Healthcare Business Trends

Hard truths about the state of the healthcare industry

February 11, 2020 10:10 pm

Big changes are coming during the year and decade ahead, so where are healthcare’s leaders?

Joseph J. Fifer, FHFMA, CPA, remembers when he was a 23-year-old senior accountant with lead responsibility for entire auditing projects, and the stress of the job was such that he would arrive home on the verge of tears some nights. He would think, “‘I can’t do this. I’m over my head. It’s too much.'”

“And the next morning,” Fifer said, “I’d get up and go back at it. And ultimately, we were able to get it done.”

Now the president and CEO of HFMA, Fifer draws on that experience as he considers the challenges facing the healthcare industry. “Sometimes I feel like I did when I was a senior accountant, but then I tell myself, ‘Get in the game, keep working, keep working at making these changes in the industry,'” starting, he says, with HFMA’s push to make hospital prices less opaque and more accessible for consumers.

With patients, consumers, voters, politicians and policy advisers clamoring for big changes in healthcare in the near term and over the coming decade, the time seemed right to seek Fifer’s perspective on what changes are realistic and how the industry should prepare. The genial Midwesterner sat down for a wide-ranging conversation in which he provided blunt assessments of the state of the industry and steps that are needed to improve the sector’s outlook during the 2020s.

Rich Daly: Amid an accelerating presidential campaign where proposals for aggressive overhauls of the entire sector are numerous, the public’s discontent with healthcare is palpable and powerful disrupters are emerging, what’s got you worried?

Joseph Fifer: I’m an optimist by nature. Sometimes I need to think issues through, but I tend to think of the opportunities and positive outcomes. Sometimes when I’m frustrated, I have a harder time being optimistic about healthcare in our country.

Let me be clear, I’m not referring to the people in the clinical or financial trenches. These are good people who could probably make more money in other industries, but they’ve chosen healthcare because of a passion. I’m talking about decision-makers contributing to the healthcare industry in this country.

The healthcare leadership in our country is lacking in many segments. You have politicians who won’t get past soundbites on healthcare. Therefore, the debate on a very serious, very complex topic is about an inch deep as opposed to a very deep, thoughtful debate. The media has a bias and would rather sensationalize than thoroughly understand our complex industry. Those are the kinds of things that are leading me to have a less-than-optimistic view of what’s going on.

Regulators who don’t appear to be seeing the broad picture. Healthcare leaders who make decisions all of the time without truly considering the impact on people. We lack courageous leadership when it comes to healthcare in this country, and that sometimes saddens me.

Daly: One traditional healthcare finance tool that causes frustration among many is the chargemaster. Where does that stand?

Fifer: Hospitals and physicians — but it’s a bigger issue for hospitals — bill with this thing called a chargemaster. No one likes the chargemaster, except maybe the media likes to talk about it to sensationalize. But HFMA has been talking about it for years. Several years ago, we tried to gather a group to work with CMS [the Centers for Medicare & Medicaid Services] to address this issue, but we got shot down by several industry leaders before we even got started, and we also couldn’t get traction in CMS.

I give the current administration and [CMS administrator] Seema Verma some credit because we did talk about it a little over a year ago; she is very interested, and she assigned staff to it. It appears we’re still years away from having a solution that would be implemented. And this is for something that no one likes.

So, what’s it going to take to change those things that people do like and that do add value, that do add clarity and that are debatable?

Daly: Is there any of this that you’re mad about?

Fifer: I really try not to get angry about anything. I get disappointed and frustrated, like with the issues I’ve mentioned. I get disappointed when there is a lack of courageous leadership. So, I’m saying, let’s try stuff, and we can adjust as we go forward. On putting the transparency tools out there, the thing that will make them the best is getting the feedback from patients and finding out what they like the best and what they don’t like. It’s about giving it your best shot. I don’t think that best effort is occurring, and it is a leadership issue.

Daly: Sometimes it appears that problems in healthcare either stem from or are exacerbated by disconnects in the outlook of leaders. Where do you see the biggest disconnects, and what is their significance?

Fifer: One, we have a fragmented system. The provider side is fragmented. When you’re seeking care, oftentimes you must seek that care from multiple different entities. The payer side is very fragmented. Simply speaking, roughly half our typical organization’s revenues would come from government sources, like Medicare and Medicaid, and the other half from private sources, largely employer-based insurance.

The second reason is that the industry is under pressure and therefore under scrutiny on the economic side.

