May 15, 2020: Today’s guest is Rob DeMichiei, recently retired CFO for UPMC, Strategic Advisor for Health Catalyst, and board member with Waystar. As a Board Director and retired CFO, Rob brings a diverse operational background and a record of success in delivering exemplary results at the highest levels of global business. In this episode, we sit down with Rob to discuss the financial impact of COVID-19 and the rise of the insurers. We discuss our expectations and speculations for the impact on healthcare facilities during COVID-19, and the reality of that impact over the last few months. Rob also explains how the pandemic can be seen as an opportunity for transformation within healthcare institutions, to change the way in which they deliver care, as well as how the markets will affect commercial rates and contracts going forward. We talk about the negative effects of this on payer mix and volumes, and Rob suggests some strategies for hospitals and healthcare facilities to drive down their cost of revenue, especially fixed costs, as well as the importance of having an accurate and robust cost accounting system. We chat growth addiction, juggling debt burdens, reducing cost consumption, and investment losses, given that revenue will not return to pre-COVID levels. Finally we dive into what Rob calls ‘the rise of the insurer’ and how he believes that independent physicians and healthcare providers are under threat from insurers moving into the provider space, as well as how they can mitigate that risk. Tune in to find out more!
Key Points From This Episode:
- Expectations versus reality for the pressure on healthcare facilities dues to COVID-19.
- COVID-19 can be transformational, an opportunity to change the way care is delivered.
- How the state of the markets will affect commercial contracts and rates.
- The negative effects on payer mix and volumes.
- Strategies for driving down cost of revenue, especially fixed costs.
- The advantages for a hospital with an accurate and robust cost accounting system.
- Managing an addiction to growth, juggling debt burdens, and reducing cash consumption.
- Different struggles for small rural communities versus large IDNs.
- Investment losses for IDNs and the necessity of lowering service delivery costs.
- Amount and quality of revenue will not return to pre-COVID levels.
- Rob talks about ‘the rise of the insurer’.
- Independent physicians are vulnerable to acquisition by insurers.
- Healthcare providers must transform the cost structure of the traditional hospital care delivery model, or they will be under threat from insurers.
- While there is financial impact on the provider side, there are benefits on the payer side.
- Large IDNs and health systems should be looking at becoming a payer and mitigating risk.