How a new structure in the C-suite can drive innovation

Erika Grotto: Driving innovation from the C-suite, today on HFMA’s Voices in Healthcare Finance podcast.

Hello, and welcome to the podcast. I’m your host, Erika Grotto. In 2021, the first report of our Healthcare 2030 series looked at the changing role of the CFO, and today’s episode focuses on a key aspect of that topic: communication and innovation as the role evolves. Peyman Zand, vice president of advisory at CereCore is here to talk about that. Before we get to that interview, it’s time to find out what’s happening in healthcare finance news. Now, typically, in this segment, you hear from our policy director Shawn Stack, but he was unable to join us for recording today. So I am excited to be talking with senior editor Nick Hut about some of the things that he’s been covering at hfma.org. Hey, Nick.

Nick Hut: Hello, and thanks, Erika. Yeah, there have been a few pretty interesting topics recently. One is that as reported back in June and as Shawn and I discussed in this segment, the Supreme Court ruled unanimously that the lower rate Medicare has been paying for drugs purchased through the 340B drug pricing program had been established impermissibly. Now in late September, a judge at the district court level ruled that the lower rate must be terminated not at the start of 2023 like CMS had been planning but immediately, as in immediately. So if your hospital buys drugs through 340B, you should be seeing almost a 30% hike in payments from Medicare right now. The same court still needs to rule on the form of remedies for hospitals given the Supreme Court ruling that the rate never should have been lowered in the manner it was. So that’s a pending decision that a lot of people have been watching.

Grotto: Something else that you’ve been reporting on lately is new regulations and enforcement around information blocking, which is a topic that we’ve talked about on the podcast before. But what’s happening today, Nick?

Hut: Yeah, so expanded information blocking rules under the 21^st Century Cures Act have gone into effect by the time you’re all listening to this. Hospitals, among other providers and other stakeholders such as health information exchanges and health IT developers, are prohibited from engaging in any action that would inhibit access to or the exchange or use of healthcare data by patients and by other stakeholders who may be involved in a patient’s episode of care. The goal is to improve interoperability and probably even more importantly, patient access to their health data. Now, some regulations have been in place for the last 18 months or so, but type of data that’s protected has now been expanded to include basically anything and everything in a patient’s record. That can include claims, billing records, etc. The one thing we still don’t know is what the penalty for violations will be for providers. We still have not gotten regulations on that after all this time. A proposed rule called for a maximum $1 million penalty per violation for developers and health information exchanges, but did not address penalties for providers. So that’s still up in the air.

Grotto: Finally, we’ve got some developments in surprise billing. It feels a little strange to be talking about it without Shawn here, as he is the foremost authority on the topic, at least here at HFMA. But there have been some recent developments worth discussing. What’s happening there?

Hut: Yeah, for sure, I wish Shawn were here to opine on this. But you may remember that the Texas Medical Association prevailed in a case earlier this year about the criteria used in the new arbitration process that’s available to decide out-of-network payments between providers and health plans. The same association has now gone to court again, saying the revised criteria in the final rule still weighed too heavily in favor of health plans in a way that deviates from legislative intent. They have the support of the American Hospital Association and the American Medical Association among others, and they’re just hoping that arbitration cases can be decided by giving equal weight as appropriate to factors other than the median in-network payment rate, i.e., the qualifying payment amount. The new final rule did go in that direction somewhat, but not to the degree providers thought it should have.

Grotto: So Nick, if people want to read about these topics or any of the other topics that you’re covering, where will they find your coverage?

Hut: They can find it at hfma.org/news and hfma.org/blog. And I’m looking forward to returning in a couple weeks with Shawn. We’ve got a very weighty topic to discuss, and we hope everybody tunes in for that.

Grotto: Alright, well thanks very much, Nick.

Hut: Thanks, Erika.

