Jeff HeltonThe media buzz about the "fiscal cliff" remains high as Jan. 1, 2013, approaches, and with it, the effects of the federal budget sequestration loom ahead for our nation. We can only hope the game of political brinksmanship will not play out as some might think, with either a near miss or actual implementation of the sequestration budget. In the event that sequestration occurs, Medicare providers face an immediate 2 percent reduction in payments. Depending on your organization's payer mix, this reduction could size up to quite a downturn in collections.

We face financial exigencies every day in the role of a financial executive-losing a key medical staff member, termination of a major payer relationship, or a natural disaster. So the "fiscal cliff" really ought to seem like another day in the office. Do we have a plan in place to react to these exigencies? Staffing cuts or freezes in discretionary spending are often seen as other easy steps in response to revenue losses. These are all viable options-and ones I have used before when faced with lost revenues. I would suggest that the savvy CFO should have other plans in his or her figurative "hip pocket" before taking these reactive approaches to already difficult circumstances...just in case.

Understanding the organization's inner workings is an absolute first step. Just where are your expenditures coming from? Do you have a handle on the business processes and work flows in use? Are there  activities or functions being performed in your organization that may not be adding value to patient care-or to the organization's margins?

I suggest what you get to know what work your organization's staff are doing-and the determine whether that work adds value or is wasted effort taken on "because we have always done it that way." Those eight words can be the bane of our work days. We must lead our organizations past that inertia to greater flexibility, adaptability and efficiency. Start looking for those opportunities now-don't wait until you have to.

Communication with stakeholders is an essential next step. Make sure they know the environmental risks and the upside of being prepared. Talk with vendors, managers, and staff. Other ideas can help us see opportunities we did not see before. Open dialogue in advance of problems can be valuable relationship building that helps bridge a difficult period following an event like the "cliff."

The one thing we have to remember is that we have a going concern to manage. As I mentioned last month, we must maintain quality-even if we are off that figurative "cliff."  Let's focus on the right survival strategies-doing the things that result in high-quality care for our patients, and doing them right the first time. Remember that a focus on cost cutting alone can lead to lost quality (and lost income). Instead let's start focusing now on process improvement-maintaining or increasing quality and reducing costs. If we go over that "cliff," at least it could end with a landing instead of a crash.

Jeff is an assistant professor, Metropolitan State University of Denver, and a member of HFMA's Colorado Chapter. 

Publication Date: Monday, December 17, 2012