From the President

Clarke_webRichard L. Clarke, DHA, FHFMA

Good news about healthcare finance is in short supply these days. So news of Moody's first-quarter not-for-profit healthcare ratings results was especially welcome this spring.

When Moody's senior vice president and team leader Lisa Goldstein told a group of healthcare CFOs at a conference that upgrades had exceeded downgrades for the first time since the credit crisis began, the group broke into spontaneous applause.

Goldstein encouraged the audience to "step up" to the challenges we face-the same phrase used by HFMA Chair Debora Kuchka-Craig in her theme for this year.

Providers that are ready to position their organizations for success can adopt several strategies now to meet the industry's challenges.

Stay abreast of the regulations that will implement the reform legislation's provisions. Follow the proposed and final rulemaking process closely and work with state and national associations, including HFMA, to interpret and comment on the regulations. Doing so will help as you assess organization-specific impacts of reform, including shifts in revenue and cost.

Build dynamic planning teams to address potential impacts of the law. Be willing to reevaluate all organizational strategies and tactics in light of reform-short-term operations as well as long-term strategies and capital plans. Assemble a multidisciplinary team with representation from clinical, finance, managed care, and operational leadership. The team should be flexible enough to change focus as new regulations are issued and market-specific changes occur.

Define the role your organization plays in its market. As the pressure of healthcare reform compounds existing market challenges and raises questions about capital needs and sources, merger and acquisition activity is likely to accelerate. Unlike the 1990s, the next wave will be driven by the need to improve balance sheet results and thereby strengthen capital access. For many organizations, the options now will be to become a consolidator-or face consolidation. Reassess your organization's affiliation status in that context.

Develop key competencies for success. Before the ink was dry on the first draft of reform legislation, the organizational competencies needed for success in a reform environment were clear. For the past year, HFMA has been advising providers to increase physician integration, develop the ability to manage risk, and improve costing and pricing competencies. Many hospitals have already begun to hone these competencies. It's time to move beyond prereform days when misaligned fee-for-service incentives reigned, medical records resided in file folders in the basement, and hospital accountability for patient outcomes stopped at the exit doors.

We in health care would do well to heed the advice of former Secretary of State Colin Powell: "Once the information is in the 40 percent to 70 percent range, go with your gut. Don't wait until you have enough facts to be 100 percent sure, because by then it is almost always too late." Whether your organization is ready for it or not, health reform is happening. Those who don't step up to the challenges will quickly find themselves out of step with the rest of the industry.

Publication Date: Thursday, July 01, 2010

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