A Healthy Respect for Quality
The finance department can be a valuable asset in the effort to maintain costs at a health care organization. CPAS working in business and industry usually are on the frontlines in the battle to control costs while retaining quality. The best demonstration of this conflict is in the health care industry, where the effort to save lives or improve health is made in the midst of increasing pressure to lower expenses. At one Louisiana health care provider, CPA Peggy Scott has used strategic innovations and technology to help maintain a lean yet effective organization. BREADTH AND DIVERSITY General Health System (GHS), a private, regional health care system in Baton Rouge, has been a part of the community since 1900, when the city's first hospital was opened. Through its subsidiaries, which include both for profit and not-for-profit entities, GHS provides primary, acute and long-term care as well as chemical dependency and psychiatric services. It has a full-service health plan, including Medicare and a traditional health maintenance organization, plus a variety of preferred-provider and third-party administrator services. "One of the most challenging aspects of GHS is the breadth and diversity of our operations," says Scott, who is senior vice-president of corporate services and CFO. Her responsibilities include all finance, accounting and treasury functions (accounting, reimbursement, tax, financial planning, patient accounting, decision support, managed care). As an indication of the breadth of a CPA's abilities, she also oversees the strategic planning effort, human re sources, information systems, risk management and the system's fund-raising arm. Scott also has served on the company's HMO and laboratory companies' boards. "GHS spans the entire continuum of care--providing services from birth until the last stages of life," she says. "This diversity means complexity, since we are affected by almost any change in the health care industry, whether it is regulatory or market-driven. Another challenge--and concern to my CFO responsibilities--is the mandate to balance the internal organization's many needs and the external parties' demands with a cost structure GHS can afford." GETTING UP TO SPEED When Scott joined GHS in 1989, she assessed the finance group's core competencies and found a need for greater technical resources, particularly in Medicare and Medicaid reimbursement, tax, GAAP and regulatory reporting, and internal audit. She spent the next several years building a staff that would gain a reputation for credibility and dependability. Scott says, "we were then able to add value to the organization with this infrastructure." For example, the reconfigured staff understood better how to increase Medicare and Medicaid revenues, and stepped-up tax and financial planning provided significant savings. The department's reengineering projects enabled it to make the most of emerging computer technologies and finance best practices in order to reduce time spent on transaction work. "Also," Scott says, "we are a learning organization, training our staffs on concepts of quality improvement and planning." By hiring quality staff members and encouraging them to question existing practices, "we were able to challenge many of the activities that have been a part of GHS finance for years. In the last year alone, we completely revised the reporting packages internal management uses, our monthly close-out schedule and our reporting to the board. For example, we now report daily through e-mail on the progress of our monthly close-out so senior management is informed almost instantaneously of significant budget variances. Additionally, our flash reports identify key indicators so management can monitor our organization's strategic and tactical initiatives." A knowledgeable staff also was crucial in implementing new accounting standards. "Our biggest challenge is retaining quality staff who can respond rapidly and proactively to the multitude of new accounting standards. …