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Hospital CFOs, CXOs have more reasons than ever to work together

It just makes sense.

As the clinical-financial relationship tightens, hospitals may want to consider whether they have appropriately organized their staffing roles and relationships to take the greatest advantage of the trend.As the clinical-financial relationship tightens, hospitals may want to consider whether they have appropriately organized their staffing roles and relationships to take the greatest advantage of the trend.

Healthcare reforms linking hospital finances and clinical operations means chief financial officers and chief experience officers need to become fast friends, experts say.

It just makes sense. Under the Centers for Medicare and Medicaid Services Hospital Value-Based Purchasing program, for example, participating hospitals have been paid for inpatient acute care services based on the quality of care they provide – not the quantity. Publicly available results from the Hospital Consumer Assessment of Healthcare Providers and Systems survey have further forged the links. By giving consumers better insight into critical aspects of past patients' hospital experiences, those with choice can be pickier about their providers, whether they're looking for the right place to have elective surgery or have a baby.

"That can be a difference-maker on the revenue side in terms of growth and market share, and even an advantage when it comes to negotiating contracts with commercial payers whose members give the hospital high scores and prefer that facility over others in the region," said Gary Frazier, a principal with member-owned healthcare company VHA. Earlier in his career Frazier also served as vice president of strategy and business development at Memorial Hospital in Bakersfield, California a member of Dignity Health.

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Cheryl Nottingham, vice president of finance at the Atlantic General Hospital Health System, a small, rural, independent facility in Berlin, Maryland points out that enhancing the patient experience also "can lead to new market products and services that may provide new revenue growth." AGH, for example, developed a telemedicine relationship with Kennedy Krieger Institute in Baltimore because it saw an opportunity to improve the patient experience for families in its area with autistic children. The hospital itself can't afford to hire physicians specializing in autism. But now it can offer a service that "allows the Kennedy Krieger physician to treat the patient and communicate with the family electronically using cameras and computer equipment, so that they don't have to make as many trips to Baltimore, which is two-and-a-half hours away," she said.

Experience matters

As the clinical-financial relationship tightens, hospitals may want to consider whether they have appropriately organized their staffing roles and relationships to take the greatest advantage of the trend.

"For those hospitals that are able, putting a chief experience officer in place ensures that a senior leader in the organization is focused on the patient's experience," Nottingham said.

[Also: 124 hospitals miss Healthgrades patient experience list]

Anthony Long, principal at Pinnacle Healthcare Consulting, seems the same important for a dedicated CXO. In some cases, the role is replacing and expanding more traditional roles such as clinical experience officer or director of patient experience.

Organizations will face some growing pains as the position evolves, among them ensuring that the person "has broad empowerment across the executive suite to truly impact patient experience and outcomes," Long said.

Frazier said that CXOs should be regularly interacting with all the other C-level positions, since each one should be focused on the patient experience.

That said, the CXO's relationship with the CFO will be a significant point of focus here, especially as value-based purchasing begins to have a real impact on the bottom line, Long said. Increased recognition of that fact by CFOs is causing them to conduct more explorations with CXOs about what the hospital needs to do to realize all the dollars associated with value-based reimbursement.

Overall, the relationship will be something of a balancing act between two parties who likely come at issues from different perspectives. CXOs, for example, may need to practice building a business plan for a major patient experience initiative before presenting the idea to the CFO and the board, to make sure that the expected returns in market share or revenue growth will merit the costs, Long said. CFOs, however, need to step outside their financial boxes sometimes.

"The CFOs that have been most successful of late have the ability to operate a financially and fiscally sound ship," he said. "But they also are able to step out on a ledge now and then and give consideration to ideas that enhance the patient experience even if they don't relate to the immediate financial payoffs they're typically looking for."

[Also: 98 hospitals earn Healthgrades awards for both safety and patient experience]

Fortunately, there are many things CXOs can do to improve experiences for patients and families – potentially impacting their hospitals' HCAHPS or value-based reimbursements – that don't require a lot of money to get off the ground. Hospitals that operate, as AGO does, under a Global Budget Revenue reimbursement model -- which accounts for fixed revenue no matter how many patients are treated -- can avoid readmissions that hurt both from a patient experience and financial perspective when a CXO helps bridge inpatient to outpatient ambulatory care, Nottingham said.

"They can help to ensure that a patient discharging from an inpatient environment that needs a follow-up primary care physician visit can actually get one and doesn't have to wait a month to get in," she said. "Getting the follow-up PCP appointment quicker may reduce a readmission."

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While at Memorial Hospital, Frazier saw patient experience efforts put in place that were neither labor- nor capital-investment intensive. "When we brought in a patient experience director, she probably added only two full-time employee positions," he said. Rather, the efforts were more focused on things like retraining staff about how they interacted with patients, and even keeping the cafeteria open later hours to make sure that the families of patients – especially parents of young children – didn't have to leave the premises to get something nourishing to eat.

"A CXO can put systems in place to mitigate problems like these -- problems that are important but from a finance perspective don't create enough expense for the CFO to worry about too much," he said.

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