Realignment shifts from hospital to corporation

Seven product lines redesigned

ScrippsHealth has realigned its finance department to match the health system’s new emphasis on product-line systems of excellence, says Jack Duffy, FHFMA, corporate director of patient financial services.

"We’ve moved from the traditional CFO to different people in charge of functions for the enterprise," Duffy says. "They don’t think of themselves as working for a specific hospital unit."

Under the systems of excellence, a financial executive and a group of analysts work with an administrative person and a physician leader to understand and redesign each of seven "product lines," he says. These are: neurology, orthopedics, woman and child, primary care, critical care, psychiatry, and hospital-based physicians (emergency department, pathology, radiology).

He says the financial executives and physicians work together to develop, for example, ways to reduce the number of supply vendors and which blend of acute and subacute care yields the best outcomes and the best economic footprint.

ScrippsHealth began with a chief financial officer (CFO) at each of six hospitals. Those CFOs were given new titles — directors of finance — and eventually were replaced by two regional directors of finance.

"Now we’ve eliminated all direct financial management and reassigned those resources into two areas," he explains. "One [financial team] supports the expense functions, and the tool used to do that is called systems of excellence. The second alignment is around managing revenue. Trio comes under that, as does a technical group that supports return on investment." (See related story.)

The reorganization has two drivers, Duffy notes. "One is to eliminate variance between hospitals that have come together to enterprise. If you support multiple forms, it’s more expensive, and you can’t move staff around when you have vacancies."

The second driver is to allow capital allocation to occur at the enterprise level, he adds. "The need of a product line will supersede the need of an individual facility. It’s not based on traditional capital allocation."

Easing concerns

It took about a month, he says, to walk hospital administrators in Scripps’ multiple settings through the rationale for the redesign. They were concerned about the allocation of resources, about where their day-to-day support would come from, he adds. "How do they get it handled when Dr. Jones wants a new machine, or when a patient has a complaint?

"When you suggest more corporate influence in an enterprise, that can be translated into less control if you’re a hospital administrator in an enterprise system," Duffy says. "You have to sell it. You have to get a shared vision. You’re talking about not only consolidation of ownership, but also centralization of services."