CFO Roles During the Crisis with Rob DeMichiei.
Episode 211: Show Notes.
The financial viability of health systems is a major concern during the crisis and we had Rob DeMichiei, recently retired CFO for UPMC on the show to share his thoughts on the matter. In our conversation, we talk about what the CFOs for these health systems are facing right now, and what we should and shouldn’t be worried about regarding finances. Rob makes an argument for a complete role reversal required by CFOs whereby they shift from being regulators into facilitators on the frontlines, also sketching out what else might be required of them after the situation changes. We also cover the topic of which financial institutions have what it takes financially to make it through this and which ones should be the recipients of government cash cushions. Larger institutions are well equipped financially and have the capacity to be innovative but in Rob’s opinion, it is the more rural ones at risk. Our guest gets into some of the specifics of strains in healthcare systems which are raising budget alarms too, speaking about the idea of stranded costs and how COVID-19 cases have replaced ones that require surgery. We also hear some far more positive news from Rob, as he weighs in on the many gains we will see coming out of this situation such as the many changes the industry could see technologically. Tune in for an insightful look at the current situation from a financial point of view.
Key Points From This Episode:
- A Slack channel and free coaching provided by Bill and sponsors during the crisis.
- How CFOs need to shift from being friction creators to facilitators, procuring resources.
- Rob’s worry that the smaller health systems will be under existential threat.
- Less reimbursement due to COVID-19 rather than surgery-based admissions.
- Increases in Medicaid and unreimbursed customer payments due to unemployment.
- Shortages in labor due to short staff that will spike costs.
- ‘Stranded costs’: continuous payment of specialist staff who aren’t working.
- Knock-on effects of nonprofits and donors losing multi-billion dollar investment portfolios.
- Timeframes for the shifting roles of CEOs as the crisis passes.
- Accelerations in the adoption of telehealth; how crises ask systems to reset themselves.
- Other positive results at the end fo the crisis: physician assistant licensures, and more.
- A move to local production driven by offshore mask manufacturing.
- State cash injections and how large institutions will have cash on hand to get through this.
- Discussions to siphon cash cushions to smaller, more vulnerable institutions.
“The CFO needs to take a role as a facilitator.” — Rob DeMichiei [0:06:40]
“Financially successful systems today will be impacted, but they will not be impacted in a way that’s sort of existential. What I worry about are the small systems.” — Rob DeMichiei [0:07:09]
“It’s going to be very terrible, but it won’t destroy us. But on the backend of this, I think when we look at this in a retrospective way, we’re all going to revisit preparedness and capacity.” — Rob DeMichiei [0:17:16]
“These strong, healthy financial systems – you’ve got the days cash on hand, you have the resources to counter this kind of an issue, and they will.” — Rob DeMichiei [0:21:00]
Links Mentioned in Today’s Episode: