UC San Diego Health CFO Lori Donaldson’s $ 2.5 billion-plus investment project is most enthusiastic about

Lori Donaldson is the financial director of the University of California at San Diego Health, overseeing a budget of more than $ 3 billion and preparing the financial strategy for the university health system.

Ms. Donaldson was appointed Chief Financial Officer of UC San Diego Health in July 2010, after serving as Controller of the University Health System for 13 years. She first joined the organization in 1990.

Under Ms. Donaldson’s leadership, UC San Diego Health has consistently posted above-industry operating margins.

Here, Ms Donaldson shares her top priorities for the coming year, discusses the most pressing issue CFOs face, and offers her best advice to fellow CFOs in the healthcare system.

Editor’s Note: Answers have been edited slightly for length, clarity and style.

Question: What is the most pressing issue facing hospital CFOs amid the latest wave of COVID-19?

Lori Donaldson: The impact COVID-19 has had on our patients and their lives is unlike anything I have seen in my 30-year career in healthcare. The most pressing issue I face today at UC San Diego Health is ensuring that there is always an adequate qualified staff to provide high quality care to our patients across the region. In addition to seriously ill COVID-19 patients, many people across the country are delaying managing their medical needs such as cancer screenings and annual checkups. Overall, we are seeing a higher volume of patients who are also suffering from more illnesses. Since the start of this latest wave, our inpatient count is 5% higher and average daily emergency room visits are 6% higher than pre-COVID levels. Across the organization, this increase has put tremendous pressure on our staff and suppliers who have already worked long hours for long periods of time. In addition to the pressures on our clinical staff, our supply chain, environmental services, dietetics, facilities and security teams also worked continuously to prevent supply shortages, safely manage wards. operations and patients and ensure the safety of all persons entering our facilities.

Q: As the CFO of UC San Diego Health, what are your top two financial priorities for 2022?

LD: COVID-19 has made it clear to many CFOs how quickly the financial performance of a health care system can be immediately affected when public health orders have necessitated the shutdown of many clinical departments. Our most important financial priority is to ensure sufficient cash reserves to support the delivery of care during the pandemic and to continue to support the tripartite mission of the only university health system in the San Diego area. Like most health systems, UC San Diego Health has lost revenue and incurred expenses that have not been fully recovered through federal or external funding sources. This has resulted in the delay of several capital projects that will address our capacity limitations by expanding our outpatient locations throughout the region to better serve our patients. In addition, continuous improvement in financial performance is required to build cash reserves to support the leverage capacity of our Hillcrest redevelopment and other strategic investments.

Our second financial priority is to rethink our flow of funds between the three missions of UC San Diego Health. Changes to the Medicare physician fee schedule and the effects of COVID-19 have impacted the benchmarks we use for physician productivity and compensation. New value-based payment programs are also driving the need to reassess the principles and mechanics of our cash flow model. In May 2021, we launched a multidisciplinary initiative that we call “strategic alignment” to assess and make recommendations to change our fund flows to ensure that the future model is simpler and more transparent, supports the growth of margins, aligns with our strategic priorities and supports the three missions of the university.

Q: Which UC San Diego Health investment projects are you most excited about?

LD: UC San Diego Health operates two major campuses in San Diego, Hillcrest and La Jolla, as well as outpatient centers across the county. Covering approximately 60 acres, the UC San Diego Hillcrest campus is located 13 miles south of the university’s La Jolla campus and is a vital regional resource, providing care for all patients, including those who are underinsured. or uninsured. In November 2019, UC San Diego received approval of the Hillcrest Long-Term Development Plan by the UC Board of Directors. This multi-phased plan is a collaboration between the UC San Diego campus and the healthcare system to redesign, rebuild and revitalize the Hillcrest campus. This multi-year redevelopment is expected to replace the more than 50-year-old Hillcrest Inpatient Hospital, rebuild the parking lot and other infrastructure, provide much-needed housing for staff and the community, and significantly expand outpatient clinical facilities.

The first phase of this project was approved by the UC Board of Regents in September 2021 and includes an outpatient lodge and parking structure. As the existing hospital must continue to function throughout construction, the construction of a new hospital requires a complete redevelopment of the campus through a carefully sequenced plan. The majority of existing buildings, both temporary and permanent, will be demolished. The new development is planned over approximately 15 years in five main phases and will be implemented in a way that reduces the impacts of construction on the surrounding community while ensuring that essential campus functions remain operational.

I am very excited about this project as it will provide important space for multi-specialty cancer clinics, infusion and radiation oncology, allowing the National Cancer Institute designated cancer center at UC San Diego Health to expand the scale of services and new treatment modalities. The facility will also offer multi-specialty clinics, an outpatient surgery center, advanced imaging and laboratory services. The total Phase 1 project budget of $ 550.3 million would be funded by previously issued bonds, external funding, campus funds, operating leases and hospital reserves. It is estimated that $ 2.5 billion to $ 3 billion will be invested in the entire Hillcrest campus redevelopment project.

Q: Beyond financial literacy, what skills are essential for healthcare system CFOs to thrive in today’s healthcare landscape?

LD: Financial managers in the healthcare system must have a full understanding of clinical operations, be strategic thinkers and be excellent communicators. The role of the CFO goes far beyond fiduciary responsibility. The CFO of today’s healthcare system must have the ability to identify growth opportunities and be prepared to take business risks in order to adapt to new models of care and to competition from non-market players. traditional. In my role as CFO, I frequently present complex financial information to a variety of internal and external stakeholders. A CFO must be resourceful and have the ability to instill confidence, because the decisions CFOs make or recommend should be seen as being in the best interest of the healthcare system, its patients and the community we serve. .

Q: What advice would you give to another CFO in the healthcare industry and why?

LD: I am extremely fortunate to have worked for UC San Diego Health for 30 years, the last 11 of which were CFO. Throughout my career, the scope of the role of CFO has broadened considerably. Today’s CFOs are tasked with leading an interdisciplinary team that covers critical business functions of a very different nature, while being a strategic partner to the CEO. The revenue cycle, supply chain, accounting, budgeting, contracting, and business analysis are all very different and complex functions that require in-depth expertise in both the subject matter and company-specific regulations. health care. To be successful as a CFO in the healthcare industry, you must build a strong team of experts with the in-depth knowledge to successfully manage these functions and be agile strategic thinkers able to adapt to the academic environment by constant evolution of health care. Building such a team requires strong collaboration with Human Resources to recruit talent; however, this is not enough. Healthcare finance professionals are eager to learn and add value to their organization. The CFO must therefore ensure that the team has access to the tools, training, coaching and mentoring to enable professional growth. The CFO must also provide a work environment that fosters trust and values ​​individual contribution.


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