Grotto: The role of the CFO has been evolving over the last several years, and with that evolution, the interactions between the CFO and others in the C-suite has likewise changed. According to my guest today, these changes can actually help healthcare organizations strategize in new ways. Peyman Zand is the vice-president of advisory at CereCore, and he spoke with me recently about how the alignment in the C-suite is helping drive innovation.

Zand: I think what we have seen over the past few years is that all business enablement involve IT, obviously and for it makes the CFOs more aligned with physician group, other departments, other business units, and in fact, it makes the CIOs more aligned with those same business groups as well. And so I think what happens with that is a couple, three things. They move away from the departmental level prioritization to more of an enterprise level prioritization. And that by the way helps the other business leaders whether it’s clinicians or other department leads to also make sure that their projects and their initiatives are better aligned to enterprise because of that reason. And they also, we’ve seen they also have moved more into the enterprise level governance, and a lot of times it’s metrics driven. Now, I have seen in some cases, it’s not metrics driven, it is still somewhat objective governance models. So that is one thing that they can still improve on. But what’s missing, really, in the middle of all of this is the assessment of the organization to be able to execute on these investments, on these projects. And I think that’s one thing that they really need to take a look at. So for example, a major IT project gets approved, goes through all the appropriate processes, but then doing the execution, they fail for whatever reason. And then finally, what I’ve seen is also, some of the key performance indicators that are missing—so, metrics, especially after the project is rolled out, or even during, what are some of the metrics that we’re using to measure that? So there’s a couple of areas that I think we can still improve on, but in general, because of that business enablement that I talked about, it allows the CFOs, CIOs and other business leaders to be much more aligned over the past few years.

Grotto: How can they better serve their organization with these new relationships?

Zand: I think one of the things they can do is, back, one of the comments I made, is to really ask the CIOs and in general, other business unit leaders, how invested are they in the project or in those initiatives. Meaning that, do they have the right resources they can assign. Are they able to endure the challenges that are coming about for the next two to three years or whatever the length that that project is? Are they able to substantiate the value of these projects and then manage those return on investments not only after the project goes live but for duration afterwards? Because those are the kinds of questions that really need to be answered, and this is where the CFOs can really help organizations to start thinking about that, and that really increases and improves the chances of success for the entire organization but also the CFOs, the CIOs and other business leaders that are coming up with some of these. Because we do this all the time, right, we come up with good ideas, we come up with brilliant ideas that help scale the business, find growth opportunities, but then we don’t look at it critically all the way through to see if we are able to actually execute on all of those. And I think that’s really the key. I’ll go back to the execution. Execution is everything, is job one, basically.

Grotto: Let’s talk about innovation for a second. I think we talk a lot about innovating within health systems. I think that any of our members would say that’s what they want to do. There are a lot of barriers to that. But how does the structure of the C-suite make a difference? Is it in the execution, or is there more to it?

Zand: One of the things we’ve learned is that innovation in a vacuum doesn’t work, meaning that innovation works within the context of the operation. So years ago, Harvard Business Review actually published an article—I think it was the early 2000s—that talked about operational innovation. And what they specifically recommended was to make sure that those innovation centers are part of the operation, because once they’re in a vacuum or in an enclave by themselves, they’re separated from what’s happening on a day-to-day basis within the organization. So we need to get them back together. So that’s number one. The other item that I’ve seen that’s helpful in this process is when those organizations that do staff rotation, so they take—you know, we’ve always had business, finance leaders or purchasing leaders, etc. be assigned to IT, but rather than being assigned to IT, meaning still part of the CFO’s organization, they get assigned and they work as part of the IT organization. Some of the IT organization staff members work in the supply chain, work in the CFO’s organization, work with the clinicians and on a day-to-day basis, reporting to them, etc., they’ll still have a dotted line or some kind of makeshift organization back to their original one, but that rotation helps them understand the other part much better, and vice versa. And there’s a couple things that I would say. A couple of items that I would mention is, leaders should always look for removing constraining barriers for innovation. So that’s something that they can help each other with and then finally, I would say, look for models that are outside of the healthcare organization. Sometimes we get a little bit pigeonholed within the healthcare industry only, so look what other industries are doing, and are there some applicable innovative ideas that we can actually bring back into healthcare? That’s really healthy and it helps a lot of the organizations spur their innovation much faster and better.

