Philadelphia hospital to lay off 175 employees amid financial troubles

https://www.beckershospitalreview.com/hospital-management-administration/philadelphia-hospital-to-lay-off-175-employees-amid-financial-troubles.html?origin=cfoe&utm_source=cfoe

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Philadelphia-based Hahnemann University Hospital plans to lay off 175 nurses, support staff and managers as it struggles to keep its doors open, hospital officials told philly.com.

“We are in a life-or-death situation here at Hahnemann,” said Joel Freedman, chairman and founder of American Academic Health System, which bought Hahnemann and St. Christopher’s Hospital for Children from Dallas-based Tenet Healthcare in January 2018.

“We’re not Tenet with endless cash. We’re running out of money,” Mr. Freedman added.

He told philly.com Hahnemann won’t stay afloat without help from government, insurers and its academic partner, Philadelphia-based Drexel University.

The layoffs, which represent about 6 percent of Hahnemann’s total workforce of 2,700, reportedly affect 65 nurses, 22 service and technical employees, and 88 nonunion workers and managers.

They come as Hahnemann has struggled financially. The hospital and and St. Christopher’s combined have $600 million to $700 million in annual revenue, compared to $790 million at the time of American Academic Health System’s purchase, according to philly.com.

Mr. Freedman, who is also CEO of healthcare investment firm and American Academic Health System affiliate El Segundo-based Paladin Healthcare, partially attributed the struggles at Hahnemann to a lower volume of patients. He also cited information technology and documentation problems at the hospital.

He expects the layoffs, along with other cost-cutting initiatives, such as the closure of some primary care offices, to save Hahnemann $18 million annually.

Read the full philly.com report here.

 

 

Major shareholder wants more frequent oversight of Tenet’s board: 5 things to know

https://www.beckershospitalreview.com/finance/major-shareholder-wants-more-frequent-oversight-of-tenet-s-board-4-things-to-know.html

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Glenview Capital Management, which currently owns 17.8 percent of Dallas-based Tenet Healthcare, has submitted a proposal to Tenet that would amend the for-profit hospital operator’s bylaws to allow all shareholders to take action by written consent without a meeting.

Here are five things to know about Glenview’s proposal, which will be voted on at Tenet’s annual meeting.

1. In a letter to Tenet shareholders, Glenview said Tenet has been a “chronically underperforming company for decades,” and shareholders need the ability to take action by written consent.

“Just as a person in worsening health may need more frequent medical attention than a check-up once every 12-18 months, a chronically unhealthy company is likely to return to health quicker and with more certainty if its owners are allowed more frequent board oversight, and this is effectively accomplished through the ability to take action by written consent,” Glenview wrote in the letter to shareholders.

2. In addition to Tenet’s financial underperformance, Glenview said there are several other factors supporting the proposed change, including the board’s slow response to Tenet’s financial and operational challenges.

3. Although Tenet’s board approved amendments to the company’s bylaws in January that allow majority shareholders to request special meetings, Glenview argued shareholders still need action by written consent.

Glenview said the amendment to allow majority shareholders to call special meetings is “wholly impractical, clearly off-market, and sends a dangerous signal that the board may need additional feedback from shareholders to fully appreciate the cultural renaissance for which we mutually strive.”

4. Tenet said it is reviewing Glenview’s proposal. “We will make a recommendation to shareholders in due course,” Tenet said in a statement.

5. Tenet launched a $250 million cost reduction initiative last year, which involves divesting hospitals in non-core markets and cutting 2,000 jobs, or about 2 percent of the company’s workforce. The for-profit hospital operator ended the third quarter of 2017 with a net loss of $367 million on revenues of $4.59 billion. That’s compared to the same period of 2016, when the company recorded a net loss of $8 million on revenues of $4.85 billion.

Cost reduction tops list of 5 top CFO priorities for 2018

http://www.healthcarefinancenews.com/news/health-execs-top-5-priorities-2018?mkt_tok=eyJpIjoiTlRkbE5qa3hPR0pqTURJNCIsInQiOiJxS28rUmdlMUxJV2hHOTF6WVNiYm1IUklXZFA4ZWI1MmZsY25GYkVRdEN3QTNFWnBsMG83MzRTOU5rQ1B5NXVqMTJxYXcxMEdiVkdWcU1aQ0RGeE52T1FtSlNtd1RiZGRhWHdncEpyS1dUM2lCdlAwbVVPYzlcL1BDa3NZa1ZyVVAifQ%3D%3D

CFOs rank cost reduction opportunities as most important for year ahead, though most expressed limited confidence in their ability to do it.

CFOs rated cost reduction as the most important performance management activity for 2018, according to a new Kaufman Hall survey of senior finance professionals.

Nearly 30 percent chose “identifying and managing cost-reduction initiatives” as the most important performance management function for their organizations, from a list of five choices, according to the 2018 CFO Outlook: Performance Management Trends and Priorities in Healthcare.

The other four priorities, in order, are improving performance reporting to operational leaders (25.8 percent); predicting and managing the impact of changing payment models (18.1 percent); developing more integrated and planning processes across financial planning and strategic capital allocation (16.3 percent); and leveraging rolling forecasting as part of a more continuous planning and financial performance monitoring process (10.7 percent).

Most CFOs, however, also said they have limited confidence in their organization’s ability to manage the financial impact of evolving business conditions. Only 15 percent said their organizations are “very prepared” to manage evolving payment and delivery models with current financial planning processes and tools.

Seventy-percent said they have cost measurement tools that are too simplistic or provide inaccurate data that can’t be trusted or have no tools in place at all, according to the survey of senior finance executives at 350-plus hospitals and health systems.

Fifty-six percent of CFOs and executives said their organizations lack

access to clean, consistent, and trusted data, while ninety-percent think their hospitals should be doing more to leverage financial and operational data to inform strategic decisions.

CFOs said long budgeting cycles are preventing value-added analysis by finance teams. Sixty-nine percent have a budget process that takes more than three months from initial rollout to board presentation. For 9 percent of these organizations, the process takes more than six months.

The survey addresses the rapidly changing healthcare business environment, and the growing role and importance of the CFO function to inform strategic business decisions that will impact long-term success, according to consulting firm Kaufman Hall.

Hospital CFOs: 3 things demanding your attention in 2018

https://www.beckershospitalreview.com/finance/hospital-cfos-3-things-demanding-your-attention-in-2018.html

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From managing new risk-based payment models to navigating an uncertain regulatory environment, healthcare industry finance leaders face many challenges this year, making it difficult to determine which initiatives to prioritize.

To simplify and focus, below are three areas hospital and health system CFOs should prioritize in 2018, according to a new study from Kaufman Hall. For the study, Kaufman Hall surveyed CFOs and other senior finance executives from more than 350 hospitals, health systems and other healthcare organizations across the nation from Oct. 2 to Oct. 27, 2017. Of the respondents, 69 percent were from multihospital health systems, 19 percent were from standalone hospitals, 4 percent were from medical groups and 8 percent were from health plans or other organization types.

1. Cost reduction initiatives. Nearly 30 percent of the respondents said identifying and managing cost reduction initiatives is the most important performance management activity for their organizations. “CFOs recognize the urgency of generating cost improvements, but are struggling with data, processes, and tools due to their lack of structure, transparency, accuracy, and hence, creditability,” according to Kaufman Hall. Seventy percent of survey respondents said their organizations do not use cost measurement tools, or use tools that are too simplistic or provide inaccurate data.

A reliable cost accounting solution can help healthcare organizations manage cost-reduction initiatives. “It must provide flexibility and transparency of costing model elements and a fluid ability to support strategic and financial planning,” according to Kaufman Hall. “A trusted cost accounting tool enables modeling and forecasting of utilization, labor and other costs, and insights into current costs at a patient or service line level.”

2. Financial planning. More than 50 percent of respondents said operational budgeting and forecasting, cost management and efficiency, and reporting and analysis to support decision-making as top initiatives. To improve in these areas, hospital leaders need to have clear goals that are communicated across the organization, according to Kaufman Hall. However, further improvement is needed to ensure transparency and accountability, as nearly half of respondents said their organizations do not closely track targets across the organization to help achieve financial goals.

“Progress is being made in improving financial planning processes, analytics, and tools in order to ensure best-possible organizational performance,” according to Kaufman Hall. “But CFOs and other finance leaders must focus on the areas that will generate the most significant returns.” Kaufman Hall recommends hospitals and health systems examine whether they have the financial resources and talent to successfully implement and operate clinical and administrative tools; support ongoing data collection and management; drive data analytics; and integrate the results with broader organizational plans.

3. Budget processes. The budget process at most healthcare organizations is time consuming, and budget assumptions are often outdated by the time they are published. Although the majority of respondents (69 percent) said their organization’s budget process takes more than three months from initial rollout to board presentation, CFOs recognize there is room for improvement in this area. Forty-seven percent of respondents said their budget cycles do not leave ample time for value-added analysis that can inform strategic decisions.

“Finance leaders are and should be considering different approaches to budgeting, not just simple tweaks to the existing process,” according to Kaufman Hall, and many healthcare organizations are doing just that. Thirty-one percent of respondents said their organizations plan to start using rolling forecasting in the near future to give them the ability to adjust projections and strategies to remain in sync with long-term financial plans.

Access the full Kaufman Hall report here.

Tenet Healthcare to slash 1,300 positions to cut $150M in expenses

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Tenet Healthcare, which recently went through a management shakeup amid financial losses, plans to eliminate 1,300 positions in order to cut expenses by $150 million.

The Dallas-based healthcare system announced Friday it had begun an “enterprise-wide cost-reduction imitative that would primarily involve job cuts and renegotiation of contracts with suppliers and vendors.”

The majority of the savings will be through actions within the company’s hospital operations, including eliminating regional managers and streamlining overhead and centralized support functions. Job cuts will also take place within the company’s ambulatory care and Conifer business segments.

In total, the company intends to eliminate 1,300 positions or about 1% of its workforce, including contractors, by the end of 2018.

The announcement comes in the wake of the sudden departure of longtime CEO Trevor Fetter, who last week stepped down from the top post and left earlier than planned with a severance package worth nearly $23 million. Reuters also reports that the organization has scrapped its sale plans and is continuing to explore ways to reduce its $15 billion debt.

The news about the layoffs also included the company’s preliminary financial results for the third quarter of 2017. Tenet expects a net loss of $366 million in the third quarter.

Ronald A. Rittenmeyer, who was recently appointed CEO while the organization searches for Fetter’s permanent replacement, said in the announcement that the organization is moving quickly to improve the financials and return for shareholders. The cost-reduction plans include structural changes in the way the organization operates to improve agility and speed decision-making, he said.

“We believe these changes will help us drive organic growth, expand margins, and better support our hospitals and other facilities in delivering higher levels of quality and patient satisfaction,” he said.