In this Business Profile, Victoria Terekhova, senior strategist for Enterprise Healthcare at KeyBank, discusses key challenges when developing long-term strategy in a rapidly changing industry, and the role the right banking partner can play in helping healthcare providers navigate the opportunities before them.

Victoria Terekhova, senior strategist at KeyBank, discusses how the right banking partner can help providers navigate new opportunities.Tell us a little bit about your organization.

KeyBank has about $90 billion in assets and more than 13,000 employees. We’re a full-services bank, and the healthcare sector is a strategic priority for us. At this point, we’re partnered with nearly 10,000 healthcare clients and have approximately $7.5 billion in credit commitments to those clients, comprised of hospitals, outpatient systems, physician and dental practices, senior care facilities, and other sectors within health care. We provide everything from traditional financing to capital market solutions to revenue cycle management.

What are some of the biggest challenges you see affecting healthcare providers?

One of the biggest challenges for our healthcare clients is setting the right long-term strategy. As the industry addresses massive regulatory requirements and undergoes significant reimbursement and competitive shifts, what we see is that healthcare providers are really forced to rethink how they do business and where they need to focus going forward.

Every organization—from a small physician office to a huge health system—has to have a well-thought out strategic plan. They need to know where they’re going to be in the next five to 10 years, who they are likely to be partnering with, and the resources and performance strategies needed to get there.

Also, as revenue streams and competitive dynamics change, organizational priorities are shifting and decision making is becoming more complex. Capital plans really have to be reshuffled and looked at differently. For hospitals that want to remain independent, the big topic is how to survive financially. Independence will likely require some creative financing options that support locking in rates for longer terms, so the organization can have the extra cash needed to weather bumps in cash flow and remain agile to competitive threats. For large health systems that have economies of scale, it’s more about readying for new business models and optimizing their real estate. Is the enterprise really making the most use of its assets? Can some of the facilities be converted for different use based on shifts in service demand—for example, would the organization be better served if facilities were used for rehabilitation services or outpatient care? It’s rethinking asset use.

How is KeyBank helping healthcare providers address these needs?

Healthcare executives have compressed timelines to make lots of decisions. What healthcare executives need is somebody who can come in and succinctly summarize options available and inform the decision process, so leaders can quickly identify opportunities and make the right decisions to support their strategic goals. As such, we moved to what we call an “enterprise” approach with our banking services, where we serve as a hub for the decision process. It’s very similar to how primary care physicians become the center of coordinated care. One banker interfaces with the team from the hospital or physician group and assesses current state through a series of probing questions, identifies and explains available options, and works with the enterprise team to determine a successful course forward.

For example, a couple of months ago, leaders from a medium-sized health system in the Midwest came to us and said they would like to build a new hospital but didn’t have the money to do it alone. To raise the necessary capital, they would need to bring others to the table through strategic alliances. Typically, a bank would say, “OK here’s the term sheet. Here’s how much we can give you for an interest rate for this duration.” But what our team started doing is asking more questions: Is partnering what you really want to do? How would a partnership impact your business? Through these dialogues, we discovered leadership really did not want the organization to partner if it didn’t have to. Executives preferred the organization remain independent to best serve community need and long-term strategy, but they didn’t think the option was possible. Our team was able to come up with several alternatives to allow the organization to fund the project independently—in this instance through an FHA loan. The CEO was ecstatic. It ended up working out very well for them.

What are some key considerations for healthcare leaders when choosing a banking relationship?

You need to know your strategic priorities and examine how the bank you are partnering with can help you achieve them. Will your bank be there when you reach your phase two, three, or four of strategy? Will it have capabilities to support you on that long journey? There are healthcare-specific products in the banking industry, for example, revenue cycle solutions or government-insured loans, but not every bank is capable of offering these products and then appropriately supporting them.

Also, the right banking partner should identify ways to bring cash back into your business. As one example, when looking at capital opportunities, we may recommend sustainability improvements, such as efficiency or advanced energy investments. Many healthcare providers fail to recognize the real dollars on the table for them through incentives and rebates, as well as reduced utility bills. In the same regard, investing in the right lighting and building controls can save approximately 27 percent in energy costs. Within a year, organizations pursuing such strategies will see more cash coming into the bottom line. Providers often overlook these opportunities when banking partners aren’t there helping to navigate options. There are some real benefits to the bottom line that the right banking partner can bring to the table.

As healthcare organizations implement your services into their day-to-day operations, what advice would you offer so they can best position themselves for success?

Prioritize communication. Engage with your banking partner frequently, ask lots of questions, share expectations up front, and discuss your priorities, concerns, and deadlines. Also, view the banking relationship as a strategic alliance. Our goal is a beneficial relationship that supports your performance not only in the near term but the years to come.

KeyBankHFMA is the nation’s leading membership organization for more than 40,000 healthcare financial management professionals. Business Profiles are funded through advertising with leading solution providers. Learn more.

Content for this Business Profile is supplied by KeyBank. This published piece is provided for advertisement purposes. HFMA does not endorse the published material or warrant or guarantee its accuracy. The statements and opinions of those profiled are those of the individual and not those of HFMA. References to commercial manufacturers, vendors, products, or services that appear do not constitute endorsement by HFMA. 

Publication Date: Friday, May 01, 2015