Life as a CFO can be challenging—especially in the current environment of healthcare reform. Patrick Gerveler, CFO of Blessing Health System in Illinois, tells HRMR how he is helping his system remain competitive and viable, and why clear communication with the risk management department is vital to success.
In order to thrive in the current era of healthcare reform and intense competition, health systems need to roll with the punches. Standing still is not an option, and for Patrick Gerveler, chief financial officer of Blessing Health System in Illinois, the key is to evolve in order to retain and gain business.
This translates as some major changes, most significantly developing a strategy for the creation of Blessing’s own risk insurance product, which will create a direct line between Blessing and the employers who place business with the system. The move will take other insurance companies out of the equation, with health insurance for those clients’ employees being provided directly by Blessing Health.
Taking out the middle man
“This new approach will get us closer to the employer, taking out the insurance company as the middle man so that we take on the total risk,” explains Gerveler.
He adds that the move will enable Blessing to deliver a whole new model of healthcare based around keeping the insureds well rather than fighting fires.
"If somebody’s really nice but they haven’t met their goals in two years then we’ll have a conversation about whether they are the right manager in the organization."
“We can go from treating patients when they are sick to trying to prevent them from getting sick in the first place,” he says. “It’s a whole different business model.”
The move is a direct response to the economic pressures being felt by Blessing and by the employers who use Blessing’s services.
“We think that the employers are in a position where they can’t afford US healthcare, and we decided that was going to impact us unless we disrupted ourselves and changed our business model. Without making this change we don’t think we would be in the market because our employers would not be able to afford us.”
In particular, Gerveler is excited about the prospect of shifting towards a model that is focused on population health and early intervention.
“Instead of having employers who are unhappy about costs we want to be able to say to them, ‘let’s keep your employee from getting sick to begin with’, or, ‘if something happens, let’s work together to get them back to work’,” he says.
“At the end of the day it’s not about trying to do as many procedures as you can when somebody is sick to get as much money as you can; it’s about keeping the person healthy.”
This view sits comfortably with the current government drive towards cutting readmissions—although Blessing is not yet seeing the financial benefits of these changes.
“Today we are still paid on volume so every time we do better and somebody isn’t readmitted, that costs us money. Over the last several years as we’ve done better with our quality, our reimbursement has gone down, but it’s simply the right thing to do for the patient and the right thing to do for the payers, so we’ve got to accept that and find different ways to make that revenue loss up.”
A goal-driven approach
Six distinct operating entities form Blessing Health System: at the top is Blessing Corporate Services. As the system’s parent company, this provides strategic planning and business expertise to other system affiliates. The remainder of the system comprises Blessing Hospital, a 300-bed, acute care hospital; Illini Community Hospital, a 25-bed critical access hospital in Pittsfield, Illinois; and Blessing Physician Services (BPS), a group medical practice that employs more than 200 people.
In addition the system includes The Blessing Foundation, which raises, manages and disburses charitable contributions on behalf of Blessing Health System affiliates for the benefit of the programs and services they provide; and Denman Services. The only for-profit member of the system, Denman operates durable medical equipment and pharmacy outlets, and markets biomedical equipment maintenance and repair and laundry services to healthcare providers. It employs nearly 140 people.
Gerveler joined Blessing in 1992 and during his time there has served as accounting supervisor, manager of reimbursement, director of fiscal services and vice president of finance and senior vice president of finance for Blessing Hospital before assuming his corporate duties.
In his 23 years at Blessing he has seen the system grow and evolve, and he derives a great sense of satisfaction from seeing its staff repeatedly meet their targets.
“At the end of the day we have to hit the quality marks and have the strategies and finances to keep going, so we have a goal system within the organization for all managers.”
The focus is on numerical, measurable goals so that progress can be clearly demonstrated. These include quality goals, finance goals and patient satisfaction goals. They are aligned with a five-year plan and assessed on an annual basis.
“It means everybody is held accountable at the end of the day. If somebody’s really nice but they haven’t met their goals in two years then we’ll have a conversation about whether they are the right manager in the organization. It’s not about personalities; it’s all about holding yourself and others accountable and achieving results.”
Enterprise risk management
Another pillar of Blessing’s success is its consistent and joined-up approach to risk management. In recent years it has shifted towards a system-wide enterprise risk management (ERM) approach that addresses not only clinical risk but also other areas such as cyber and financial risk.
“As an organization we’ve recognised that from a risk management perspective it’s just not about the treatment of patients; there are many other things the organization is facing and we try to lay that out to the board and show them these are the areas in the organization where we have risk, and what we’re doing as the management team to mitigate those risks,” says Gerveler.
Like most healthcare providers in the US, Blessing has shifted towards greater transparency when problems do occur.
“We have been able to identify potential risk issues sooner because people are actually reporting them. It’s significant that our reportable incidents are way up but our actual litigation lawsuits are on the decline. When it comes to carrying our root cause analyses, we have moved away from blaming people, and instead focus on establishing what process broke down, or what occurred.”
Blessing’s insurance needs are addressed through a mix of self-insurance and placement of risks with insurance carriers via a broker.
For medical malpractice, the system is self-insured for the first $1.5 million ($4.5 million in aggregate) and only once has it ever breached that ceiling.
“We have been very fortunate because by self-insuring that first layer we have saved a lot of money in the organization,” he says. “We can look back over the premium savings that we’ve had in last 30 years we’ve been self-insured and we know it’s been a good strategy from a cost perspective.”
The success has been helped along by the system’s strong relationships with the community it serves.
“It’s really unique in that it’s not a litigious community. In some of the larger metropolitan areas you get juries that are more sympathetic to large payouts, but we don’t really find that here; people really see it as their community hospital, so they take their lawsuits very seriously and they know that if we are at fault we really work hard to identify that up front, have that communication with the patient and their family and try to settle that before it goes to court.”
Blessing demonstrates a similar commitment to forming good relationships with its insurance carriers. For every year’s renewal, Gerveler travels with Blessing’s CEO and vice president of risk management to Chicago to meet with the carriers that are interested in bidding for their business.
“Spending the day with all the potential carriers means that they get to know us and we get to know them. We think that’s been a good investment; yes, it’s a day of our time but it forges a good relationship.”
Working with risk management
At Blessing Health, the lines of communication between risk management and the board are very much open, with the board receiving regular updates from risk management regarding any issues that are emerging, guaranteeing there are no nasty surprises from a financial or reputational point of view.
“We meet monthly on all the risk issues, we talk about the reserves being set, and finance gets a detailed list that is, of course, anonymised from a patient perspective. Our performance excellence people assist with the review of any issues.”
Gerveler is keenly aware of the finance department’s power to assist in reducing risk.
“We’re always looking to ensure we have the right processes and that our finance supports the necessary staffing—we’ve actually increased the staff in the organization because we think it’s important to tackle potential risk areas in the beginning rather than after something happens.”
As Blessing Health moves towards a new business model built on keeping patients healthy and out of hospital, those interactions with risk management will be an important part of ensuring the system performs well financially, as well as doing right by its patients.
A challenging and interesting time lies ahead, and Gerveler is eager to put all those carefully laid plans into action.
“It’s a much bigger business model, and we’re working with a national consulting firm to help us pull all the pieces together into a cohesive strategy. I’m looking forward to seeing how all the parts are finally going to fit together.”
Patrick Gerveler, Blessing Health System, US