Latest / Becker’s Healthcare Podcast / John Mallia, Interim CFO, Methodist Le Bonheur Healthcare

Transcript

John Mallia, Interim CFO, Methodist Le Bonheur Healthcare · Becker’s Healthcare Podcast

• 0:00
  This is Madeline Ashley with the Becker CFO
• 0:02
  and Revenue Cycle podcast, and I'm excited to
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  be joined today by John Melia, interim CFO
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  of Methodist Le Bonheur Healthcare.
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  John, thanks for joining me.
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  Thanks for having me.
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  So I'm so excited to dive into our
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  conversation. Before we kick things off, do you
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  mind sharing just a little bit about yourself,
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  your background, and and more about your organization?
• 0:23
  Sure.
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  You know, as you mentioned, I'm interim CFO
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  at Methodist Le Bonheur in Memphis.
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  We're a six hospital system
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  generating about 2,000,000,000 in net revenue annually. We
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  have a nationally recognized children's hospital, of course,
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  in Le Bonheur.
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  We have
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  a academic medical center here and four other
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  great hospital facilities as well as many fantastic
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  outpatient sites in and around Greater Memphis.
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  We recently went live with Epic and Workday
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  just last year, so that obviously has been
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  a major transformational
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  change for us across the system.
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  As far as myself, before coming to Memphis
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  here, I served
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  as a an interim capacity in New York,
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  both Upstate and in Brooklyn.
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  So I've seen a wide range of markets
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  and and environments, payer environments.
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  But now I'm proud to serve MLH,
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  Midwestern accent and all, and they're alongside a
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  very dedicated team here in Memphis.
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  Wonderful. Thanks so much for sharing. I I
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  too have the Midwestern accent. So,
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  well,
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  just to kick us off, and and as
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  you mentioned, you've served in in different areas,
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  different markets.
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  I would be curious to hear maybe some
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  of the broader challenges that you were, you
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  know, following closely right now in that in
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  the health care industry from a financial perspective
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  and and why these challenges are, you know,
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  these industry pain points.
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  Sure. Yep. There's a bunch, as you know.
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  You know, just off the top of my
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  head,
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  workforce pressures really have not gone all the
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  way down, you know, since coming out of
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  the the, the pandemic.
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  Some of them have shifted around a little
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  bit,
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  but labor costs continue to be elevated.
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  Allocating,
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  market increases is is critically important for recruitment
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  and retention.
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  And this is true with staff and physicians,
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  and and increasingly, APPs,
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  in fact, advanced practice providers.
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  That's becoming,
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  you know, continues to be a a tough
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  spot for us.
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  Medicare Advantage, we're seeing higher administrative burdens, higher
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  denials,
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  and meaningfully
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  lower yield compared with traditional Medicare, and that
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  that continues.
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  As we look ahead, we're looking at potential
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  reductions in our $3.40 b savings.
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  That's a big deal for us. That's a
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  big deal for any safety net.
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  And then, of course, OBBA,
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  OB three. I've heard it referred to a
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  number of different ways. Mhmm. Possible reduction
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  of the,
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  ACA exchange subsidies the subsidies, the eliminations
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  that'll put more people,
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  make more people may lose coverage,
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  which increases bad debt and shifts payer mix.
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  So that's that's a challenge that we're looking
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  at.
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  And then just long term pressure on directed
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  payments specifically for safety nets.
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  That is become, you know, a pretty, integral
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  part of our reimbursement
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  and our strategy going forward. So
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  understanding the impacts of that in in future
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  years and any potential mitigation strategies that that
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  might come,
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  is important to us.
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  Yeah. And I wanna circle back a little
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  bit to the the one big beautiful bill
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  act. You know, that's something that we've heavily
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  covered here at Becker's and something that we're,
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  you know, seeing a lot of attention drawn
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  to from from finance leaders.
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  With so much unknown around that right now,
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  how are you just kind of keeping a
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  quote maybe like a pulse on this and
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  and working with your finance team to be
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  ready for, you know, the the unknowns?
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  Yeah. So we're putting together,
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  long term financial forecast.
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  And as we head into this budget year,
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  year one, is really gonna be our budget
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  for next year. So I think the the
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  most,
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  the closest things that we have to look
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  out for is how those exchange plans are
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  going to impact us, the the reduction in
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  the subsidies. So that's the nearest term thing.
