The changes launched by the Affordable Care Act are upon us and have created considerable trepidation among many in healthcare, particularly our chief financial officers (CFOs). The CFOs’ core responsibilities include financial planning, contracting, and setting budgets. Although finance teams and clinical leaders sometimes feel like they are speaking different languages—and, in fact, many physicians couldn’t pick their hospital’s CFO out of a police lineup—successful healthcare systems bridge that gap, enabling clinical and finance leaders to work together toward common goals.
It’s easy for us doctor types to be leery of our hospital’s financial team. If you’ve ever been in direct conversation with your CFO, you may have found the discussion was packed with terms like “EBIDA,” “capital allocation,” and “operating margin,” and seemed to imply that the organization is prioritizing its bond rating over its composite PSI [patient safety indicators] performance. But the truth is that our finance teams are frustrated, too. In fact, they are more than frustrated—they are scared.
They really haven’t been sleeping well lately. They’d feel better if doctors could try to see the world that they see. A CFO’s core responsibility is ensuring a responsible, long-range financial plan that meets the needs of their hospital stakeholders—to paraphrase Tom Wolfe paraphrasing astronaut Gus Grissom, “no bucks, no Buck Rogers”—and that responsibility got a lot harder in 2014. By understanding their perspective, we clinicians should be able to take actions that result in better care of our patients today—and ensure a sustainable hospital that can take care of patients tomorrow. So that we can better empathize with our green-visored colleagues, here are a few of the thoughts going through their heads as they toss and turn at 3 a.m.
Change Is All Around
There are many urgent pressures on hospital, physician, and healthcare revenues. Keep in mind that a hospital’s costs in terms of pharmaceuticals, equipment, and labor (the average hospital has nearly 60% of its cost in labor) are not really going down to offset that revenue loss. While we’ve become uncomfortably familiar with RAC audits, value-based purchasing, the sustainable growth rate, and sequestration, I’d suggest that these revenue challenges pale in comparison to the insomnia created by the rapid rise of healthcare consumerism. Lost, or at least buried, in the stories about ACA politics, coverage of the uninsured, website malfunctions, and dropped insurance plans is the fact that the nature of insurance is changing.
Although offerings like medical savings accounts and high-deductible plans have been around for years, they are increasingly mainstream, because the plans offered through the insurance exchanges, which have surpassed the seven million mark in enrollment as of the time of this writing, all carry substantial patient commitments. The great majority of these plans—81% through February—are either “bronze” or “silver” level—and keep in mind that the average “gold” plan, in covering 80% of anticipated expenses, leaves patients with higher commitments than most large-employer group plans probably do. From that standpoint, they require patients, doctors, and hospitals to manage healthcare differently than they have in the past: We have to be mindful that patients are paying more of the “first dollar.”
The problem, from a CFO’s perspective, is at least twofold: First, a lot of patients don’t pay the portion of their bill for which they are responsible. Many doctors, hospitals, and healthcare systems are moving toward more assertive and up-front collections for non-emergency care; unfortunately, at best, we don’t do a very good job and, at worst, we create an uncomfortable space where we either channel the practices of collection agencies or leave much-needed funds on the table. As the deductibles, co-pays, and co-insurance obligations rise, so do the uncollected accounts. Our advocacy for patients increasingly requires us to be better stewards of their resources.