Tomorrow's healthcare finance executive will need new priorities and skills to lead a health system forward.
Future finance leaders are entering into an increasingly complex and high-stakes healthcare market. What type of skills and strategies are going to set these leaders up for success?
We have some ideas.
Let's face it, the CFO role is not what it used to be. No longer are CFOs just the financial gatekeepers of a health system. There's a lot more to the job now, like leadership and communication skills.
Leadership: Communication with Executive and Clinical Staff
Future finance leaders will need to get a good grip on effective communication across all domains of their organization, including executive staff and clinical staff. They need to build mutual trust and understanding first. Without this trust and frequent, thorough communication, CFOs will find themselves in dangerous territory, making decisions in a vacuum that may impact patient care in ways they don't fully grasp.
Finance leaders will also need to have a robust skill set in negotiation. Effectively communicating with payers in contract negotiations and vendors for products and services is crucial. Future CFOs can look into courses to improve these skills before jumping into important discussions.
"The CFOs of the future really do have to have that strategic knowledge," says Bristol Health CEO Kurt Barwis. "They may be smart, but you can't put them at the top of your organization if they have no people skills, no interpersonal skills, and, most importantly, no self-awareness skills."
The Nurse Outlook: Virtual Nursing
Virtual nursing is all the talk in healthcare right now, but leaders need to be thoughtful about integration, including understanding the financial implications. Integrating AI and virtual nursing can streamline processes and give clinicians time back with the patient, but these tools should be used as assistants, not replacements.
CFOs will need to collaborate with CNOs to figure out how virtual nursing will make the most impact for their health system. Clinical feedback from a CNO can help CFOs make the right investments. The right technology and strategies will mean the difference between a virtual nursing platform that succeeds in improving outcomes and reducing nurse workflows and one that wastes time and money.
While a virtual nursing strategy can help to retain and hire nurses, CFOs know that this alone isn't going to solve the workforce crisis. Working with clinical leaders and investing in the tools they need to do their jobs effectively and efficiently will make an impact on retention and workforce challenges.
Industry Tech
It's easy to get caught up in the excitement of new technology and the possibilities for innovation. But leaders will need to prioritize where they need to pay the most attention, i.e., the areas directly impacting patients and staff.
For CFOs, don't pounce on new tech too fast. Discuss with CTOs and CIOs the technology trajectory the organization should pursue. A CFO should be able to understand and communicate the value of IT when collaborating with CTOs. A sloppy tech integration makes it even more difficult to measure ROI.
For AI, CFOs will need close collaboration with CTOs, CIOs and other executives to examine what specific challenges AI can solve for their health system. Don't pour investments into AI just for the sake of having AI. There's much that goes into this decision, including development costs, educational costs, determining market needs, creating utilization balance, and assessing potential ROI, — not to mention governance costs, which include legal and liability concerns. CFOs need to have a full understanding of the financial risks when adopting AI into an organization.
"Our goal is not to replace our workforce with technology, but to help our workforce be more effective and efficient in doing their jobs, while also improving their experience when taking care of patients," says HealthLeaders Exchange Member and Finance Director of AdventHealth Kaitlyn Anderson.
Physician Workforce Expectations
Recruiting and retaining physicians is becoming increasingly expensive, and future CFOs will need to explore different strategies to help CMOs maintain a stable physician workforce. They'll need to collaborate with CMOs to get an understanding of where physicians' challenges lie and create a financial strategy that helps CMOs address those challenges.
CFOs can also collaborate with CMOs to create a workplace environemtn that physicians will appreciate and enjoy. This may involve a culture revamp, with more opportunities for collaboration and open discussion and investments in educational pipelines, and technology to help physicians with their workload.
Disruptors
Healthcare is a much more competitive industry now, and so-called disruptors are targeting key pain points, like cost and convenience. While some of the early primary care models from retail, disruptors have failed to show sustainability, CFOs need to understand where and how those models could affect a health system's financial stability.
The trick for CFOs is to understand where to compete with disruptors and where to stand back and let the market determine what works. They'll need to understand where a health system can invest in collaborations or other programs to improve care while reducing cost, and they'll need to understand how technology and other investments can support the patient journey and keep them from seeking care elsewhere.
