New Healthcare System Requires CFO and CMO Collaboration

Effective collaboration between the clinical and financial leaders of healthcare organizations is increasingly necessary, according to a recently published joint report from the American Association for Physician Leadership and the Healthcare Financial Management Association.

 

Providers, insurers, regulators and the public recognize the need for greater value in health care—that is, improved quality and lower cost of care. The new value-based care and payment models highlight the importance of collaboration between the clinical and financial leaders within healthcare organizations.

 

Healthcare leaders must communicate a common message about the pursuit of value, which requires a common definition and agreement on the metrics used to track progress. Distinct capabilities in four categories can help organizations move toward value-based care delivery. The four categories are:

 

  • People and culture
  • Business intelligence
  • Performance improvement
  • Contract and risk management

 

The shared goal of becoming a “high-reliability” organization can bring clinical and financial leaders together. A “high-reliability” organization delivers performance as intended consistently over time, the authors wrote. (“Designing the New Health Care System: The Need for CMO and CFO Collaboration,” a joint report from the American Association for Physician Leadership and the Healthcare Financial Management Association, 2015)

 

Consistent performance over time would translate into:

 

  • No harm to patients (safety focus)
  • Clinical excellence (quality focus)
  • Patient satisfaction (patient-centered care)
  • Positive margin (financial focus)

 

Organizational leaders can use the trust cycle to enable the changes required for successful adoption of new care and payment models. The trust cycle includes four key steps:

 

  • Finding common ground
  • Having needed dialogues that are healthy, meaningful and safe
  • Tapping collective wisdom
  • Building trust

 

Collaboration between the CFO and CMO

 

Chief medical officers and chief financial officers speak different languages, have different perspectives and focus on different goals. “It is absolutely critical for clinical and financial leaders to recognize and understand the pain points of their colleagues on the other side of the C-suite.” (“Designing the New Health Care System: The Need for CMO and CFO Collaboration,” HFMA Weekly, May 22, 2015)

 

Bridging the clinical and financial realms requires clinicians who understand finances and financial leaders who understand clinical priorities. Clinicians should be able to motivate their peers to work toward organizational and/or population health goals. Financial leaders must be able to identify relevant, actionable data for clinicians and communicate effectively with chief medical officers and care providers.

 

The authors of the report emphasized that organizations should “minimize dollars withheld from penalty programs and maximize dollars received in reimbursement and in incentive programs.” Both the clinicians and the finance leaders must clearly understand the various payment programs and should implement a process for “shifting strategies and practices in response to changes in these programs.” (“Designing the New Health Care System: The Need for CMO and CFO Collaboration,” HFMA Weekly, May 22, 2015)

 

To make all of this successful requires timely, accurate and actionable data so clinicians get the feedback they need. Data must be translated to useable information for leaders, clinicians and also patients.

 

For a copy of the full report, please contact Carlin Lockee at clockee@iprotean.com.

 

 

 

 

iProtean subscribers, the new advanced new advanced Mission & Strategy Course, Consumerism: Strategic and Financial Implications, Part One, will be in your library soon. It features Mark Grube (KaufmanHall), Marian Jennings (M. Jennings Consulting) and Nathan Kaufman (Kaufman Strategic Advisors). These experts discuss what is driving consumerism, elements of a consumer strategy, partnering and more.

 

 

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iProtean Connect is on holiday to observe Memorial Day Weekend. Last week’s news update is repeated below. Enjoy the weekend! 

Board Diversity Brings New Perspectives

Board composition discussions about diversity tend to focus on ensuring an appropriate ethnic and gender mix. But boards also should strive for diversity “in thought” to ensure a healthy way to challenge the status quo and help trustees view issues through a new lens, according to the authors of a recent article in Financier Worldwide. Diversity should be embedded in “boardroom thinking, ideas, actions and composition,” the article’s authors wrote. (“Unleashing Valuable new perspectives in the boardroom,” Financier Worldwide, May 2015)

 

Board Members

Board composition should include both men and women from diverse backgrounds and also from different perspectives. Bringing new perspectives to both old and new issues encourages existing directors to see issues in new ways. Some of these issues may be, for example, reputational risk, business model disruption and technology challenges such as cyber security. These new board members can help the board advise management, oversee risk and address community interests.

 

When identifying new board candidates, consider expanding beyond the traditional picks—high level executives of leading companies in the community or communities—to include business unit heads, regional leaders, academics, entrepreneurs, government leaders and other non C-suite executives. Try to find skill sets and experiences that connect to the trends shaping hospital/health system business practices such as accountable care organizations and bundled payments (i.e., capitation, risk, etc.), cyber security issues, technology implementation and consumerism.

