Cartoon – Turning Around Dismal Performance
Category Archives: Turnaround
ThedaCare physicians, advanced practice clinicians take pay cuts
ThedaCare physicians and advanced practice clinicians will take a 10 percent pay cut to help reduce the Appleton, Wis.-based health system’s financial hit due to the COVID-19 pandemic, the organization confirmed to The Post-Crescent.
The physicians and advanced practice clinicians — which include physician assistants and nurse practitioners — will see their pay reduced beginning in June, Cassandra Wallace, a ThedaCare spokesperson, told the newspaper.
ThedaCare is projecting a $70 million loss this year after temporarily postponing revenue-generating elective surgeries and nonurgent clinic visits due to the COVID-19 pandemic. The health system began a phased approach to reinstate services last month, but the recommended suspension and the costs associated with COVID-19 preparation resulted in net revenue dropping 40 percent in April, ThedaCare said in a June 4 news release.
The salary reductions are part of the health system’s plan to narrow its projected loss to $30 million, said Imran A. Andrabi, MD, ThedaCare president and CEO.
Dr. Andrabi has also agreed to take a 50 percent pay cut, and other executive leaders will take a 40 percent cut to improve the health system’s financial picture.
Additionally, ThedaCare leaders will not be eligible for incentive compensation for 2020, the health system said.
The health system’s plan does not include mass layoffs.
An optimistic view from health system workforce leaders
https://mailchi.mp/9f24c0f1da9a/the-weekly-gist-june-5-2020?e=d1e747d2d8
Continuing our series of Gist member convenings to discuss the “Brave New World” that awaits in the post-pandemic era, we brought together a group of senior human resources and nursing executives this week for a Zoom roundtable.
Several themes emerged from the discussion. First, there was general consensus that the COVID crisis exposed a workforce that had become over-specialized and inflexible. Said one chief nursing officer, “Our workforce is much more brittle than we thought.” A key lesson learned is the need for increased cross-training—especially for nurses, and especially in critical care. Systems should work now to increase the supply of nurses comfortable in an ICU environment to enable hospitals to flex staff across settings and roles to deal with future waves of the virus.
Not surprisingly, layoffs were top-of-mind for many. Executives were of one mind on the need to safeguard clinical staff as much as possible, and many systems are now considering deep cuts to management and administrative ranks: “It’s easier to stand in front of your clinical staff and be able to say you’ve stripped millions from administration before turning to clinical cuts.”
There was broad consensus for the potential for artificial intelligence and robotic process automation to enable greater reliability and productivity at lower cost in areas such as billing, coding, and even some clinical functions—and that the pandemic will accelerate plans to implement these solutions.
On a more optimistic note, one executive shared that “relationships between clinicians and administrators have never been stronger. The pandemic has forced us to have difficult and constructive conversations we would have never had the courage to have before.”
Another noted the pandemic has spotlighted new leadership talent who might otherwise have been overlooked, and plans are now in place to formally recognize and retain newly crisis-tested talent for the work of restructuring the system.
On the whole, the discussion was far more upbeat that we had expected—as difficult as the crisis has been for many teams, the opportunity to rethink old ways of doing business seems to have created renewed enthusiasm even in the face of daunting financial and operational challenges ahead.
Cartoon – Message from Corporate on Need to Cut More Operating Expenses
These Hospitals Pinned Their Hopes on Private Management Companies. Now They’re Deeper in Debt.
At least 13 hospitals in Oklahoma have closed or experienced added financial distress under the management of private companies. Some companies charged hefty management fees, promising to infuse millions of dollars that never materialized.
Revenues soared at some rural hospitals after management companies introduced laboratory services programs, but those gains quickly vanished when insurers accused them of gaming reimbursement rates and halted payments. Some companies charged hefty management fees, promising to infuse millions of dollars but never investing. In other cases, companies simply didn’t have the hospital management experience they trumpeted.
Click on link above for examples of rural hospitals that pinned their hopes on private management companies that left them deeper in debt. They are based on interviews, public records and financial information from the Centers for Medicare and Medicaid Services and the American Hospital Directory.
Envision Healthcare considering bankruptcy filing
https://mailchi.mp/0d4b1a52108c/the-weekly-gist-april-24-2020?e=d1e747d2d8
National physician staffing firm Envision Healthcare is considering filing for bankruptcy, according a report from Bloomberg. Sources say the company, backed by private equity (PE) firm KKR, which acquired Envision for $9.9B in June 2018, has hired restructuring advisors and is working with an investment bank. The abrupt halt to elective surgeries and reduction in emergency room volumes due to COVID-19 has caused Envision’s business to shrink by 65 to 75 percent in just two weeks at its 168 open ambulatory surgery centers (ASCs), compared to the same time period last year.
The Nashville-based company, which employs over 25,000 physicians and advanced practitioners, has already been reducing pay for providers and executives, in addition to implementing temporary furloughs. Envision is also struggling with a debt load of more than $7B, resulting from its 2018 leveraged buyout, and has been unable to convince its bondholders to approve a debt swap.
It remains to be seen whether Envision will be a bellwether for how other PE-backed physician groups will weather the ongoing COVID crisis. While Envision’s composition of mainly hospital- and ASC-based providers, coupled with its huge debt load, leave it on especially shaky financial footing, many PE-backed physician groups will struggle this year to achieve anything close to the 20 percent annual rate of return often promised to investors.