Grotto: How can healthcare leaders best work together to maximize innovation while staying on top of their many, many, many other organizational and financial priorities?

Zand: Well, a couple of thoughts on that one. I would say that in many cases, how they can help each other is to build a stronger relationship with each other using some of these special cases that we just talked about. So for example, an amazing thing happened when the pandemic hit. We moved to telehealth much faster than we had moved it in the past 10 or 20 years. We were able to, within weeks, basically, stand up a robust telehealth environment so we could actually manage patients, get paid for the work that we’d done, help them achieve whatever they needed to achieve, etc. That required the CFO’s organization, the CIO’s organization, the chief medical officer’s organization, nursing, etc., all of these different groups came together. Why? Because they had a single purpose alignment in that drive to roll out telehealth. So I think we should leverage those types of opportunities to find out how else, what else can we do to have better alignment? And remember, early on, I also talked about moving away from departmental level prioritization to enterprise level prioritization, and that ensures that our department level goals are aligned to the enterprise, and that’s one of the ways to do it. But I think the other couple of things that I would say are really helpful is, make sure that you’re agile in the implementation. And so we talked about governance, and sometimes governance can be too complicated and get in the way of our progress as well. So make sure that those governance are streamlined, they’re looking at the right things, they have the right metrics, and they’re not standing in the way of these innovative ideas. So remove any barriers again, as we’ve mentioned before as well. So that agility matters. And then I think the last thing that they can do—probably a few more things, but the last thing that I can think of right now—is making this tracking of return on investment everybody’s business. Not just CFOs, not just the CIOs, but everybody’s business, so that they are all keeping an eye on those. And by the way, if you’re not getting the results that we wanted to get, it’s OK. The agile organization stops the projects that are not working and then starts with projects that do work or that keeps them going. So we want to stop the ones that are not providing evident or providing what we thought it was going to provide for the company or the patients or the physicians, etc.

Grotto: You know, I think about telehealth in the early pandemic, and you’re right. It’s astounding how quickly things moved. How easy would it be to agree upon something that needs to happen in that way again? Because with telehealth, it was pretty obvious what we needed to do. If we were shutting things down, we needed to provide care somehow. I think everyone sort of came together with that common goal because it was an obvious one at the time. But if you’re just in business-as-usual mode, how do you rally around something if it’s not obvious which priority to make the priority?

Zand: Yeah. Good question, Erika. I think the first thing that organizations need to do is to take a look and see why they’re taking on a project, for example. So let’s just say that we’re in the process of making a request for a $50 million ERP upgrade. That’s a huge amount of money, big undertaking, and the question should be asked, why are we taking that? Why are we doing this? And I think that’s where—when we start asking the whys, that’s when we start getting to a lot better alignment. And so if the answer really is, well, we are missing the proper inventory or we are missing some surgical equipment getting to the right place at the right time, or we’re not getting to the result that we need from financial perspective, etc., let’s put those as a requirement before. So long before we pick a project, long before we—let’s take a look at business issues that we have. Let’s talk about those business issues and all together come to an alignment that these are the business problems that we need to solve before we pick a project. So flip the script. Rather than picking, saying, well, we need to upgrade our ERP or we need to upgrade our EHR or whatever the case is, let’s take a look at the business problems that we are having, make sure that everybody’s in alignment on those, and once that’s done, then we can decide, ok, do we really need an ERP replacement or do we just need a bolt-on product that solves these one or two problems that we have? I think that’s what’s missing in that, we’re not aligned. All of a sudden, the CFO sees this $50 million budget item come in and now they have to figure out, ok, why? What are we trying to solve? Why are we going to spend the money, and so they’re doing it post-request coming into their office. If we were aligned better, that would have been obvious to them to begin with.

