Nancy J. HamIn my years as a technology executive, I typically met with hospital CFOs at some point in the sales cycle to discuss “the numbers”—the cost of implementing the particular population health management product and its associated ROI. When I went to meet with the CFO of a leading hospital in Indiana, one day a few years ago, I assumed he’d want to discuss those things. Instead, he asked me to open my laptop.

Not only did he ask for an extended demo of the software, he also wanted to know exactly how it would help him improve quality. He asked a lot of non-number questions, such as, “What changes to my culture and my processes do I have to make?” and “Why do we have to focus on these care measures versus those care measures?” and “How are you going to help me gain insight across all my physicians so I can understand who is a high-quality and high-performing physician and why?”

It was the very first time I had met with a CFO who was keenly focused on the clinical side of the business. But although this particular CFO’s approach to purchasing technology was cutting-edge at the time, today it is part of a growing mindset among finance executives of leading healthcare institutions.

As our industry undergoes an enormous shift to managing patient populations, CFOs are being asked to do more than serve as gatekeepers of finance. Doing this means unlearning everything you ever knew about the traditional role of CFO—throwing it out the window—and embracing a more holistic, bigger-picture outlook. Admittedly, the idea of taking on a new way of thinking can be intimidating for CFOs who are accustomed to a more linear job description. But in the end, a broader approach will benefit an organization’s patients, partners, and pocketbook.

The New Population Health Mindset

In the recent past, hospitals focused on length of stay and occupancy rates. The motto was “fill those beds.” Now the job of hospital leadership is to use those beds only when necessary, while focusing on care coordination and preventing readmissions. This new focus means hospitals have no choice but to look at their physician affiliation and employment strategies through a new lens.

For example, a hospital would previously acquire physician practices to guarantee additional referrals and increased revenue through a fee-for-service model. It was easy to run the numbers on what made a good deal. Today, that same hospital is likely part of a shared-risk model (with those same physicians), such as an accountable care organization (ACO). Now it’s all about transforming those physician relationships to be focused on the Triple Aim, and creating true alignment on the new goals. It’s about building a new physician culture, and attracting and retaining patients. The math is still important but new “softer” skills are just as important.

As patients continue to opt for higher-deductible plans on narrower networks, hospitals should take more time to consider new metrics, like net promoter scores (a calculation measuring the value of customers as promoters, passives, and detractors), and how to keep patients from shifting loyalty over time.

Conversation into Action

For CFOs, embracing a population health outlook means using new criteria to make technology and other purchasing decisions. Instead of focusing solely on how to negotiate the best discount, a CFO should consider broader questions such as, “What is the impact on clinician work flow and efficiency?” or “What is the impact on patient satisfaction?” or “Does that system share data nicely with other systems?”

In addition, when it comes to making crucial financial decisions, CFOs need a broader investment framework in terms of how they will help a hospital meet its quality-improvement goals—and ultimately thrive in an increasingly value-based environment. A CFO needs to determine what percentage of a budget to allocate to brick-and-mortar infrastructure, patient experience, clinical tools, and other necessities that support these goals. Getting buy-in across the extended management is key.

Enhancing the patient experience and improving population health are two considerations that should drive investment decisions. If, for example, patients have a hard time navigating your complex campus, perhaps it’s time to consider investing in new aids like concierges or kiosks. Such a strategy might mean delaying discussions about building a new hospital wing or something more “visible” of progress in your role.

Hospital leaders should also focus keenly on their organization’s core competencies, and putting dollars where those resources can make the greatest impact. For example, if a hospital has a top-notch cardiac program, its CFO should collaborate with the organization’s chief medical officer (CMO) or other leaders to figure out what kind of technology investments can aid care coordination for post-acute cardiac patients. If orthopedics is not a strength, these leaders might want to consider partnering with its cross-town rival on driving patients to a respective Center of Excellence.

Collaborating With Others

If you are a CFO, how often do you meet with your CMO or chief medical informatics officer (CMIO)? If your answer is “not enough,” you’re likely right: In taking on a bigger, population health role, CFOs need to saddle up next to their management peers at board meetings, and get cozy with all aspects of how their organization is run and what the relevance is of all clinical imperatives at the organization.

Don’t be afraid to ask questions of other hospital leaders in other departments. In fact, bringing other opinions into the fold creates a better conversation about managing patients in the most quality-focused, cost-efficient way possible. If, for example, an organization is focused on acquiring practices and making them part of the patient care team—in something like an ACO partnership, for example—the organization’s CFO should be asking, How do we measure performance of these new employees? How do we motivate them? Reward them?

Again, conversations shouldn’t be limited to the budgets for various projects; rather, they should be centered on what changes and purchases are necessary to strengthen your organization’s core competencies and patient-oriented services (for example, “What are you doing with this program? What best practices are you putting into effect?”).

When everyone’s voice is heard—and a CFO has a seat at multiple tables—the result is a better plan.

At a recent event, I heard a prominent CFO say, “We’re no longer in the hospital business—we’re in the health business.” When I think back to that day in the office of that forward-thinking CFO of a leading Indiana hospital, I am reminded that medical management begins with great leadership, with CFOs, CEOs, CMOs, CIOs, and others who are willing to look into the long-term future, ask questions, and transcend their traditional roles for the greater good of their healthcare organization and patients.

Going forward, a hospital’s strategy should not be “We treat who shows up.” Changing the way you think about health care and moving beyond traditional roles is tough, and it will take time. But a CFO who can embrace the bigger picture of population health management while still keeping a watchful eye on the numbers will emerge as a true leader.


Nancy J. Ham, MIBS, is CEO, Medicity, A Healthagen Business, and is based in Salt Lake City, Utah. Twitter: @medicity

Publication Date: Thursday, July 31, 2014