Key Strategies for CFOs: Facing ACOs and Credit Rating Agencies

In a session at the Becker's Hospital Review Annual Meeting in Chicago on May 17, Gary Weiss, CFO of NorthShore University HealthSystem in Skokie, Ill.; William Cusick, executive vice president and CFO of St. Mary's Hospital in Streator, Ill.; and Henry Brown, CFO of Internal Fixation Systems, shared key strategies for CFOs in today's healthcare environment in a panel moderated by Bob Herman, writer and reporter for Becker's Hospital Review.

Mr. Herman kicked off the session with a question concerning healthcare reform and how hospitals can plan for ACOs and bundled payments even if the survival of the Patient Protection and Affordable Care Act is uncertain.

Mr. Weiss began by sharing NorthShore University HealthSystem's strategy. "At our organization we have been spending time assessing what we believe will happen down the road. We are not jumping into an ACO because we do not know what form of reimbursement it will take," said Mr. Weiss. Instead, NorthShore is spending time with senior groups identifying payment mechanisms and identifying possibilities under different scenarios. "Once we can assess our readiness for new payment programs in operation terms, we can ensure our viability for those payment models in the future," continued Mr. Weiss.

Mr. Brown added that a challenge many hospitals face with ACOs is their lack of definition, which has made it difficult for CFOs to guide their hospitals to prepare for them. "Unfortunately, even if the model is entirely unclear, we may still have to pursue it," said Mr. Brown. He then added that smaller hospitals may not be able to set up new payment networks without the support of larger systems. Therefore, ACOs might force more mergers among hospitals and health systems.

Mr. Herman brought the session to a close by asking the panelists what they would recommend for building positive relationships with credit agencies such as Moody's.

Mr. Cusick made the argument that hospitals and CFOs cannot go outside their limits just to please credit rating agencies. A better strategy is clear and straightforward communication. "You have to be clear with [credit rating agencies] about your hospital and your hospital's market. With that, you need to be clear about the competition you face. Your hospital may face more competition compared to the Midwest because it is in New York City with hospitals every two seconds. Numbers are numbers. It is better to clearly communicate," said Mr. Cusick.

More Articles on Hospital Finance:

The Future Success of Healthcare Reform: Thoughts From Alan Sager, PhD

Key Developments and Strategies for Medicare Reimbursement

How Health Systems Can Develop ACOs and an Alignment Strategy

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