 

Generational diversity should not be overlooked. GenX and Millennial consumers have different attitudes, priorities and expectations; their voices should be heard in the boardroom, and not just as part of an “advisory group.” The authors of the article noted, “There is a great and largely untapped opportunity for boards to seek younger directors to gain perspectives of a generation that is redefining technology, consumer preferences, business strategy, business models and even business risk.” (“Unleashing Valuable new perspectives in the boardroom,” Financier Worldwide, May 2015)

 

Ultimate Goals of Boardroom Diversity

Taking a few important steps can facilitate bringing new perspectives into board conversations to drive innovation and value:

 

Comprehensive orientation/onboarding program: This helps break down the barriers to new board membership, or “barriers to integration.” These barriers can occur when, for example, a new board member is the sole voice on an issue, or is the only trustee without relationships or ties to other board members, or when he/she is from an underrepresented group or function.

 

It is important to create an environment “that encourages innovative thinking . . . one that welcomes new perspectives from directors who may have been brought in for that purpose.“(“Unleashing Valuable new perspectives in the boardroom,” Financier Worldwide, May 2015)

 

Uses of technology: To remain current with the market, directors should consider monitoring social media to understand how the community views the hospital/system. The board should use dashboards to assess internal data. Analytical and brand monitoring tools to help strengthen risk-sensing capabilities are also being introduced to boardrooms to help in the traditional oversight responsibilities.

 

A well-functioning board relies on trust among its members. Embracing diversity of thought and investing in new processes and tools will encourage more dynamic boardroom discussions and a better understanding of immediate and future change.

 

 

 

iProtean subscribers, the new advanced new advanced Governance course, Two Imperatives for Boards, featuring Tom Dolan, Ph.D. and Karma Bass, MPH, FACHE of Via Healthcare Consulting is in your library.

 

Our next advanced Mission & Strategy course, Consumerism: Strategic and Financial Implications, Part One, will be in your library soon. It features Mark Grube (KaufmanHall), Marian Jennings (M. Jennings Consulting) and Nathan Kaufman (Kaufman Strategic Advisors). These experts discuss what is driving consumerism, elements of a consumer strategy, partnering and more.

 

 

For a complete list of iProtean courses, click here.

 

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CMS Says Medicaid Waivers Will Be Tied to Expanding Medicaid

Nine states received letters from CMS that explicitly link Medicaid waivers with the expansion of Medicaid eligibility as authorized by the Affordable Care Act.

 

Medicaid waivers help safety net hospitals cover their uncompensated care costs and come up for renewal periodically. CMS said in the letters that federal funds for these waivers “would not be needed if states expanded Medicaid to provide coverage for uninsured residents.”

 

The Healthcare Financial Management Association (HFMA) noted: “The financial impact on hospitals from cutting off the waiver funds, which CMS can refuse to renew for any reason, would be significant.” (“Administration Links Hospital Funds to Medicaid Expansion,” HFMA Weekly, May 1, 2015)

 

CMS noted three key principles it would consider when considering the future of state low-income pools (LIP) established by the waivers:

  • Uncompensated care pool funding cannot be used to pay for health care for people whom the state could have covered through a Medicaid expansion.
  • Medicaid payments should be used to support services provided to Medicaid beneficiaries and low-income uninsured individuals.
  • Provider payment rates should be sufficient to ensure adequate provider participation in Medicaid, access to care for beneficiaries and care coordination by managed care plans.

 

In Florida, a non-expansion state and one of the nine states to receive the letter, LIP funding increased from $1 billion to $2.17 billion between the initial approval of the waiver in 2005 and the most recent one-year renewal by the Obama administration in 2014. (Center on Budget and Policy Priorities) Of that amount, about $1.9 billion went to cover uncompensated care costs.

 

California, a model eligibility expansion state, also received the CMS letter because its $636 million waiver expires this year. But it’s not clear whether its Medicaid provider rates—among the lowest in the nation—would pass the scrutiny mentioned in the letter. (“Administration Links Hospital Funds to Medicaid Expansion,” HFMA Weekly, May 1, 2015)

 

According to one expert at The Camden Group, the underlying rationale for waiver-based hospital funding programs is “substantially reduced or eliminated by Medicaid expansion . . . It brings into serious question the future of the large waiver-based hospital funding programs in states like California and New York.” (“Administration Links Hospital Funds to Medicaid Expansion,” HFMA Weekly, May 1, 2015)

 

 

 

iProtean subscribers, the new advanced new advanced Governance course, Two Imperatives for Boards, featuring Tom Dolan, Ph.D. and Karma Bass, MPH, FACHE of Via Healthcare Consulting is in your library.

 

Our next advanced Mission & Strategy course, Consumerism: Strategic and Financial Implications, Part One, will be in your library soon. It features Mark Grube (KaufmanHall), Marian Jennings (M. Jennings Consulting) and Nathan Kaufman (Kaufman Strategic Advisors). These experts discuss what is driving consumerism, elements of a consumer strategy, partnering and more.

 

 

For a complete list of iProtean courses, click here.

 

For more information about iProtean, click here.