The third factor is the size of the industry, just the fact that it is one-fifth of the economy.

When you combine all those things, it adds up to a pretty explosive environment and leads to all kinds of disconnects. There are four major constituencies that contribute to healthcare: the payer environment, or insurers; providers, in which I would group hospitals and other clinicians; the business community; and patients/consumers.

The disconnects among all those are almost too many to list. An example might be that most times patients expect to be able to use all providers in any given community or even outside their community. Another one would be that patients don’t expect to be surprised with a bill. That’s a very reasonable expectation, whereas maybe you could argue the expectation of having access to all providers is unreasonable. This industry is full of disconnects, and it comes back to a lack of communication in so many respects.

Recently, it dawned on me that with all this fragmentation, we haven’t yet defined the transaction in question. When we buy other consumer goods, we know what the transaction is.

In healthcare we have not identified it. Is it acquisition of health insurance? Is it the purchase of hospital services, physician services or those from other clinicians? Is it the funding of our federal or state governments?

When we don’t know where to focus, don’t know the one transaction, and the costs are increasing, then everyone starts to look like a villain, which adds to the disconnect.

Daly: That potent combination of pressures could produce some unexpected results. Where do you see healthcare going in 2020 and the coming decade?

Fifer: I feel better about making a longer-term prediction than I do about 2020. In 2020, there’s so much uncertainty. I expect Democrats to hold the House of Representatives and perhaps win the White House. Even if the Democrats win the Senate, it would not be enough to avoid a filibuster. So, in that scenario there is not an environment where we would have big sweeping changes in healthcare. You could make that argument no matter who wins the White House.

That means with no big sweeping change, we’ll continue to make gradual incremental changes in the industry. Similarly, the movement to value-based payment will remain at a snail’s pace. Congress will pass some bills, such as surprise-bill legislation and the drug pricing measure. Maybe some of that will be handled through regulation versus legislation.

I’ve been hesitant to address the long term publicly, given that HFMA is politically agnostic, but I think we’re going to end up in the long term with Medicare Advantage for All. There are elements that would make the left happy: universal coverage. There are elements that would keep the right happy: market forces, it would allow for choice — in each market you could choose between multiple health plans. In a Medicare Advantage for All environment, we would focus on the purchase of health insurance that fits what consumers need.

Lots of folks will get mad at me for saying this, but why not approach this like other complex things that we buy, like cars and phones? If we focus on that transaction, hospitals would be a supplier to that transaction, just like there are all kinds of suppliers to automakers. Part of the benefit is that it would focus us on that insurance-purchasing transaction in a way that people in this country could understand. Once that focus starts to get simplified a little bit, then perhaps other things would start to line up. It would be funded by a mechanism that would provide for universal coverage. This approach satisfies both ends of the political spectrum, by which I mean it irritates both ends.

The cost pressures are going to continue  to mount in such a way that we are going to need a big-time solution on the table, rather than this incremental change we’ve been discussing.

Daly: What steps would you tell CFOs to take to prepare for coming changes? And to make it more personal, what steps would you take if you were still a health system CFO?

Fifer: It depends on the CFO. There are differences and similarities. Sharing risk between different parties is in their future, almost no matter what. Even if providers are not going to jump into more risk, the movement to more and better coordinated care among multiple organizations in this fragmented industry is going to be the case. That will happen more rapidly if they start sharing risk. There are steps they should take.

First, continue to prepare for value-based payment. That includes acquisitions, partnerships and investment in their own organizations. Value-based payment across all of that fragmentation is something that CFOs need to prepare for, no matter what the payment environment ends up looking like.

Second, they need to invest in cost accounting and analytics. Those are two different but related things.

In cost accounting, there’s the HFMA-Strata L7™ Cost Accounting Adoption Model, which if I were a CFO, I would use to evaluate my capabilities in costing. The bottom line is that healthcare systems and CFOs need to lead this conversation, and they need to emulate what manufacturers have done for years. Manufacturers understand their costing down to fractions of pennies. And they eliminate waste down to minute percentages. And that’s the mentality that we have to have.

On analytics, we need to have analytics with curiosity. It starts with the costing data but then brings in data from all other elements or sources to be more predictive. Analyzing what has happened historically with more curiosity means saying, ‘I wonder why X is happening.’ Curiosity is a powerful thing.

If you put analytics and costing together, we’re going to end up with a much richer data set upon which to make healthcare decisions.