Above all else, it's important for CFOs to understand that disruptors and "out of the box" ideas can be good for healthcare by exposing the industry's weaknesses and identifying what patients really want. And it will be up to the CFO to craft a financial strategy that addresses those needs and keeps the health system on firm footing.
The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at our LinkedIn page.
To inquire about attending a HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com.
The key to CFO success lies in balancing cost management with a human-centered approach and a forward-thinking mindset. One tricky area for CFOs to manage is staff retention, which can have a big impact on the bottom line.
One study found that the average cost of turnover for a regular position is between six and nine months of an employee’s salary. Additionally, replacing a highly specialized healthcare professional can cost as much as 200% of the employee’s yearly salary.
HealthLeaders just wrapped up its Workforce Exchange, and here are a couple things that we learned:
-Leaders must build a culture of wellness and psychological safety, where staff feel comfortable approaching leadership with questions and concerns.
-Leaders must strategize and build better educational pipelines into the industry, for both physicians and nurses. Create strong partnerships with academic institutions and consider innovative solutions such as tuition reimbursement or assistance.
-Leaders need to integrate technology like AI and virtual nursing to streamline processes and give clinicians time back at the bedside.
The industry message is clear: Leaders must create a safe and positive working environment, with room for advancement and education, while also giving staff access to tools that help them do their daily tasks more easily and efficiently.
CFOs can play an important role in fostering a strong team and improving staff retention, and clear communication is at the top of the list.
“It is my responsibility to make sure those managers have the tools, education and resources to find their answers about their budget, about what they can do to make money,” said Kyle Wilcox, VP of finance for MercyOne Medical Group.
One part of successful staff retention is ensuring health systems are recruiting the right type of workers. CFOs can ask themselves, ‘Do the physicians being recruited for the health system actually want to work at this specific organization?’
“On the physician side, we've also become more intentional around recruiting physicians that want to work for a not-for-profit health system or want to be in some of our communities that are very rural,” said Adventist Health CFO John Beaman. “In fact, we have a rural residency program where we actually train physicians to be practitioners in a rural setting.”
A good company culture also plays a role in staff retention.
CFOs must lead by example. A CFO should demonstrate a commitment to the organization’s mission and values in their daily interactions. When team members see their leaders embodying these principles, they are more likely to adopt them. Additionally, recognizing and rewarding behaviors that align with organizational values can also reinforce an excellent culture.
Lastly, CFOs can invest in technology that specifically aligns with their organization to reduce burnout amongst staff. CFOs can collaborate with CTOs, and CIOs to examine which tech options are best to integrate into the organization for streamlined operations that keep staff happy.
Is this a step backwards in the value-based care movement?
The recent announcement that OneCare Vermont is shutting down at the end of 2025 is raising questions over whether value-based care is truly sustainable.
The Accountable Care Organization (ACO), a subsidiary of The University of Vermont Health Network, aimed to reform how health care is paid for across the state. The decision also comes as the Vermont All-Payer ACO Model (VTAPM), a state-led initiative designed specifically for Vermont, is set to finish at the end of 2025.
As a lead organization in its network, OneCare ran on the state’s all-payer model, which sought to improve how Vermont residents pay for care while decreasing costs. This type of model is part of a federal framework that allows the organization to accept both Medicare and Medicaid payments.
Programs like OneCare contract with insurers to provide lump sums to providers to keep patients healthy, instead of the traditional pay-for-procedure model. About one-third of the state’s physicians are paid under this program.
“Ultimately, this is such a pivotal point in the region’s health care reform journey,” said Abe Berman, CEO of OneCare Vermont. “It made sense, when we talked to UVM and our other board members and colleagues, that it’s the right time for us to sunset this effort and look towards what comes next (for) Vermont.”
Healthcare leaders now question whether OneCare delivered a meaningful impact. According to the Green Mountain Care Board, OneCare spent between $13 million and $15 million on operations per year, including $7 million spent on benefits and salaries. The ACO has faced criticism from the board that it consumed money but hasn’t reduced healthcare costs or quantifiably improved Vermont’s health outcomes.
While the value-based model sought to lower recurring costs for patients through more holistic, preventative care, in the decade since OneCare’s launch, healthcare costs have sky-rocketed.