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  As we look out to the future,
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  it it does appear that there will be
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  some reduction in our, directed payments.
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  In Tennessee here, we are a non expansion
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  state. So the floor on the reduction right
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  now as it stands is a 110%
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  of Medicare, which
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  is still better than our Medicaid rates, but
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  also much less than we're currently getting. So
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  we're trying to model those out, understand what
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  shifts we have to make in our financial
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  strategy going forward,
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  to mitigate the, the impact of losing that
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  reimbursement.
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  And,
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  one final question for you here. You know,
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  some CFOs that I've talked to just honed
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  in on the the importance of working with
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  your with your CEO,
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  to to really develop strategy and and sometimes
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  have those tough
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  conversations.
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  Can you kinda talk a little bit about
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  that working relationship that you have and and
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  just kind of, you know, how you guys
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  have maybe even grown together during this time?
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  Absolutely. Yeah. And there's a lot of things
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  to talk about. So, Michael Lubecki, our our
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  CEO here, and I,
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  you know, have a lot of these conversations
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  about how to plan,
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  because a lot of our strategy is currently
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  driven around the fact that that we do
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  get these reimbursement streams.
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  And, you know, three forty b,
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  in particular
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  is is a key area for for growth,
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  just pharmacy in general.
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  So we stay, you know, very close in
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  in conversation about the potential impacts of these
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  things, how it changes our strategy, how we
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  look at, you know, potential impacts of, site
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  neutrality,
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  as we look at expansion,
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  for our hospital outpatient departments.
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  So, yeah, that constant communication, staying in touch
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  with the story both together
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  with our external partners and our board is
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  is really important. Yeah. Definitely the key there.
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  I wanna shift,
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  just the discussion a little bit and see
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  if you could share with with myself and
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  the listeners a little bit about how you're,
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  deciding right now where to invest in the
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  revenue cycle. If you could just share some
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  thoughts there as well.
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  Sure.
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  You know, as I mentioned, we went live
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  with Epic
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  Yeah. Which is, pretty transformational
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  for us. But we've also locked in our
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  non epic cost of collections
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  and, are accelerating the full revenue cycle performance
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  with our partnership with Ensemble Health Partners,
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  which just started this year.
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  So other than increasing yield and accelerating cash
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  flow, which, you know, the the primary goals
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  of the relationship also include treating them as
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  a co innovation partner.
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  You know, as I mentioned, we've locked in
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  the the cost to collect. So,
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  you know, benefits that the r and d
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  that they put into,
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  automation, we wanna make sure that it it
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  truly improves cash and yield, that benefits both
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  sides of the partnership, obviously.
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  But we really wanna reduce the friction for
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  patients and staff,
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  as part of
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  the evaluation of these innovations and and the
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  investments,
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  and, of course, improving the patient financial experience,
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  which
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  can, as you know, be rocky.
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  And we're trying to mitigate as much friction
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  as as possible on that. And, really, when
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  we're talking about on the automation,
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  other than improving the the patient financial experience
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  and reducing that friction, we really wanna make
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  sure it just stays focused where,
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  it really improve improves the, the yield and
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  the cash.
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  Can you share,
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  with us a little bit about everything that
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  went into this epic integration,
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  you know, how long,
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  this this took and and kind of what
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  things are looking like right now?
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  Sure.
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  You know, I could spend a a whole
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  podcast on on that as well. You know,
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  we
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  we we went through the the journey like
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  a a lot of other organizations. We went
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  live, in October, so just about fourteen months
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  ago.
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  October
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  2024.
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  Yep. October 2020, actually. Yep. And we we,
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  doubled down. We went live on Workday
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  in in, in July
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  2024.
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  So there was a lot of change
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  very quickly.
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  And and the organization now, I think, is
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  really getting its legs underneath us, understanding the,
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  all the benefits that we're we're,
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  able to to get from it, all the
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  the,
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  the the, things we're able to see that
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  we hadn't been able to see before,
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  the the reduction in the amount of, I
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  would say, manual work and manual interfaces,
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  having people just take information out of one
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  system and putting into another. A lot of
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  that's automated now. And we're just really starting
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  to hit our stride. You know, our AR
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  days are down to, less than they were
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  pre go live,
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  and, you know, our coding is is improving.
