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January 19, 2009

We’re All in This Together
By Juliann Schaeffer
For The Record
Vol. 21 No. 2 P. 6

In the debut of For The Record’s new department, CFOs talk about their expanding roles, including their connection with HIM.

For a closer look at the relationship between a hospital chief financial officer (CFO) and HIM, For The Record interviewed Tim Burroughs, vice president and CFO of Medical City Dallas Hospital, who will soon be transitioning to a CFO position at the West Florida Division of HCA; and Kenneth McFarland, senior vice president and CFO of Mission Hospital in Mission Viejo, Calif.

Holding the position of CFO since November 2003, Burroughs has guided Medical City Dallas Hospital, a 660-bed tertiary care center located in North Dallas, through the financial side of a multimillion-dollar expansion program that included the construction of a new emergency department (ED), a critical care tower, and a 200-seat conference room. He has also approved initiatives that have led to lower turnover rates in the employee population.

McFarland is responsible for overseeing all aspects of Mission Hospital’s financial, budgetary, and accounting functions, as well as the operations and financial performance of various departments, including information systems, admissions, care management, and property management, for the 301-bed acute care, full-service facility serving south Orange County.

What are the issues having the most impact on the CFO’s job?
Burroughs: There are very few issues that do not impact the CFO position. Some of the issues I pay the most attention to are contract modeling (ensuring adequate yield from third-party payer contracts); ongoing issues with Medicare/regulatory reimbursement reductions; billing, whether it be regulatory compliance, managing billing edits, accuracy, timeliness, or managing denials; uninsured issues; overcrowding in the ED; pricing transparency; cash collections; internal controls such as SOX [the Sarbanes-Oxley Act]; staffing (nursing vacancies and responding to seasonal volume fluctuations); the increasing cost of labor rates; understanding business and product lines; supply management, which involves vendor pricing, physician preferences, the need for standardization, and ensuring timely and efficient delivery systems; the increasing cost of utilities; and opportunities for insourcing contracted services.

McFarland: When I think of the questions as they pertain to the HIM department, the categories that I would lean toward would be around reimbursement. We have a swelling population of people who don’t have access to healthcare and have the ability to secure healthcare insurance. A big challenge from my perspective is people using our emergency room as their primary care physician. We have a perception that south Orange County is quite affluent and everybody has all that they need to make life work, and that’s not the case. We have tens of thousands of people who are at risk and use our emergency room as their primary care facility. With that, we probably write off close to $1.5 million to $2.5 million every month for unfunded care coming through our emergency room.

The other area is the declining levels of reimbursement from the state of California for the Medi-Cal population. Thirty-five percent of the 3,000 babies that we delivered [in 2007] were Medi-Cal babies and because of its financial challenges, the state [is not able to] continue funding Medi-Cal at rates that we had previously enjoyed. There was a 10% budget cut proposed for Medi-Cal, and we’re being tagged with an additional 10%, so we’re looking at a 20% reduction in funding from the state of California for all the Medi-Cal work that we do for our community.

And the last would be the complicated nature of getting reimbursement from Medicare and MS-DRG [Medicare severity diagnosis-related groups] coding and reimbursement, [as well as] the critical need to have competent and proficient coders who can ensure that hospitals are getting their fair and just reimbursement for the care that we provide to those patients that qualify for Medicare.

What is your role in the IT decision-making process?
Burroughs: At Medical City Hospital, the CFO is responsible for all IT decisions. The IT&S [information technology and services] department reports directly to the CFO, and the CFO is ultimately responsible for all IT&S decisions and management issues. In addition, the CFO oversees obtaining funding and deployment of all capital expenditures and equipment, which typically involve an IT component.

Some of the major projects we’ve been working on include completing a major hospital expansion that features a new IT infrastructure, installing patient tracking systems, converting from analog to digital imaging, developing remote single sign-on for physicians, implementing voice recognition for transcription, and establishing a telemedicine program with remote wireless monitoring. There are also plans to convert to an electronic health record. Plus, we’ve got an electronic order submission and a self-scheduling system that allow physicians or patients to self-schedule outpatient procedures.

McFarland: I have full responsibility over the information technology and what we call clinical transformation areas. We have recently merged IT with clinical transformation. What we used to call clinical informatics we have since changed the language to call clinical transformation, using technology and information to transform the practice of healthcare. I have full responsibility and I have recently appointed my director of HIS [health information systems] over the clinical transformation function because of the critical role that HIS plays in all things IT driven.

What is your relationship with the HIM department?
At Medical City Hospital, HIM directly reports to the CFO, and the CFO is ultimately responsible for HIM operations, outcomes, and management decisions.

There are several major projects and issues that we’ve focused on. We’ve developed a centralized coding center that services 10 facilities and implemented a documentation integrity program where documentation specialists work directly with physicians to ensure that the patient’s clinical status is adequately documented, which improves coding and eliminates physician queries.

We’ve also had our eye on electronic storage vs. storing hard copy off site and worked on ensuring timeliness of chart completion to ensure claims can be billed timely.
McFarland: The director for HIS reports directly to me, and we have a very tight relationship. Recently, I appointed the director over the HIS function, Daniel Pothen, to lead both HIS and the clinical transformation teams as well. We’ve been embarking since July 2004 on the complete transformation of bedside care using technology, and we’ve spent close to $20 million with a project we call Care Redesign, [which is] the full automation of the medical record. We’re moving toward a paperless environment, hence the need to marry those two departments together.

How have the CFO’s responsibilities changed over the years?
Over the years, the CFO has become more of a business partner with the CEO. The duties have also shifted from transactional to more strategic, with an emphasis on process and system flow.

McFarland: In the past, I believe the CFO’s role was really anchored in accounting—people hitting their productivity and cash collections. It’s broadened and we’ve been pushed by the necessity to wear a broader and bigger hat around the operations and ensuring that operations are well funded, ensuring that we’re giving resources to the proper service lines, a lot of service line management, and providing great analysis to determine what areas of business we do well at, understanding why we don’t do well at other service lines, and making difficult decisions around the portfolio services we can offer and realizing we can’t be everything to everybody.

I like to call it the balance between benevolence and beneficence, benevolence being the old days of doing everything for everybody and beneficence saying I can do this, this, and this but I have to say no to that, that, and that. So for every couple of yes’, there’s a series of no’s. In the old days, we did everything, no matter what the profitability. Now we’re having to be more mindful stewards of what resources we’ve been blessed to manage and have those difficult conversations and potentially close down service lines or things we used to do in order to take those resources and point them in a different direction for their better and higher use.

Do you visit the hospital’s clinical areas? What is the purpose of those visits?
Yes, the executive team conducts regular rounding throughout the facility. The goal is to affect employee pride, further understand operations, and address issues as they relate to support services.

McFarland: I visit them hopefully daily but [definitely] several times during the week. I’ve asked all of those who directly report to me—whether they’re from admitting, accounting, budget, material management, care management, information technology, or clinical transformation [departments]—that on an every other week basis, we all have to do what’s called management by walking around. We have to go into an area that’s out of our competency area and observe and walk around in somebody else’s shoes.

So we gown up and we go into the operating room, we go and hang out in the emergency room, etc. I’ve painted the nurses’ bathroom in the acute rehab unit; I spent a day with our lift team moving patients; and I spent a day working the cash register in the cafeteria. I think it’s very critical that we get out of our comfort zone and step into the clinical areas so we appreciate how difficult and how important it is to deliver great bedside care and see what it means to the patient and the family and all of our employees.

— Juliann Schaeffer is an editorial assistant at For The Record.