Latest / Becker’s Healthcare Podcast / Balancing Growth and Financial Pressures in Healthcare with Jenni Alvey

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Balancing Growth and Financial Pressures in Healthcare with Jenni Alvey · Becker’s Healthcare Podcast

• 0:00
  This is Madeline with the Becker CFO revenue
• 0:03
  cycle podcast. I'm so excited to be joined
• 0:05
  today by Jenny Alvey, CFO of IU Health.
• 0:08
  Jenny, thanks for being on with me. Yeah.
• 0:11
  Thanks for having me, Madeline.
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  And we're so excited to have you back
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  on the podcast, but for some of our
• 0:16
  listeners who might not know you or haven't
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  tuned into the previous episodes, do you mind
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  just sharing a little bit about yourself and
• 0:22
  more on IU Health?
• 0:23
  Sure. I'm happy to.
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  Really glad to be here. My name is
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  Jenny Alvey. I have the privilege of serving
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  as the chief financial officer for Indiana University
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  Health.
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  I've been with IU Health for over a
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  decade,
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  including
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  leading our revenue cycle services,
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  being the treasurer before stepping into the CFO
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  role.
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  And just a little bit about IU Health,
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  we're the largest health system in Indiana.
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  We serve patients across the state throughout a
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  network of both our academic and our community
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  hospitals,
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  our physician practices, all of our highly specialized
• 1:00
  programs,
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  and really our our mission is deeply rooted
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  in improving the health of all Hoosiers.
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  It truly drives all of our financial decisions
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  that we make and how we talk about
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  funding our vision
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  while ensuring that care affordability and access to
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  care for patients are also happening at the
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  same time.
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  So we continue to make investments in our
• 1:23
  workforce and communities. We remain committed to our
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  longer term strategies
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  that both our our team members and our
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  patients
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  benefit from. You've probably
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  seen we're moving to Epic, and we're excited
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  about that implementation
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  in in,
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  2027.
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  And then we're also going to be doing
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  our new
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  downtown medical center, and we're excited about that
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  too. So we've got some really big projects
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  coming down the pipeline.
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  Amazing. It does sound like a busy but
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  exciting time at IU Health right now. And
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  before we even kick off the podcast, I
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  do have to say congratulations
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  on the twenty twenty five national championship as
• 2:02
  well. Yes. Of course. That is
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  we, we love coach Signetti and really appreciate
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  what
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  the Hoosiers have done, and that team is
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  just amazing. It's been fantastic
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  to be a Hoosier this year. So cool.
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  One of my dear friends went to the
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  game actually and she sent all the pictures.
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  It looked amazing. So congrats on that. Had
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  to throw that in there as a fellow
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  Hoosier myself. Yeah. It's, it's I'm very proud
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  to be an alumni. It's awesome.
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  That's amazing. Well, thanks for, again, that intro
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  there, and I guess I wanted to kick
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  off. So IU Health obviously just released, its
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  most recent financial report.
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  Operating margin did decline to 0.5%
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  despite some revenue growth. So
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  could you share maybe some of the biggest
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  structural cost pressures you're working to address over
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  the next few years and just just any
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  thoughts on on your most recent report?
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  Yeah. Thanks for asking about that. We we
• 2:56
  knew we were going to have some pressure.
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  Actually, we've been pretty transparent
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  about
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  having it in
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  '25,
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  '26, and '27
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  as we take on some
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  big one time endeavors that we believe are
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  setting us up for the future.
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  So as I said, we had quite a
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  bit of investment
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  in,
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  the EPIC system and our our downtown hospital.
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  We're bringing our Fort Wayne Hospital
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  online in 2027
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  as well. And so we have some really
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  big projects. We are still very focused on
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  our destination
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  programs and our school of medicine partnership,
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  so we had quite a bit of investments
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  in that. And then lastly, I'll I'll just
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  mention,
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  we've been on a care affordability
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  plan for several years, and
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  we
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  feel really strongly about making sure that our
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  care is affordable while we provide great access
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  and quality care to our patients.
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  And so last year was
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  really another big lift getting to where we
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  thought we needed to be at the national
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  average,
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  as a percent of Medicare, and we feel
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  really good about that.
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  And we have a a plan, a long
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  range plan that will continue to
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  strengthen our margin
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  and operating income as well as our balance
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  sheet. So
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  just more to come. Stay tuned. But we
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  feel really good about where we are financially
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  and where we're headed,
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  especially keeping our mission and our vision, you
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  know, in the front of our minds.
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  Yeah. And as you mentioned at the beginning
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  of the podcast, all these big projects going
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  right now, the transition to epic, how do
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  you and your finance team just stay aligned
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  amid all these changes?
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  It's good things, but amid all this this
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  change.