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  So we're hitting our stride on a lot
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  of those key points right now.
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  Well, thank you for diving a little bit
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  deeper there.
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  Final question I have for you here. You
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  know, as the the industry continues to evolve,
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  ebb and flow, you know, like we talked
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  about, some of the uncertainties we're seeing. Can
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  you share how the CFO role has been
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  maybe forced to evolve beyond just just crunching
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  numbers, just the finance side of things, and
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  maybe some of the most important leadership skills
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  you're seeing in this role right now?
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  Yeah. You know, it it's it that's a
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  good question. And and
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  as I think about, really, the the latter
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  part of my career, how it's evolved,
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  it's so much less about numbers now in
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  the CFO role, and more about telling a
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  compelling story. I mean Yeah. The story has
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  to be a true story.
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  Mhmm. And you have to be able to
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  influence it in a positive way as as
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  much as possible. But being able to tell
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  it in a clear, consistent manner,
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  internally and externally,
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  that folks can easily understand and that resonates.
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  And, really, it has to stay focused on
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  the future.
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  You know, we spend a lot of time
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  telling,
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  our our boards and external stakeholders about what
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  happened historically. But I think it's really important
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  to say, hey. This is what we're anticipating
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  going forward. These are the headwinds that we're
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  facing.
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  It it's it's our responsibility
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  to outline all of the knowns and give
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  the best guidance we can
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  about the the known unknowns.
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  Yeah. And then we also have to acknowledge
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  the fact that there are always unknown unknowns,
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  I think, is,
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  is Donald Rumsfeld put it. You know, recent
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  history
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  from the change health care cyber incident to
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  the pandemic.
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  Stuff happens.
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  And while we can't really be prepared for
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  things like that, we have to keep in
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  mind that they do happen. So Right. I
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  would say, you know, communicating simply and consistently,
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  keeping the focus forward,
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  interpreting uncertainty, which we've talked a lot about
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  already today, without creating anxiety,
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  and then just, you know, really leading with
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  steadiness,
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  even when those variables change.
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  And could you share too, how long have
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  you been in your interim role?
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  So I've yep. I've been in at, MLH
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  since July.
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  Yeah.
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  You know, and and then previous to that,
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  as I mentioned, I was working in, two
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  different facilities and interim capacities in New York
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  since, 2019.
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  What does the and this might be maybe
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  an obvious question, but what does that interim
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  period that interim role kind of bring to
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  the table that might be different from, you
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  know,
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  a regular CFO role.
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  Maybe what are some things that you've learned
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  during this time? Sure.
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  So my background is in consulting,
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  and it kinda morphed into interim management later
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  in my career, which, I'm I'm really
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  enjoying. But, you know, interim,
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  CFOs
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  are a little bit different in that they
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  come during a time of, uncertainty
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  transition. Sometimes it's as simple as keeping the
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  seat warm in between,
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  the former CFO and the known CFO that
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  will be coming in at a a certain
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  date. Other times, they're kind of date uncertain.
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  So Mhmm. You know, that's part of the
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  the,
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  the challenge is to make sure that while
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  you have that interim tag, you also lead
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  with purpose and
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  and some semblance of consistencies
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  because there can be some,
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  worry about the the lack of,
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  you know, tenure and and consistency
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  with that. But I I I guess to,
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  you know, circle back on on what we
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  bring to the table, we I'd I'd like
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  to think that, you know, in an interim
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  capacity, we bring kind of a a national
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  perspective on things. Yeah. Sometimes organizations,
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  need that,
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  outsider kind of view, independent view.
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  And, you know, that's what we bring to
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  the table. Yeah. And it still holds true
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  to exactly what you were talking about just
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  as the, you know, the the permanent CFO
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  role, how that's evolving, interim CFOs, interim roles,
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  they evolve too. You know? Absolutely.
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  Yeah. Well, wonderful. John, it has truly been
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  such a pleasure getting to connect with you,
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  learn a little bit more about you personally
• 13:00
  and Methodist Livonar Healthcare. So I I appreciate
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  you hopping on the podcast with me, and
• 13:05
  I look forward to connecting again soon. Absolutely.
• 13:07
  My pleasure, Madeleine. Thanks for having me.