Cost-cutting alone will not get a health system to sustained financial health, according to health system CFOs. Their focus has shifted toward revenue integrity, smarter reimbursement negotiation, AI-assisted financial reporting and disciplined, team-driven growth strategies.
Becker’s asked CFOs: Where are you finding margin improvement beyond repeatable cost-cutting, and what factors are you watching most closely when deciding where to invest in the next 12 to 18 months? Their answers rangeed from payer negotiations and AI-driven reporting to balancing community needs against limited resources.
Editor’s note: Responses have been lightly edited for clarity and length.
Question: Where are you finding margin improvement beyond repeatable cost-cutting?
Deb Harris. CFO of TaraVista Behavioral Health Center (Devens, Mass.): We’re looking beyond traditional cost-cutting to improve margins in ways that are sustainable and increase over the next three years. A major focus has been working with our payers to secure better reimbursement rates and negotiating coverage for services that weren’t previously billable or were under-reimbursed. Those changes have a lasting impact on revenue and are more effective than relying on expense reductions alone. We are focused on three years of annual increases.
We’ve also been using AI to streamline our financial reporting and variance analysis. It gives us much quicker visibility into our key metrics, allowing us to identify issues sooner, ask better questions and make decisions more quickly. The faster access to meaningful information has improved our ability to manage both revenue and expenses throughout the month instead of waiting until month’s end.
Camie Patterson. CFO of Central Peninsula Hospital (Soldotna, Alaska): Cost-cutting will never get us where we need to be with margin improvement because we can never shrink to greatness. Although we always want to ensure we are optimizing our spend and being good stewards of the dollars we have, growing revenue is the key to sustained financial performance. We have an entire team focused on strategic growth. They are identifying ways to simply capture or recapture volumes for existing services, as well as identifying new service lines that we can add to provide needed care in the community while also improving the bottom line. We also have a work group that focuses on financial improvement, and at this moment we have 16 initiatives we are working on that are “owned” by 10 different leaders so that we leverage more than just a few finance leaders, but also our clinical and support leaders who can provide great leadership on initiatives in their areas. One focus area right now is on the upcoming Medicaid work requirements, and we have a team that has been meeting with the state’s Department of Public Assistance to identify resources that will be able to help Medicaid beneficiaries receive and maintain Medicaid coverage, including having a person from DPA on site at our hospital on a recurring basis to meet with those needing assistance.
Alison Roca. CFO of Mary’s Center (Washington, D.C.): We are focused less on broad cost-cutting and more on improving the economics of the business. That includes revenue integrity, reimbursement, pharmacy performance, grant discipline and making sure staffing is aligned with demand and productivity. We are also taking a closer look at the full financial and operational impact of programs so we can better understand where changes in structure, funding or execution may improve performance.
Q: What factors are you watching most closely when deciding where to invest in the next 12 to 18 months?
DH: I’m focused on investments that improve long-term financial performance while supporting patient care. This includes technology that increases efficiency, particularly AI and automation within the revenue cycle and finance functions, where we can reduce manual work and gain faster access to meaningful data.
I’m also looking closely at investments that strengthen our clinical programs and expand access to care, especially where there is demonstrated demand and a favorable reimbursement environment. Any capital investment needs to have a clear return, whether that’s through increased revenue, improved operational efficiency, enhanced quality outcomes or reduced risk.
CP: Balancing community and system needs with limited resources, which means people, equipment and dollars. We are anxious to hear which applications our state funds for us with the Rural Health Transformation Program, as this is a funding stream over the next five years that will help us set up some needed processes that sometimes take hard-to-find, up-front dollars to implement, including things like AI tools, workforce retention programs, patient navigation systems, enhanced IT security, expanding mobile crisis support, and even some basic equipment needs like sterilizers, drying cabinets and laundry renovations.
AR: I am watching reimbursement risk, cash flow, operational readiness and whether the investment will improve access, productivity or financial performance. I am especially focused on investments in data, reporting and infrastructure that help us manage more complex payment models without adding unnecessary complexity.
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