Michael Allen, CFO, OSF HealthCare

Four the future: Going beyond the clinical breakthroughs

The health care industry faces an increasing number of challenges and is undergoing rapid changes as technology advances in unforeseen ways and the expectations of the population change along with it. OSF HealthCare Chief Executive Officer Bob Sehring has called for a shift in mindset for the entire organization. In keeping with the organization’s history of more than 140 years of innovation, Sehring charged OSF Mission Partners with being curious, critical, creative, quick and agile, and challenged leadership to embrace their roles as thought leaders, disrupting the traditional ways health care systems operate.

In this interview series, OSF HealthCare leaders sit down to answer four questions about how their teams are embracing innovation to build a healthy future for the organization and the communities it serves.

Michael Allen, MHA, CPA, FHFMA, joined OSF HealthCare as chief financial officer of OSF HealthCare in 2015. He has been named one of the nation’s top health care CFOs by Becker’s Hospital Review and is the Chairman of the Healthcare Financial Management Association Board of Directors.

 

1. Why is innovation important to what you and your team do?

When I came to the organization three-and-a-half years ago, innovation was one of the selling points of OSF. But most of the innovation was on the clinical side. There’s nothing wrong with that at all. It’s a great place to be innovative, but my intent when I got here was to bring that mindset of innovation to the finance side of the house. We’ve rebuilt almost all of the finance systems and processes, and I’ve challenged my team to think differently, use new ways of doing things to deliver support for the organization in new and better ways.

The idea about curiosity, creativity, thinking differently, it’s very core to the way I approach health care finance. I think it’s very necessary, as well, in health care today. The external world is changing around us pretty quickly. We have disruptors coming after us. We have a country who’s decided, and rightfully so, that the cost of health care has reached a boiling point, so to speak, and they can’t afford our care.

We have a country who’s decided, and rightfully so, that the cost of health care has reached a boiling point, so to speak, and they can’t afford our care. Click To Tweet

You take all those pressures together and it forces us to say, “We can’t do business the way we used to do business.” I mean, there was a way that got us here and it’s not necessarily the way that’s going to lead us to the future.

Let’s look for our problems and opportunities and define them first, and then find our solutions. For us to do that we’ve got to be curious and we’ve got to be creative and we’ve got to be agile. Rather than, “I found a solution I like and then I want to back into whatever problem I’m trying to solve.” I’m always out looking for problems and then the right solutions, rather than solutions looking for problems.

 

2. What is the biggest thing/change you see coming in health care finance within the next five years?

If you look at the work of health care finance, some of the biggest changes I think are coming in the next 5-7 years are what I’ll call the finance workforce of the future. We still do a lot of task-oriented work. Not all of our work is that, but we do a lot of task-oriented work. More and more, we’re going to see automation opportunities. More and more, we’re going to be able to use machine learning, artificial intelligence, robotic process automation and other techniques like that to automate the work. What that’s going to allow us to do with ourselves as the humans, as the Mission Partners in this, is to use our abilities for the things we do best and let the automation do the things it does best. If we try to use humans for things that should be automated, we won’t be the best at that, and if we try to use automation to do something that needs the human creativity, the human touch, the human emotion, then that’s not best left to automation.

More and more, we’re going to see automation opportunities ... machine learning, artificial intelligence, robotic process automation and other techniques like that to automate the work. Click To Tweet

So, how can we make things more efficient, so we can focus the human minds more on solving problems and finding opportunities to improve the way we do our work?

What’s going to be the pressure more and more on health care finance are the payment levels – the dollars aren’t necessarily going to go down, based on how we’re paid today, but how we get paid is going to change and the rate of increase in pay is going to change, and that’s already happening. It’s already putting pressure on us.

If you think about Medicare for All, if a single payer system comes to fruition in any form, it’s going to change fundamentally how we deliver our care, and we’re going to have to be able to adjust. Now, we don’t know exactly what that would look like, but we need to be prepared for change, and so we need to be creative, agile and curious to adapt.

Another big challenge I see coming for OSF is how we fund our legacy operations. The traditional bricks and mortar, seeing a patient in a clinic, the traditional ways we deliver care – how do we fund all of that while we develop new models of care? The legacy operations are our “A” business. So, our “B” business is this new delivery platforms we’re focusing on. You can see a small example just with OSF Urgo. The OSF Urgo urgent care locations are about focusing care, ease of care, low cost of care, helping us build a brand. OSF Urgo locations are organized to make getting urgent care easy for the patient.

The traditional bricks and mortar, seeing a patient in a clinic, the traditional ways we deliver care – how do we fund all of that while we develop new models of care? Click To Tweet

We’ve got to fund those things. Like anything that’s kind of a start-up, they don’t make money to start with. We’re also investing heavily in building our virtual care platform, which has several components to make the process of engaging care simpler and less stressful. It will also make care more accessible by eliminating distance as an obstacle.

 

3. What are the big, forward-looking finance initiatives OSF HealthCare is tackling and what challenges do these initiatives face?

Along the innovation side, moving away from traditional budgeting, that’s certainly innovative. It’s not a new idea in industry, necessarily, but it is a new idea in health care and there’s been a challenge around how do you think about that? And there’s been a belief that the budgeting process and getting very detailed with planning every dollar you spend and whether that detailed work is worth our effort and our time or not. To break ourselves out of that thinking, we stepped back and thought about it more deeply and we looked at all the time we spent doing that on the front end. We found a lot of it to be non-value add work. That doesn’t mean we don’t have targets to strive for. It doesn’t mean we don’t want to improve our financial standing. We do. We just felt like the budget got outdated more quickly. It got outdated quickly and was no longer useful very early in our fiscal years and the work it took to prepare it often wasn’t adding value to the ultimate financial equation for the organization.

So, we looked for different ways to do that and moving our efforts into a forecasting model and moving more into a performance management focus. A contemporary performance management focus is about how did we perform in the past – past month, past year, past quarter – versus how are we performing today. Why is that changing?  How can we make it better? Rather than focusing on how am I performing against a budget that I put together 12 months ago that doesn’t make any sense today. What our new processes help us do is focus on shorter periods of time – sort of that agility – quarters, months. And it also helps us focus more on longer planning horizons three years and beyond.

We’re going to focus on the right things at the right scale and at the right scope.

We can’t just incrementally change our numbers each year the way we typically did with the budget – take last year’s numbers, add a few percentage points to the cost, add some percentage points to the revenue and say, “There’s our budget.” That’s just going to keep adding to the cost of health care for our patients and our communities.

We can’t just incrementally change our numbers each year the way we typically did ... That’s just going to keep adding to the cost of health care for our patients and our communities. Click To Tweet

Then there’s cost management. Last year we completed a four-year cost management program that identified and implemented about $180 million worth of cost improvement opportunities. We found a lot of the low-hanging fruit, and other costs continue to grow, so we have begun another program aimed at tackling opportunities that go across all the regions or go across different functions in the organization. There are five of those projects now at the beginning stages of business cases being developed. It will be a discipline, this cost management piece, which will never go away.

Revenue realization, on the other side of that equation, is about getting paid every dollar we’re entitled to. The revenue streams in health care are very complicated. We have government payers. We have private payers. We have people who pay out of their own pocket for their care. And when you put that all together it creates a very complicated way of tracking and realizing the revenue that we’re expected to get.

In revenue cycle – that area that goes through scheduling, coding and documentation, getting the bill out the door and ultimately getting paid – we’re moving away from our revenue cycle team doing all of the work themselves and moving what we can to the patient. Let it be self-service. Let the patient have choices about when they pay their bill and how they pay their bill so we never have to touch it. Right now, when a patient pays a bill, 90 percent of the time we’re touching it in some way. It’s not automated. We’re receiving a check. We’re processing a credit card transaction. We’re doing something where we have to touch or interact with it. What we want to do is flip that model so our patients can self-serve. If the patient can self-serve, they can do it 24/7. They can pay the way they want to pay in a way that’s easiest for them. And in the meantime, we’re not touching it, and we’re not holding up the process. And it allows us to take those resources that were doing that work and do something that’s even higher value add.

If the patient can self-serve, they can do it 24/7. They can pay the way they want to pay in a way that’s easiest for them ... we’re not holding up the process, so to speak. Click To Tweet

So as our organization gets bigger and more complex, we also need to simplify. One of the best ways you can do that is through standard work. If you have standard work you can figure out how you do your work and what’s the best way to do your work. What does work and what doesn’t? If everybody’s doing it the same, then you can find a way to improve it. That makes the platform for continuous improvement work very well.

 

4. Does being a non-profit, faith-based health system change the equation compared to for-profit health care?

It’s different in some ways, but not different in other ways. We still have to run the organization as a business on a certain level because we need to generate new resources every year to continue funding and investing in the future of health care delivery.

So, a for-profit organization’s goal is to increase shareholder value for those who own the company. We don’t have a goal that’s as focused because our goal is to provide health care to our communities with the greatest care and love. We don’t turn anyone away. We have to generate the resources to do that. We have to provide a great patient experience. So, we have to increase value to our stakeholders, where a for-profit increases value to their shareholders. And we deliver value to our stakeholders by having a great patient experience with high-quality care, bringing peace of mind to patient and family.

And we deliver value to our stakeholders by having a great patient experience with high-quality care, bringing peace of mind to patient and family. Click To Tweet

It’s much more challenging for a non-profit to deliver on everything we’re expected to deliver on, but there are a lot of lessons we can learn from the for-profit organizations about being focused, which we struggle with sometimes. We can learn about focus and execution and agility and all of those things, because for-profit organizations move faster, make decisions quicker. There are things we can learn from that part of the business world, yet we’re not going to necessarily strive to look like those organizations because we have different goals.

There are things we can learn from that part of the business world, yet we’re not going to necessarily strive to look like those organizations because we have different goals. Click To Tweet

About Author: Ken Harris

Ken Harris is a writing coordinator for the Marketing & Communications division of OSF HealthCare.

He has a bachelor's in journalism from the University of Wisconsin-Madison and worked as a daily newspaper reporter for four years before leaving the field and eventually finding his way to OSF HealthCare.

In his free time, Ken likes reading, fly fishing, hanging out with his dog and generally pestering his lovely, patient wife.

View all posts by

Tags: ,

Categories: Industry Perspectives