Medicare and Medicaid spending per enrollee grew 40.8% and 21.7% respectively in the last 10 years, while per enrollee spending on private insurance grew by 61.6%.
OneCare was the only active ACO in Vermont. With its end in sight, the organization will join in the state effort to pursue similar goals under the AHEAD model — States Advancing All-Payer Health Equity Approaches and Development.
The CFO Playbook
Although the program is ending, it helped play a crucial role in stabilizing primary care in Vermont, and provided a step in the right direction towards implementing successful value-based care models.
There are currently more than 1,800 ACOs in the U.S, but healthcare leaders are still unsure how to financially optimize models to both improve care and lower costs. In order to get a better grip on how a VBC shift could work, healthcare leaders will need to collaborate with ACOs to focus on the strategies they know are working, and carefully manage funding to stretch each dollar as far as it can go.
CFOs will need to hone in on specific patient health-related performance measures and continuously update finance strategies where needed. Look at not only the monthly cost per patient, but also smaller metrics like drug costs per patient and surgery costs per patient. A successful value-based care model will also involve more collaboration between clinical and executive roles. CFOs can ask themselves where they can collaborate with clinical staff to work on the organization’s most budget-eating challenges within the care model.
Stay tuned for a deeper dive into how CFOs can financially optimize value-based care for their health system.
Here's how CFOs can prep for this possible reimbursement change.
Hospital leaders are fighting back against a Senate position paper advocating for site-neutral payments.
The proposal, drafted by U.S. Sens. Bill Cassidy, MD, R-La., and Maggie Hassan D-N.H., 1 advocates for site-neutral payments to reduce patient healthcare costs, reduce provider consolidation, improve Medicare financials, and aid rural hospitals in high-need areas.
Under this payment structure, Medicare would be required to pay the same rate for services carried out regardless of the care location. Medicare payment rates currently recognize fundamental differences between care in hospital outpatient departments and other settings.
As hospitals push back against the proposal, CFOs can evaluate the potential financial and strategic impacts and zoom in on a few key considerations.
Outsourcing revenue cycle management comes with controversy. Is it truly a good method for cutting costs?
The narrative isn't the same for every system. While outsourcing offers potential benefits, it also comes with its share of challenges.
At Moffitt Cancer Center, Vice President of revenue cycle management Lynn Ansley explains how she strategized to get the department where it is today and what considerations are important when deciding whether or not to outsource RCM.
Do Vendors Really Do It Better?
While it may be enticing to jump on the vendor train to cut costs, Ansley explains that health systems must be crystal clear with their expectations for vendors and thoroughly examine what the vendor can do for the specific challenges of that organization.
“Being realistic, there are times where I do think you have to outsource,” she says. “But what I have found and what I aim to do when we have a new partner is we're very, very upfront with our expectations. Because we have had partners in the past where we haven't been as upfront with those expectations, we ultimately end up parting ways, and that's just wasted effort and time for both.”
Mergers and acquisitions may be a good exception for outsourcing, Ansley explains.
“I've heard both sides of the coin when there are large organizations, especially health systems, that are merging with one another, and they have two different rev. cycles,” she says. “I think part of that comes into the conversation.”
While vendors will compare what they do for other health systems, Ansley says sometimes they can downplay the complexity of some of the RCM roles.
“I think that also weighs into the controversy… really understanding how one vendor can support health systems that are so different,” she says.
Where Does The CFO Come In?
To help make the most informed and sustainable solution, CFOs will need to collaborate with RCM teams to determine what the specific needs and challenges are in day-to-day financial operations, and how that may contrast bigger picture finances for the organization.
There are some benefits to outsourcing, like the potential for cost savings, scalability without the need for major investments in infrastructure or staffing, and allowing for a focus on core operations. But RCM leaders and CFOs should be extra choosy with vendors and make sure a well-thought-out strategy accompanies any outsourcing. Making the wrong decision could lead to a loss of control, a dependency on vendors, and data security risks.
CFOs should weigh in and determine which option best suits their organization. Additionally, CFOs should evaluate the vendor's track record, technology capabilities, and security measures to ensure they align with the health system's needs.
Also, consider the broader strategic implications of outsourcing. This includes evaluating how it aligns with the organization’s long-term goals, such as patient experience improvements, clinical outcomes, and operational efficiency.