Grotto: That’s a really good point. It almost feels like human nature. We want to skip to, what is the project, because we want the results. We want to solve the problem rather than discuss and dissect the problem. But that’s not necessarily the best way to go about it.

Zand: Yeah. A few years ago, I was thinking that I needed a new car, and I was talking to this mechanic friend of mine that works on my car, and he said, what’s the problem with it. I said, things are going bad. He said, you know what, I can replace this, this and this for you for this amount of money. You’re still tens of thousands of dollars less than a brand new car. So keep it. I’ll fix it for you. So that’s what I did. It’s the same thing. So define the problem rather than coming up with all of a sudden this grandiose project that we want to go do.

Grotto: Yeah, absolutely. I think it’s easier said than done when you’re sitting around the table, but certainly something to keep in mind as you’re trying to tackle the many, many issues in healthcare, no matter what it is. But alignment seems like a good place to start. So Peyman Zand, thank you so much for joining me today.

Zand: Thank you, and I appreciate the opportunity to speak with you.

Grotto: Voices in Healthcare Finance is a production of the Healthcare Financial Management Association and written and hosted by me, Erika Grotto. Sound editing is by Linda Chandler. Brad Dennison is the director of content strategy. Our president and CEO is Joe Fifer. If you haven’t been in the online community lately, now is a great time to check it out. You can join forums based on denials management, rural health, No Surprises compliance and even membership resources. You can talk with your fellow members and connect with others who might be facing similar challenges or who can offer advice. Just go to HFMA.org and click Community. And of course, if you want to connect with the podcast team, you can email us at [email protected].

As the role of the CFO evolves, the interactions between C-suite leaders have likewise changed. On a recent episode of HFMA’s Voices in Healthcare Finance podcast, Peyman Zand, a vice-president at CereCore, discussed how alignment among top executives can drive innovation in healthcare.

According to Zand, much of the shift comes from the reliance on technology and involvement of IT in business enablement projects.

“CFOs [are] more aligned with physician groups, other departments, other business units, and … [chief information officers become] more aligned with those business groups as well,” he said.

The open lines of communication not only help the organization moved toward an enterprise-level prioritization rather than a departmental one but also help departmental leaders ensure their projects are aligned to enterprise-level goals.

Innovation at the enterprise level

Innovation can be difficult in healthcare due to financial and other barriers, but Zand said better alignment and communication in the C-suite can help drive innovation strategies. He cited the rapid move to telehealth as an example of how healthcare organizations can get good results when leaders collaborate.

“We were able to, within weeks, stand up a robust telehealth environment so we could actually manage patients, get paid for the work that we’d done,” he said. “That required the CFO’s organization, the chief information officer’s organization, the chief medical officer’s organization, nursing, etc. All of these groups came together … because they had a single purpose alignment in that drive to telehealth.”

Another important way to ensure better alignment is to make ROI tracking everyone’s business and staying agile and open-minded in implementation, he said.

“The agile organization stops the projects that are not working and then starts with projects that do work,” he said.

Agreeing on common goals

A key element of alignment is bringing everyone to the table to discuss business issues and agree on priorities before choosing a project to solve those issues, Zand said. For example, instead of deciding to upgrade software, leaders should scrutinize the issues with the current software and look for less expensive ways to solve those issues. Zand shared a personal story that mirrors this idea.

“A few years ago, I was thinking that I needed a new car, and I was talking to this mechanic friend of mine that works on my car,” he said. “He said, ‘I can replace this, this and this for you for this amount of money. You’re still tens of thousands of dollars less than a brand-new car.’”

Having the conversations before making an investment of money and time in something new can help leaders work together more efficiently, he said.