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  Yeah. Actually,
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  we are very lucky. I I am so
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  thrilled to be in a
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  great system like IU Health because of the
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  way that we partner with our operational teams,
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  our strategy teams, our clinical teams. Right. It's
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  I'm very lucky to be part of that
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  executive team
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  in how we all do our work together
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  and
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  the financial planning
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  is really well connected to our strategic planning,
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  our clinical planning, our workforce planning.
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  We do it through a long range financial
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  plan. It's a it's a very disciplined process,
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  and we have done it for many years,
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  And it is about funding our vision.
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  So we maintain
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  that rolling ten year financial plan that reflects
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  our revenue, our expense, our balance sheet assumptions.
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  It gives us visibility
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  beyond an annual budget cycle,
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  and then we're using that ten year plan
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  to help prioritize
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  major long term investments.
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  So when my,
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  clinical partners, our chief medical executive and our
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  chief nursing executive came in and said we
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  really feel like we
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  want to implement EPIC.
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  We partnered with the entire executive team to
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  say, hey. We're already doing these large growth
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  projects that we put EPIC in there. We're
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  going to have to,
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  do some things differently.
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  And so we use that ten year plan
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  to sit down as an executive team and
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  make some choices on what we were going
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  to prioritize,
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  deprioritize,
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  or move down a couple years. And so
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  that's really we're doing it as a team.
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  They aren't financial decisions.
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  They
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  are decisions across the system with all the
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  executives and all of our operational teams.
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  Wonderful. Teamwork really does make the dream work.
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  It does. It does.
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  Definitely. Well, so, Jenny, I do wanna switch
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  gears a little bit here. You know, we've
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  all been hearing about
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  financial headwinds facing
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  hospitals and health systems and a lot of
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  policy changes going on right now. So I
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  wanted to get your thoughts on maybe some
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  governmental changes that some hospitals and systems,
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  should be keeping a close eye on right
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  now and and why you think they should.
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  Yeah. I
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  this has certainly probably been at the top
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  of the list for most CFOs across the
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  country. The government and uncertainty
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  makes it very hard to do our jobs
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  because the changes can happen in such a
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  material way with your revenue so quickly Yeah.
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  That you
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  aren't expecting it. And so
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  what my advice has been and how we
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  have done it is you need to be
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  planning for those things. You need to have
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  playbooks in place. And so
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  we've been very,
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  very close in partnering with the state on
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  our state direct payment programs and supplemental funding.
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  Mhmm. They are increasingly
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  critical to hospital economics.
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  They come with uncertainty,
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  political risk, which, you know, requires a lot
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  of planning and response of being able to
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  partner with,
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  I will say peers. Some people might say
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  competitors, but I'm going to say they were
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  our peers. Yeah. We had several that we
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  partnered with this past year and working with
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  the state on, hey. How do we make
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  sure we're prioritizing
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  our Medicaid patients
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  and how do we make sure that we're
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  also reducing our commercial prices?
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  How do we make sure that we're providing
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  great quality care and we're able to do
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  that going forward and supporting the state and
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  their Medicaid needs? So we did a lot
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  of work and focus there.
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  That was a very particular focus in our
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  state. I think across the nation, though, we
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  also have to focus on the changes in
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  the Medicaid policies, particularly,
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  you know, the work requirements and eligibility
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  changes. And they could sound straightforward on paper,
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  but in practice, they create
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  a lot of coverage churn and emotion as
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  it relates to uncompensated
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  care. It can introduce
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  significant financial burden for patients and create administrative
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  barriers for patients to come in and get
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  the care they need or for hospital organizations
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  to be able to provide the care.
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  So we're just making sure that we're keeping
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  a priority on ensuring our individuals
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  who are eligible or connected to that coverage
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  and help minimize their financial burden.
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  And
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  maybe a a third category would be in
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  really the broader regulatory and payer environment. There
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  are a lot of reforms to prior authorizations,
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  denial behavior,
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  shifting payment models, and really how hospitals and
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  payers interact operationally.
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  Even small policy changes can really have a
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  material impact on our cash flow and revenue
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  predictability.
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  So when you put it all together,
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  it just reinforces
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  the reality that hospital leaders are already managing
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  thin margins, high capital needs,
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  workforce
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  inflationary
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  pressure, and growing demand.
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  So we have to anticipate that
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  scenario plan and make sure we're ready for
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  what comes at us and and think about
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  how we're going to make sure that we're
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  true to our mission and deliver on the
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  care that people expect from us.
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  You know, some really great insights there. And
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  and you're so right. Everything you just listed,
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  health care leaders definitely are busy right now.
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  So
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  any solutions are are useful.
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  Could you dive a little deeper into how
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  IU Health is positioning
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  itself from, you know, and its financial strategy
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  to remain resilient amidst some of these uncertainties.
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  You touched on a little bit, but just
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  anything deeper that you could dive into. I
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  think the again, I'm gonna go to long
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  range planning. And if you do that as
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  a team, that can really
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  help you be prepared
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  not only for what gets thrown at you,
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  but also for the choices that you make.