Ultimately, the decision to outsource RCM is not just a financial one—it is a strategic move that requires careful consideration of both short-term benefits and long-term sustainability.
Rising medical expenses and industry headwinds contributed to the system's losses.
Kaiser Permanente posted a $608 million operating loss in its third quarter. The California-based system cited factors like higher-than-expected service utilization, resulting in more medical expenses, as well as patient acuity and pharmacy costs as reasons for the loss.
The health system posted an operating revenue of $29 billion in the three months ended Sept. 30, which is up from $24.9 billion it had over the same period in 2023. In that same timeframe, Kaiser's net income was $845 million and its capital spend sat at $922 million, resulting in a negative operating margin of 2.1%.
Kaiser defended its third quarter capital spend in a press release, saying it "reflect[s] an ongoing investment in facilities and technology to serve members and patients and meet seismic safety mandates."
Another ding to Kaiser's third quarter performance, the system said, was the "impact of Medicaid and other true-ups of annual contracts that normally occur earlier in the year."
These results differ from Kaiser's earnings in the first half of the year where the system reported a 3.1% operating margin and a $2.1 billion net income for its second quarter.
Health systems all over the country are dealing with some of the same pressures Kaiser is feeling, especially the consistent rise of medical expenses. CFOs will need to explore new strategies to battle consistently rising expenses. Leaders can collaborate to examine how other strategies, such as lowering non-clinical spend, optimizing service models, and pursuing partnerships, may help with cost control.
Despite the losses, Kaiser's income for 2024 versus 2023 is marginally higher after reporting $1.2 billion last year. In a press release, the system cited favorable market conditions as a contributing factor.
Kaiser noted in the release that its second-half margins are generally lower than the first because revenue remains flat while expenses increase, partially due to seasonal care. However, the system emphasized that its year-to-date spend of $2.6 billion is consistent with its 2023 spend.
The system plans to shift its strategy by controlling discretionary spending and trimming business operations.
"Kaiser Permanente is continuing to innovate and adapt to address industry headwinds including the changing marketplace, rising consumer expectations, and the inflationary effects on the total cost of care," Kaiser chair and CEO Greg A. Adams said in a statement. "I have confidence in our integrated model and believe it provides us with unique opportunities to respond to the current environment."
In March, Kaiser acquired Geisinger, which brought the system's net income to $10.3 billion, compared to last year's figure of $2.5 billion. The total net asset gain from Geisinger in the first quarter was $4.6 billion. Kaiser reported a $13 million net gain in the third quarter.
A new program is making a difference in women's health outcomes, says this CFO.
Balancing clinical outcomes with financial sustainability is a difficult task, and CFOs are constantly on the prowl for new strategies. One avenue worth examining is the impact a health system is making on women's health.
CFOs need to examine sustainable financial strategies for boosting women's health outcomes. This could be as simple as more education opportunities, to as complex as pivoting care models for more streamlined care and better outcomes.
At OSF HealthCare, newly appointed chief financial officer Kirsten Largent is proud to share the strides the health system has made in women's health.
OSF HealthCare's program OSF OnCall Connect provides support to pregnant women with Medicaid insurance, and it's seen major success.
How it works
Available through the OSF OnCall Connect app, the pregnancy-postpartum program connects patients to a nurse instantly. The app provides several types of support, including : chronic condition monitoring, health and wellness education, and pregnancy care and postpartum support, which gives the user 24/7 access to specially trained nurses and advanced practice providers.
The program also provides OSF OnCall Advanced Care, which gives 24/7 access to a care team by phone or a tablet. Personalized care and support is designed with the patient's specific needs in mind, and then connects them to the right resources. The patient also has access to other health care providers, such as social workers, pharmacists and dietitians, as needed.
Users of the program have 24/7 support through the app, and receive information and education for each week of their pregnancy and for during their postpartum time.
This program is one that is supported through OSF HealthCare's work with the state of Illinois Department of Health and Human Services called Medicaid Innovation Collaboration (MIC).
Results
Kirsten Largent, newly appointed CFO as OSF HealthCare, couldn't be prouder of how the program has helped patients. Largent explains this area as one that ties back into the organization's strong focus on community and wellness.
"We are allocating our funds to address women's health needs across the ministry, and we do have a dedicated service line to women's services," Largent recently told HealthLeaders. "We think about where we're investing and looking at access for women's services and also promoting wellness."
