nontraditional retail sources like CVS and big tech companies. 
  • Regulatory burden. Ms. Rogas said health systems must comply with hundreds of federal regulations, which she termed "absolutely impossible to do absent healthcare-specific quality and compliance software."

2. Healthcare must become consumer driven. The experience that patients expect going to their physician or to the hospital has changed. Providers now need to meet patients where they are and become more consumer centric. An example is the difficulty patients have in scheduling appointments. Health systems are adapting by offering open schedules and digital front doors. "Health systems must prioritize improving the consumer experience," Ms. Rogas said.

3. Enormous organization change is required, demanding physician engagement, alignment and support. The paradigm shift taking place in healthcare requires massive organizational change. "Change management has been happening at lightning speed," Mr. Smith said. The changes that are occurring include cultural shifts, changed behaviors and changed roles. Roundtable participants' comments included: 

  • Physician stress. In driving change, health system leaders must keep in mind that "all the old guys want to retire, and the young guys want to do virtual medicine. There is incredibly high turnover in staff. They don't see any upside for themselves," one participant said. "What's in it for them?" another asked. Changes need to be presented as beneficial for physicians.
  • Engaged physicians. "The more they feel like employees, the less engaged they will be. The more you can put decision-making about how they practice in their hands, the better it gets. The more they feel like shareholders or owners, the more engaged they are," one participant said.
  • Physicians as business partners. Physicians need business savvy and business acumen and need to be treated as business partners.
  • Reduced administrative burden. Part of engaging physicians is "doing it in an environment that is going to be very supportive," one participant said. This involves health systems taking care of infrastructure and eliminating worry about administrative burdens.
  • Role of the CFO. The CFO role has evolved. More than ever before, CFOs will need to partner with their peers to develop cost savings strategies, drive operational and process efficiencies and consolidate vendor agreements to reduce costs and ensure that care delivery is sufficiently funded. 

4. Technology consolidation has significant value. CFOs, clinicians and those in healthcare operations are overwhelmed by a proliferation of IT vendors and systems. "We have so much technology, we can't figure it out," one participant said.

Part of the solution is to consolidate and simplify technology to reduce data silos, increase efficiency and decrease financial risk. "We're trying to build a cohesive system," Mr. Smith said. Streamlining technology can result in replacing manual processes, consolidating bills and ensuring technology provides a good return on investment.

As a roll-up of several best-of-breed health technology products, symplr is playing a key role in creating the new area of healthcare operations. Through operational software delivered at scale, symplr aims to help health systems address their key operational and financial challenges. 

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