Third, if I were a CFO at an organization not up to snuff, I would demand we focus on the patient financial experience. Not enough organizations are doing that. A CFO needs to pound their first on the table and say, ‘We need to focus on the patient financial conversations.’ I’m talking about the medical debt policies. Are those ones that you’re willing to stand behind in a public environment? Are they approved all the way up to the board?

Daly: Speaking of costs, the public consistently names that as their biggest healthcare concern. What steps should leaders take to get a handle on costs?

Fifer: We have not done a good job over the last two generations in getting out in the community and talking about how healthcare finance works. How is it financed? How do the processes work? What are the benefit structures? What are the payment expectations? And how do the taxes fit in?

Having these conversations would be a scary thing for healthcare executives. It means going into a place where many times you’re going to be criticized. But not addressing those issues publicly doesn’t make those issues go away. In fact, it enables them to take place in a conversation that you’re not part of, and I don’t think that ends up with a good solution.

On patient financial communications, we need to be more in tune with what it feels like to be a patient going through our system. I ask, ‘Have you personally done a walk-through of your revenue cycle processes?’ I don’t mean sending a staff member to do that. I mean listening to conversations between staff and patients. Asking the patients what it feels like.

As healthcare executives, we’re doing what anyone would do, taking steps to benefit our employer. But sometimes we skip over what it feels like to be a consumer.

Daly: Speaking of patient finances, is there any way to stop lawsuits related to their financial obligations beyond previous voluntary initiatives?

Fifer: HFMA’s medical debt body of work is still applicable today. It talks not only about what people should do and not do, but also about how should those policies get communicated all the way up to the board, and about making sure that the board is in tune with the organization’s collections efforts.

I think of it as passing the “microphone test.” I wanted an infrastructure in my hospitals when I was CFO that I could stand behind if somebody in the media put a microphone in my face. Would I be able to answer those questions? When you talk about increased media scrutiny, that microphone test is a real thing; we do have CFOs with a microphone being put in their face.

Sometimes CFOs are being held accountable for decisions made years before and maybe under a predecessor. I’m not sure it is an issue of having more industry guidance. But it’s a matter of using the guidance we have today and putting it in place.

HFMA has an adopter program for patient financial communication standards where hospitals can self-audit to see if they are in compliance. If I had a set of practices and policies that I was proud of and approved by my board, and then I could say I met the standards of HFMA, that may not eliminate this brief media hype, but it would give me a lot better footing to deal with people in my community.

Daly: Among the myriad trends affecting healthcare is the rise of consumerism. How do you see consumerism affecting finances in the coming year?

Fifer: We’ve all seen a movement toward increased consumerism, at least what the expectations are. That’s partially because the amount of hype about healthcare issues is not going away. When people are paying more and more out of pocket, including high deductibles, that leads to this consumerism environment. The industry is finally gaining some traction on this.

When I go around the country to speak to HFMA chapters, I check how local health systems are handling consumerism, including on their websites. I pull it up on my phone because that is how we do things as a society today. And if things were really consumer-centric, then they would allow people to access the data by phone. Most of the time when I pull up these websites, they are not very good, and they are not very consumer-friendly. I see more attention to this matter in the coming year.

We are seeing more and more bad debt, which is no surprise when there is a significant out-of-pocket responsibility. Some don’t like to pay their bills, some can’t pay them. We will see increasing bad debt in the coming year as part of this environment.

Daly: Any closing thoughts?

Fifer: I have a deep passion for healthcare in our country. As I’ve said for a long time, I don’t want to leave a mess for my kids and grandchildren. When I am critical of so many elements in healthcare, it’s not criticism for criticism’s sake and it’s not holier than thou. I’ve been in this industry for my whole career. I have a deep passion for us to fix the things that ail healthcare: to bring costs in line, to make it more easily understood, to improve on healthcare literacy. So, my criticisms are rooted in a deep passion that I have for healthcare and sometimes that gets lost in the shuffle. 

Conversation starters

Podcast. Hear more of the interview on our “Voices in Healthcare Finance” podcast. Available in Google Play and Apple’s App Store or subscribe on Podbean.

Community conversation. Share your thoughts about Joe Fifer’s comments on healthcare in the 2020s and the need for courageous leadership.

From the President. Joe Fifer talks about being asked to appear on the cover of the January 2020 hfm and why he ultimately agreed: “I can’t pass up an opportunity to have an impact.”


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