Kate Johnson, clinical supervisor for Digital Care at OSF, says 4,938 women have signed up for the pregnancy and postpartum program since it was launched in August of 2023. With 688 actively enrolled, Johnson says pregnant women, especially those who have a lack of resources, are eager to have the 24/7 connection offered through an app they can download on their smart phone or tablet, according to a press release.
"I think what we're seeing mostly is patients who are struggling with transportation to get to their actual OB provider appointments," Johnson said, "so we are able to align transportation for them in most cases."
Why Focus Just on Women's Health?
Women often suffer worse health outcomes than their male counterparts. With factors like longer life spans and more reproductive health care needs, women often require more intensive care, but that doesn't always play out.
Women are generally 20% to 30% more likely to be misdiagnosed than white men, and one study even found that women are 50% more likely to be misdiagnosed when having a heart attack.
This gap in women's healthcare also has economic consequences. A report by McKinsey found that in 2020, for example, only 1% of healthcare research and innovation was invested in female-specific conditions beyond oncology. But according to that same report, every $1 invested in women's health would return around $3 in economic growth.
Negative pregnancy outcomes are a particular disparity in women's healthcare, and in the United States, pregnant Black women are three times more likely than white women to die as a result of pregnancy.
Additionally, as the country prepares for an administration change, many women are concerned about their access to comprehensive reproductive healthcare and are preparing for regulatory changes in this area.
By investing in resources that create access to education and support for pregnant and postpartum women, whether that's an app, a partnership or beyond, CFOs can help lead the way towards better wellness outcomes for this group of patients. These investments in turn could boost women's health outcomes and prevent unnecessary readmissions and misdiagnosis, as well as create supportive mental health care for these patients.
Boosting women's health outcomes also shows promising financial outcomes.
Women often suffer worse health outcomes than men, and it can be costly to the health system, patients, and even the economy…but CFOs can step up.
Generally, women are 20% to 30% more likely to be misdiagnosed than men, resulting in more readmission and higher utilization for a health system.
There are also economic consequences. A report by McKinsey found that in 2020, for example, only 1% of healthcare research and innovation was invested in female-specific conditions beyond oncology. But according to that same report, every $1 invested in women’s health would return around $3 in economic growth.
CFOs can take the reins on women’s healthcare by educating staff, investing in tools and programs and creating initiatives to better health outcomes for women patients, which could, in turn, also have positive financial effects for a health system.
Be sure to check out the accompanying article here.
This proposal isn't sitting well with the industry.
Hospital leaders are fighting back against a Senate position paper advocating for site-neutral payments.
The proposal, drafted by U.S. Sens. Bill Cassidy, MD, R-La., and Maggie Hassan D-N.H., 1 advocates for site-neutral payments to reduce patient healthcare costs, reduce provider consolidation, improve Medicare financials, and aid rural hospitals in high-need areas.
Under this payment structure, Medicare would be required to pay the same rate for services carried out regardless of the care location. Medicare payment rates currently recognize fundamental differences between care in hospital outpatient departments and other settings.
Unsurprisingly, the American Hospital Association is not on board with this plan, arguing it would destabilize patient access to care.
"Simply put, this framework from Senators Hassan and Cassidy will limit and eliminate critical hospital-based care, resulting in increased wait times and decreased access to care for patients. It is irresponsible to think that clawing back up to $140 billion of Medicare spending for seniors won't destabilize access to care," AHA Executive Vice President Stacey Hughes said in a statement.
"Rather than addressing the root causes driving physician acquisitions, this instead proposes dramatic and untenable Medicare cuts, reducing seniors' access to critical hospital-based care," Hughes said "We urge Congress to address the true drivers of physician acquisitions, which include significant underpayments to providers and persistent delays and denials of care by commercial insurers."
Brian Peters, CEO of the Michigan Health & Hospital Association, wrote about the disadvantages of the proposal on LinkedIn, arguing that site-neutral payments ignore the very different cost structures between hospitals and other care sites.
"Here is an economic reality: being prepared to care for anyone, for any diagnosis, at any time, creates high fixed costs," he wrote. "[...] comparing hospitals with other sites of care is not comparing apples and oranges – it's comparing apples and space shuttles. More importantly, reducing healthcare costs can't come at the expense of reduced access to care."
