As financial pressures hold steady across the healthcare landscape, Charlie Brinkley III, CFO of Pensacola, Fla.-based Baptist Health Care, is rethinking ways to create a steady and sustainable financial foundation.
From ongoing margin compression and rising labor costs to stagnant reimbursement rates and supply chain inflationary challenges, the path forward requires more than temporary fixes.
Mr. Brinkley, who has nearly two decades of healthcare experience under his belt, connected with the Becker’s for a CFO+Revenue Cycle Podcast episode to discuss how he and his team are doubling down on data-driven decision making, cross-functional collaboration and cost transparency to ensure that money saved reinforces long-term resiliency and continued patient care investment.
Editor’s note: Responses have been lightly edited for clarity and length.
Charlie Brinkley III: There are certainly several items that come to mind. I think, first and foremost, all of us across the U.S. are probably dealing with margin compression and really the focus on creating a sustainable cost structure. Margin pressures are remaining very real on a day to day basis.
Post pandemic, we’re still seeing increased labor costs, and while we may have a reduction in our dependence on contract labor, the base wages are structurally higher. When you work in a highly competitive market like we do here in Pensacola, Fla., it’s something that you have to stay on top of, day in and day out.
On top of that, I think inflationary increases in our supply chain and purchase service areas continue to impact how we approach our day-to-day [and] how we approach our budgetary process on an annual basis. These are really areas that you can’t just trim without potentially impacting patient care, so we want to be very mindful as we seek out sustainable structures moving forward.
I’m sure we could probably talk about healthcare reimbursement for hours on end, because that is an area that I think all of us are dealing with day in and day out. Our commercial payers have been slow to adjust to these inflationary increases. Negotiations across the table, I think, are becoming more and more difficult. [There is] not a lot of movement that you can see on that commercial payer side, and you are continually working to try to move the needle appropriately for your market, creating that dynamic where you can continue to offer all services.
Governmental rates are probably flat at best, and I think when you factor in inflation, you’re actually seeing that decline, as you’re working with CMS and how they’re impacting things on a day-to-day basis.
When you factor all of those things together, … change becomes very important. It can’t just be a one time fix that creates cost savings for the here and now, it has to be sustainable over time. Here at Baptist, we’re really trying to focus on how to create processes and structures that are going to allow us to continue to invest appropriately in patient care while maintaining positive margins.
Q: What type of strategies are you investing in?
CB: One of the areas for us specifically is an intense focus on our cost accounting platform, ensuring that we have a cost structure in place and a platform that allows us to have stronger visibility and transparency of how we’re performing at a service line level. We have what we call a ‘smart team,’ so sustainable margins amongst rapid transformation.
In this “smart team,” we spend a lot of time focusing on all areas of the organization. [We] identify specific targets of cost reductions throughout the organization, and really nothing is off the table. We come together as a senior executive team, and we discuss our labor, we discuss our purchase services, we discuss our professional fees, and we think about where we have opportunities to move the needle, and then we go out and we attack those areas appropriately and create either savings through contract renegotiations or looking at [request for proposals] and changing those that we’re doing business with. This is not something that we’re just doing on a quarterly basis. We have these meetings on a weekly basis, so it’s staying top of mind for our entire team, so that we can really hone in on creating sustainability for the long run.
