Jon Alford became CFO of Seattle-based UW Medicine and vice president for medical affairs at the University of Washington, also in Seattle, in March, but has not wasted time settling into his new role.
With challenges like legislative changes, payer pressures and strained clinical margins commanding the attention of Mr. Alford and academic medical center leaders broadly, he has moved quickly to assess the financial landscape and start acting on it.
Becker’s connected with Mr. Alford on a “CFO+Revenue Cycle Podcast” episode to discuss his early priorities, the unique financial challenges facing academic medical centers, and where automation and AI are beginning to drive meaningful efficiency gains.
Question: What are your top priorities in the first few months of your new role? How do you plan to achieve these goals?
Jon Alford: It used to be that you would go by that 30-, 60- and 90-day rule – learning everything the first 30 days, then taking up to day 60 on formulating a plan and up to day 90 starting to execute, but healthcare is moving so quickly that we don’t always have three months to sort of sit and learn and have a honeymoon phase. The first six, seven weeks have really been focused on understanding the main challenges, really understanding the personality of UW Medicine, getting to know a lot of our partners, and starting to go ahead and make decisions that have kind of been left idle for a while. Reacting to things that are coming at us with changes in both state and federal legislation, and changes that are happening with payers, is a big focus and takes up a fair amount of time just in the beginning. I’d say that priorities are understanding the financial picture, understanding who all of our partners are and then going ahead and starting on action plans to improve on all of those.
Q: What is one financial challenge facing AMCs that no one is talking about? How is UW Medicine combating this?
JA: I think one of the biggest challenges facing academic medical centers that maybe gets some discussion, but I think those of us that are deep in it really understand it as one of the hardest things, is that we’re part of large long-standing organizations that have a tripartite mission. We’re focused on research, on teaching and on delivering great clinical care. Historically, a lot of AMCs have supported the other two missions of research and education through margins that they were able to derive from the clinical side.
Now we’re seeing such hyper-inflation of the cost of labor, the cost of pharmaceuticals, the cost of goods, and really a narrowing of payment differences between government and managed care pressures, from managed care, payers, insurances to the cap rates, and you add in value-based healthcare, it’s harder to make the margin in the clinical side to always support the other two missions at the level that we have historically. I think figuring out how to operate as efficiently as possible, as efficiently as a non-teaching organization on the clinical arm, is one of the challenges that we’re having to undertake. Then, starting to look at what are the highest priorities in the other two parts of the tripartite mission, is one of the ways that we’ve got to scale back maybe in some of those areas, and again, find efficiencies in reducing overhead and wastage in those other two missions to spend every dollar as wisely as we can.
Q: Where are you finding the most meaningful wins, whether through technology, workflow changes or team structure?
JA: I think wins are definitely going to be in the cost curve for administrative tasks. More than 20 cents of every dollar in healthcare right now is spent in administrative duties, whether that’s the cost to collect in revenue cycle, whether that’s the cost to procure within the supply chain, whether that’s HR overhead, etc. That’s an area that we’re going to have to put a lot of focus on automating, reducing manual tasks and reducing redundant tasks that require people. The availability of people that could even do that will be trained and then sustained in some of those roles has become more and more difficult as well.
Even forgetting the cost savings, just the availability of labor in some of those areas, has become more and more difficult. AI is part of that. I think when people think of AI, they’re thinking about agentic AI and Chat GPT…I think even I’ll call it lower tech, or less sophisticated automation through robotic processes for run-of-the-mill tasks that can be done in some of these areas, and the widespread adoption of that, is something that that we’re seeing as big wins. Whether that’s, again, in revenue cycle, supply chain, but also in quasi-care-delivery areas … whether that’s scheduling of patients and procedures or scheduling of our employees and optimizing those things, and using less people there to get a better technology solution. That’s where I think we’re starting to see wins and really need to build on that momentum.
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