If high-profile PE-backed groups like Envision end up declaring bankruptcy, it will likely impact the calculus of the many independent practices which may have previously looked to PE firms for acquisition, and temper the enthusiasm of investors, who might see physician staffing and practice roll-ups as less attractive as volumes continue to fluctuate.
Cartoon – Maybe We Can Turn It Around
Cartoon – Turnaround Planning
Cartoon – Successful Business Turnaround
NEW COVENANT HEALTH CFO AIMS TO LEAD ORGANIZATION’S FINANCIAL TURNAROUND
The Tewksbury, Massachusetts–based health system strives to post its first positive balance sheet in more than five years.
Stephen Forney, MBA, CPA, FACHE, excels in fixing “broken” organizations and he has built a track record of achieving financial turnarounds at seven healthcare facilities, he tells HealthLeaders in a recent interview.
Forney has over three decades of experience as a healthcare executive, with a primary focus on problem-solving. He began his career fixing problems in areas such as information technology and supply chain, an approach and skill he has carried over into financial operations in the C-suite.
“In finance, it wound up being the same thing. Pretty much every organization I’ve gone to has been broken in some way, shape, or form,” Forney says. “I’ve developed a specialty doing turnarounds and this will be my eighth.”
Forney speaks about his new CFO role at the Tewksbury, Massachusetts–based Catholic nonprofit health system Covenant Health, which he joined in mid-September, and how driving revenue and reducing expenses must go hand-in-hand to achieve financial balance.
This transcript has been lightly edited for brevity and clarity.
HealthLeaders: Covenant is coming off its fifth straight year of operating losses. What is contributing to those losses and how do you plan to address those financial challenges?
Forney: The thing is, most turnarounds—to a greater or lesser extent—look a lot alike. With organizations that have [financial] issues, there are obviously always unique aspects to every situation, but virtually every healthcare organization that’s not doing well is because of the same relatively small handful of issues.
[For example,] revenue cycle is probably No. 1. Productivity has not been well attended to; expenses haven’t had a lot of discipline around them in a broad sense. That’s not to say that all decisions are bad, but in a systematic fashion, things haven’t been looked at. Frequently, driving volume and growing the business needs a better focus.
In the case of Covenant … there has been a plan developed to address all those areas and we are addressing them already, even though we will be posting another operating loss in fiscal [year] 2019. But the trajectory is good and some of the things that we’re now looking at are what I would consider to be phase two–type initiatives. How do we accelerate and move them to the next level?
On October 1, we outsourced our revenue cycle. I’m pleased that we were able to get that accomplished. Obviously, it’s early but, at least anecdotally, initial trends look good.
HL: Where do you fall on the dynamic between focusing on expense control measures or revenue generation?
Forney: I always feel like you need to do both. Expense management and working towards expense strategies is easier, quicker, and more straightforward.
[Revenue growth strategies] take time, take effort, and tend to [have] a much higher degree of uncertainty around the volume projection. Those are necessary and they’re things that we need to invest in because, at some point, you can’t cut any more from your organization, you’ve got to grow the top line. To me, it’s sort of like step one is stabilize your revenue cycle and stabilize your expenses. Then while you’re doing that, work on growth that’s going to take place 12 to 18 months down the road.
HL: Are you optimistic about the federal government’s efforts to move the industry toward value-based care?
Forney: Going back about a decade, I thought the ACE program, which was [the federal government’s] bundled payment program, was a solid step in the right direction. It gave organizations a chance to collaborate in compliant fashion with physicians to bend the cost curve and have beneficiaries participate in the bending of the cost curve as well. I was with one of the pilot health systems that [participated], and it was a remarkable success.
Everybody got to win; CMS, patients, physicians, and systems won by creating value. Yes, I think that the government has a good role to play in [value-based care] because they have such a large group of patients that they’re willing to experiment like that. [The federal government] can come up with potentially novel ways to get people to buy into this.
HL: What is it like to be at the helm of a Catholic nonprofit system and how does it affect your leadership style?
Forney: From a philosophical standpoint, the principle of creating shareholder wealth and good stewardship are not significantly different. You’ve got an end goal in mind, which is, you’re taking care of the patients and a community. In one case, whatever excess is left goes to a private equity fund or shareholders. In the other case, [the excess] stays in your balance sheet and gets reinvested in the community.
HL: Given your three decades of healthcare experience, do you have advice for your fellow provider CFOs, especially some of the younger ones?
Forney: Focus on being that strategic right-hand person to the CEO. In my experience, that has been one of the things that marks a successful CFO from one that isn’t as successful.
CEOs are going to get ideas from everywhere. They’re outward and inward facing. They deal with the doctors and the community, and they’re going to get all sorts of great ideas.
The CFO needs to be that person [who is] grounded and says, ‘Well, what about this?’ That doesn’t mean saying no. The whole idea is how do you make it [sound] like a yes. To me, the CFO role just grounds all the discussions, from working with physicians to working with the community.
CFOs over the last couple of decades have been operationally oriented. Now they need to start becoming clinically oriented.
There’s a real benefit in being able to sit down and talk with a physician and understand [what] they’re doing. … It winds up becoming a way to help ground the clinicians in the hospital operations because now you’re having a dialogue with them instead of them just saying, ‘You don’t understand. You’re not a clinician.’ That would be something that I would have a young CFO try to stay focused on, even though it’s dramatically outside the comfort zone for people that typically go into accounting.
HENRY KOTULA 