• December 2008 FEATURE ARTICLES •
The Healthcare CFO
Chrissy Yamada, CFO, CPA
Senior Vice President, Finance, Evergreen Healthcare
Chrissy Yamada came to Evergreen after 15
years at Northwest Hospital, located in Seattle. Yamada started
at Northwest in the role of Controller and was later promoted to
Chief Financial Officer. Prior to joining Northwest, Yamada
spent several years in the local office of the national
accounting firm of KPMG.
Yamada earned her Bachelor of Science degree
in Accounting from Central Washington University and has been a Certified Public Accountant since
1985.
Q HMT: What is it like to be a healthcare CFO today?
"I have responsibilities for all the fiscal
matters over the organization; fiscal policies which include
monthly financials, audit work and bank relationships, and I
also oversee the risk management area. Some challenges as a CFO
that I face include rising healthcare costs to hospitals. This
puts substantial pressure on CFOs to find solutions to increase
or maintain an operating margin, so that infrastructure
investments and providing quality healthcare can continue.
Additionally, Medicare and Medicaid aren’t increasing our
reimbursement nearly as fast as healthcare costs are climbing.
Also, the number of unfunded mandates continues to increase each
year.
"These are several challenges facing
healthcare CFOs. We are constantly asked to report additional
data, more quality indicators and more benchmarks — this
additional reporting produces increased infrastructure
investment and costs. As the government continues this trend, we
find more commercial payers wanting the same information.
Meeting these increasing expectations is very challenging."
Q HMT: What tactics are you employing to meet these challenges?
"We are being more selective about what
services we provide. We examine what areas where we excel and
focus on those. Others, where we might be losing money, we ask
‘Is it a core part of our business?’ If so, we implement
solutions to make it break even. We made tough decisions in the
past to terminate unprofitable services because we didn’t
consider them a core service.
Many hospitals in previous years attempted to operate as all
things to all patients, but in this business climate, I don’t
think hospitals can fulfill this and are being more selective
about what services they are providing as well.
"When we are compelled to provide data to
external parties, we must discover how to do that most
efficiently, whether we utilize people or IT systems to manage
the task. IT systems improve reporting accuracy — provided the
billing is accurate, but they often result in increased costs.
This, in turn, requires the organization to identify strengths
and weaknesses.
"Hospitals like Evergreen are being forced to
streamline operations and processes constantly. We are taking a
hard look at these kinds of things and going beyond identifying
where we do better in certain service lines than others in order
to operate more efficiently."
Q HMT: What technologies are you currently employing?
"In 2009, we budgeted to automate our manual
payer denials process. This is one of the issues that our
revenue cycle committee prioritized during our capital budgeting
cycle. We also manage payment variance through a back-end
financial reporting system used for many of our service lines
analysis, an annual exercise to re-validate all of our costing
statistics and our cost accounting. We also use People Software
Financials and its budgeting module. When I came to Evergreen,
budgeting was done manually on 200 linked Excel spreadsheets. We
built out the budgeting module three years ago, giving us the
ability to upload completed worksheets into our financial
system. It makes our work so much simpler and definitely more
accurate."
Q HMT: How do you feel about the volatility the markets have been showing?
"It is a little disturbing as a CFO. It makes
me question the safety of our own investments and our financial
relationships. As a public district hospital, we took certain
measures a few years ago to avoid this. Without any foresight
into the current state of the economy, we took our bond
portfolio and switched to fixed-rate debt.
We also removed the auction rate securities that we had in place
two years ago when we did a bond measure or issued bonds. One of
the reasons we did that was because the rates were going up in a
variable rate portfolio.
"In retrospect, it was a wise decision
because when the auctions market started to fail earlier this
year we avoided exposure. As a public hospital, we are
prohibited from investing in many of the equity markets;
consequently, we avoided any significant exposure to the
sub-prime mortgage meltdown because much of our investment
portfolio is held in government agencies and treasuries.
"It is disturbing to observe this incredible
volatility the markets are undergoing and everywhere I turn, in
the news I read, there is a tie-in somewhere to Evergreen, so I
won’t let my guard down or fail to be proactive. It is making me
examine all of our relationships; banking, investments and
insurance, as well as our bonds and bond insurers, our leasing
arrangements and leasing vendors, to make sure that everybody is
safe."
Q HMT: What are you doing to prepare for the future?
"Our goal is to maintain financial viability
and keep the hospital from any financial risk, even as our focus
remains on expansion and growth. In the last few years we have
added substantial infrastructure to the hospital and this is
placing significant demands for building out this new
infrastructure. With these demands come high price tags, so our
challenge remains to decide how to spend our capital dollars the
next three years and meet the needs of a growing organization."
Q HMT: Any advice for your fellow healthcare CFOs?
"Many CFOs are in the same situation that we
are, in which government reimbursement is shrinking and the
number of unfunded mandates is increasing. We have to find ways
to make it work. We have to learn to be more efficient at what
we do to maintain a positive operating margin.
It’s been a challenge and it will continue to
be one going forward."
