Health systems should look outside of the healthcare industry for management capabilities.
Since 2008, Jeff Taylor has served as senior vice president and CFO of St. Luke's Health System, a nonprofit system based in Boise, Idaho. Prior to assuming his current role, Mr. Taylor served as controller of St. Luke's from 1994 to 2008.
Becker's had the opportunity to catch up with Mr. Taylor and get his insight on how to run a health system's finance team and the greatest challenges facing hospital and health system CFOs today.
Question: What are some of the best practices for running a health system's finance team?
Jeff Taylor: I think it amounts to instilling a culture of discipline in all that we do, whether that's timely reporting of information, providing operational leaders and physicians with information upon which they can act, or hiring the right people. By that, I mean those who have the ability to be both financial leaders and operational partners.
We also must continue to evolve our financial and reporting systems to accommodate our current environment. Key measures that have historically related to a volume-based revenue system will be less relevant in a value-based environment, where cost and utilization metrics at a population level will become more important.
It's also important that we look outside our industry for management capabilities. As provider systems look to assume greater financial and performance risk associated with managing the total cost for defined populations, competencies found in the payer market are increasingly important.
And revenue cycle competencies targeted at improving overall financial and collection rates will become increasingly important as more and more of the financial burden is borne by the patient.
We've looked outside our industry for these competencies, and we're also implementing tools that have traditionally been used in these sectors to monitor and improve our operational performance.
Q: What is the greatest challenge facing hospital and health system CFOs today?
JT: There are three aspects that preoccupy me.
One is the transition of our operational culture and related strategies from a volume-oriented business model to a value-based model.
Second and relatedly, deploying capital in a manner that advances those strategies. So, for example, do we target investment in consumer attachment and loyalty strategies, provider network development, facility expansion, information technology, or alternatively, retaining capital in the near term to improve the organization's overall balance sheet metrics? These are the types of decisions I'm looking at.
And third, changing our business relationships with payers and others in support of strategies I think that we all agree, no matter what side of the table we're on, are necessary to keep healthcare available for most Americans.
Q: In the last year, what has been your greatest accomplishment as CFO?
JT: We saw significantly improved operating results, achieved by engaging all stakeholders, including fiduciary boards, physicians and employees. I'm very proud of this work, given the financial climate and the volatility we know was going on with many of our colleagues and other systems.
We've also strengthened our balance sheet with improved operating results and we improved our overall debt structure by taking advantage of the current interest rate environment.
At the same time, we increased our clinical footprint, improved information technology capabilities, and significantly increased the number of lives associated with value-based business relationships, most notably our relationship with SelectHealth, the insurance subsidiary of Intermountain Healthcare.
Working collaboratively with SelectHealth has provided the necessary platform to accelerate strategies related to population health within St. Luke’s Health System and among our network partners.
Q: How is St. Luke's navigating in the shifting reimbursement climate?
JT: Public policy decisions will undoubtedly have a profound financial impact on the health sector going forward.
That said, history has shown us that provider systems that are focused on transcending the traditional fee-for-service business model, developing a better product at the population level, and assuming an appropriate level of financial risk, have performed very well in recent times and have effectively navigated declining reimbursement rates on a per-unit basis. Our strategy is focused on being able to execute in this kind of environment.