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  And we we do it in
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  two to three year cycles where we do
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  a deeper dive. And right now, we're
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  working arm in arm with all of our,
• 10:44
  hospital and physician
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  leaders in how we're thinking about what what
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  our volume needs,
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  what what is our market capacity, what should
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  we be prioritizing?
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  How are we thinking about that in partnership
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  with the school of medicine?
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  What do we think inflation is going to
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  be? How are we going to ensure we
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  have a healthy workforce that are really truly
• 11:08
  engaged and that we ensure that they're paid
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  at market, and how do we make sure
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  we're very efficient?
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  So you think about putting all those aspects
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  into a plan, and then you overlay all
• 11:19
  of your strategies.
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  So you have to ensure that you are
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  running
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  very efficiently
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  and running effectively at the same time that
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  you are continuing to grow, that you're continuing
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  to provide
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  great care to our communities and focusing on
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  making our communities healthier.
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  So I think if you if you really
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  sit down with the teams and you do
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  that in a long range planning cycle,
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  it it could have a material impact. And
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  a lot of people don't realize
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  not for profit entities are limited
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  to generating cash through operations and borrowing debt,
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  while for profits can also issue equity and
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  stock.
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  So it's making
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  access to debt markets critical for not for
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  profits.
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  And we really do then have to ensure
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  that as expense and cash outflows for major
• 12:10
  capital strategic projects,
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  as they're impacting our days cash on hand,
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  a strong balance sheet becomes increasingly important
• 12:18
  to be able to continue to deliver on
• 12:20
  our mission or respond in times like COVID
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  and be ready for emergencies.
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  So,
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  a lot of us across the country are
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  trying to diversify our revenue streams, think about
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  that from a planning
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  perspective, and then just everyone needs to continue
• 12:36
  to be committed to care affordability.
• 12:39
  Yeah. So we've we've made a lot of
• 12:40
  public commitments to price transparency,
• 12:42
  reducing
• 12:44
  patient financial burden,
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  and that really requires balancing the margin
• 12:49
  protection with access and equity.
• 12:52
  Yeah. Wow. Some some really great advice there.
• 12:55
  Along with
• 12:56
  governmental
• 12:57
  policy changes that we're seeing,
• 12:59
  what major decisions today do you think require
• 13:02
  CFOs to think even beyond that traditional financial
• 13:04
  management, maybe acting as like an enterprise strategist
• 13:07
  almost?
• 13:09
  So
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  we think of it here almost as, like,
• 13:12
  two different things. Our mission engines or operating
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  engine
• 13:17
  and how we generate the resources
• 13:19
  that sustain care access, affordability, reinvestment in our
• 13:23
  people.
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  Yeah. Faces near term head near term headwinds,
• 13:27
  a lot of reimbursement
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  pressure, labor cost utilization
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  shifts, and requires that continuous
• 13:33
  optimization
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  because margins are thin.
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  So we also have to think about our
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  strategic engine, the investment engine, and the balance
• 13:42
  sheet, and that engine converts that
• 13:45
  disciplined risk into really a long term compounding
• 13:49
  for mission reinvestment.
• 13:51
  So that's really how I think about it.
• 13:52
  It supports the investments and facilities, technology
• 13:56
  growth, things like our new adult academic health
• 13:59
  center campus, regional growth projects, and implementing epic
• 14:02
  to the new EHR.
• 14:04
  That that is what really stabilizes an organization
• 14:08
  when operational wins shift.
• 14:11
  So you have to be highly focused on
• 14:13
  both and be thoughtful about how you're preparing
• 14:16
  for the future.
• 14:17
  And so that's
• 14:19
  hopefully that answers your question, but I think
• 14:21
  both of those engines
• 14:24
  are essential.
• 14:25
  And one kind of defines the pace of
• 14:28
  flight and the other helps us maintain the
• 14:31
  altitude over time if you think about it,
• 14:33
  you know, from
• 14:35
  an overall operational perspective.
• 14:38
  Yeah. No. Definitely answers my question there.
• 14:41
  Again, Jenny, really appreciate you taking the time
• 14:43
  to connect. It's always such a pleasure chatting
• 14:45
  with you and
• 14:47
  excited to hear about all the great things
• 14:49
  that continue to happen at IU Health. And
• 14:51
  again, congrats to your team as well. Yeah.
• 14:54
  Thank you. Thanks for the time today, Madeleine.
• 14:56
  It's always great to talk to you and
• 14:58
  love love reading everything in Becker's. It's so
• 15:01
  such a helpful way for us to be
• 15:03
  able to stay connected to what's going on
• 15:05
  across the country.
• 15:07
  Well, we really appreciate you also providing us
• 15:09
  some insights. So thanks again, Jenny, and we'll
• 15:11
  be in touch. Alright. Thanks.