Michigan Medicine’s CFO is ready to ‘get creative’ for growth

Michigan Medicine CFO Eric Strucko, PhD, is proud of the academic health system’s financial growth in the last few years, growing from less than 1% to around 3%.

“[The growth] positions us well to address our never-ending capital needs. It also enables us to advance strategic initiatives and grow the investment in biomedical health science research and education,” said Mr. Strucko during an interview for the “Becker’s Healthcare Podcast.” “One of the notable success stories financially was the turnaround of our Sparrow Health System. Sparrow was an independent provider in the Lansing area, and they merged with Michigan Medicine right out of the pandemic. Their operating losses were growing, and we really focused our attention on Sparrow to turn it around to where it’s contributing to that healthy 3% margin.”

There were several factors driving the turnaround, including strong clinical leadership and a culture of improvement. The organization’s leadership spent time examining operations and identifying the right places to make changes.

“I’m very proud to say that Michigan Medicine has that built into its culture, that we never rest on our laurels. We acknowledge our success but we’re always driving to improve, to do better, to reach more patients and to serve the state in a stronger fashion,” said Mr. Strucko. “Our introspective analysis and our self realization really helped us focus on the one area that we can control to improve financial performance, and that is patient access and patient volumes.”

Michigan is a challenging state for healthcare providers because one payer dominates the health plan market, with about 70% share. The commercial reimbursement rates are among the lowest in the nation as a result.

“In that environment, our financial success really derives from opening up patient access and getting more volumes through our operating rooms, through our inpatient units, through our ambulatory clinics,” said Mr. Strucko. “We focused on length of stay, appointment wait time, and turnaround times, and the results really show we had some success on that front.”

Michigan Medicine does have an advantage over others in the market when it comes to payer negotiations: its reputation.

“A lot of the citizens of this state really want to get their care at Michigan Medicine. We are the predominant academic medical center in the state,” said Mr. Strucko. “We’ve achieved notable success in our research, translation research in particular, where the quality of care, the contemporary nature of care, we are applying the latest and most proven techniques to treat our patients. The demand to get your care here is [an underlying factor to] our success.”

But the payer also has leverage with a history of success in the state and coverage for such a large swath of the patient population. Mr. Strucko said his team needs to “get creative” and develop a mutually beneficial solution.

“Where can we partner and experience mutual benefit? That’s going to be our challenge, and we’ve started the conversations. It’s something that will have to figure out a way to get to ‘yes,’ but I do think that there is an opportunity to partner with the payer and figure out ways of mutual economic benefit,” said Mr. Strucko. “We have to be able to stand behind the quality of care we provide, and I do think that outcomes-based reimbursement arrangements are going to be one of the areas we will work on. There are other ways of doing partnerships as well. We can be capital partners and join initiatives that will bring care to places in Michigan where Michigan Medicine is not proximate.”

Looking ahead, Michigan Medicine is taking a proactive approach to growing patient volume. The health system broke ground on a $50 million facility in the Detroit suburb of Troy to bring cancer care, orthopedics, primary care and mental health services to the community.

“It’s a population center, and we’re confident in our capabilities and the strength of our brand. We’re growing organically in that fashion, and we’re looking at other projects in Ann Arbor to modernize our clinic space and expand our services with ambulatory surgery,” said Mr. Strucko.

The health system is also open to partnerships with specialists and provider affiliations to strike joint operating agreements with other health systems and practices.

“We’re open to that because we feel in order to compete in this environment, we do have to grow,” he said.

The post Michigan Medicine’s CFO is ready to ‘get creative’ for growth appeared first on Becker’s Hospital Review | Healthcare News & Analysis.