The CFO Playbook
As hospitals push back against the proposal, CFOs must evaluate the potential financial and strategic impacts and zoom in on a few key considerations:
Cost Efficiency Initiatives: CFOs may need to step on the gas pedal to streamline operations, optimize workflows, and identify the best areas for cost reduction. The push for site-neutral payments is an incentive to adopt more efficient care delivery models, particularly in outpatient settings.
Advocacy and Policy Engagement: CFOs can get involved in ongoing discussions with policymakers and industry groups to provide data-driven insights into the financial challenges of hospitals. Engaging in advocacy can help ensure that the specific needs of their organizations—especially safety-net hospitals—are considered in future legislation.
Revenue Diversification: Providers could explore diversifying their revenue streams to reduce dependency on outpatient services. They can also focus on investing in value-based care models, which could potentially offer more predictable financial stability in a shifting reimbursement environment.
The Medicare Patient Access and Practice Stabilization Act would, if passed, boost physician pay by 4.7%, replacing Medicare’s planned 2.8% pay cut.
A bipartisan bill introduced in the House aims to provide much-needed relief for physicians by proposing a pay increase to replace scheduled Medicare reimbursement cuts set to take effect in 2025.
The Medicare Patient Access and Practice Stabilization Act would give a 4.7% payment update in 2025 and eliminate the 2.8% Medicare physician payment cut that is set for January 1.
The bill, sponsored by Reps. Greg Murphy, R-N.C., and Jimmy Panetta, D-Calif.,
is designed to address the growing financial pressures on providers, especially physicians, who have faced years of stagnating reimbursements despite rising operational costs.
The Industry POV
At the core of this bill is a provision that would raise physician reimbursement rates under Medicare. In addition, it would delay or entirely block the automatic Medicare payment cuts triggered by the "Sustainable Growth Rate" (SGR) formula, which was originally implemented to control Medicare spending, but has since been criticized for threatening to undercut providers' financial stability. The cuts are scheduled for 2025 unless Congress intervenes.
The American Medical Association has been urging Congress to take action, emphasizing that Medicare reimbursement for physician services, when adjusted for inflation, has steadily declined 29% since 2001.
Jason Marino, director of congressional affairs at the American Medical Association, said in a statement: “We are ruffling some feathers in Washington. Some of them want to just give us a little fix, maybe reduce the cut a little bit, but still give us some cut and want us to go away. And this is not the time to shrink away. This is a time to be fully engaged with the Hill, with Congress and really push this issue.”
MGMA' Senior Vice President of Government Affairs Anders Gilberg also commented:
"We urge Congress to quickly return from recess to pass this critical legislation, stopping the full 2.8% proposed cut to the Medicare physician conversion factor and providing a modest inflation update for 2025. These annual cuts represent an ever-present creeping decline that threatens the viability of our nation's medical groups. The fact that physicians must rely on Congress each year for a last-minute payment fix underscores just how broken the Medicare reimbursement system is. Moving forward, Congress must enact permanent, commonsense reforms that enable medical groups to keep their doors open and protect patients' access to care."
In July, CMS proposed a 2.8% reduction in the conversion factor for the 2025 Medicare Physician Fee Schedule final rule.
On top of this, CMS projects a 3.6% increase in provider expenses for 2025, and physicians would be faced with a 6.4% cut, unless Congress intervenes.
The CFO POV
Considering the bill’s uncertain path through Congress, CFOs will need to prepare for multiple scenarios. If the bill is passed, CFOs should assess how the increased reimbursements will impact their financial projections, especially in terms of cash flow and budget forecasting.
Increased physician compensation could improve recruitment efforts and reduce turnover costs, but it may also lead to higher operational expenses, which need to be balanced against other revenue streams.
If the bill fails to pass and Medicare cuts are enacted in 2025, CFOs will need to have contingency plans in place. They could consider renegotiating contracts with Medicare Advantage plans, exploring alternative revenue streams, or looking into cost-saving initiatives like technology adoption or more efficient resource allocation.
Additionally, CFOs should keep an eye on the political landscape, as changes in policy could prompt rapid shifts in reimbursement rates or regulatory guidelines.
