Achieving Rural Healthcare Success: Key Insights From a Leading CFO

Apr 16, 2024
Article Background

Rural healthcare faces distinct challenges — from limited resources to high operational costs — making effective financial management critical. As these complexities bear down on rural providers, it’s up to industry leaders to find solutions that combat these unique issues.

Stacy Taylor, chief financial officer at Nebraska’s Nemaha County Hospital, has seen rural health challenges firsthand and worked to identify opportunities to ease them. Named one of Becker’s rural CFOs to know in 2023, Stacy has a deep understanding of the sector’s nuances and shares her insights on managing rural healthcare finances.

Challenges and strategies for not-for-profit hospitals

Not-for-profit hospitals face a difficult environment, with high labor costs and staffing shortages at the forefront. These issues are expected to persist, pressing CFOs to devise effective strategies. According to Stacy, key among these strategies is to control labor expenses, diversify revenue streams, and manage budgets with precision.

“As a critical access hospital, one thing that we have done to maintain financial stability is to make ourselves true to the critical access model of reimbursement,” Stacy said in an interview with Health Leaders. “We’ve stayed true to that outpatient business. This approach underscores a critical realization: For healthcare institutions to thrive, especially in not-for-profit sectors, a strategic overhaul in financial and operational planning is imperative.”

Trends in hospital financial management

Improving financial performance starts by understanding the specific stressors confronting rural facilities. When you assess hospital financial management trends, three areas of focus emerge from earnings reports:

  • Labor costs: Amid persistent workforce shortages, hospitals strive to mitigate labor costs, though the overall expense burden continues to challenge many. Despite some success in cutting costs, the financial pressure from rising inpatient expenses remains significant.
  • Admissions revenue: A notable uptick in hospital admissions and outpatient visits signals a trend toward outpatient services, underlining its importance for the stability and growth of institutions like Nemaha County Hospital.
  • Margins: An interesting trend is the slight improvement in operating margins, attributed partly to the reduction in labor costs and an increased focus on outpatient revenue streams.

Emphasis on outpatient services

Outpatient services are a cornerstone of how Stacy and other rural providers are managing financial challenges. For example, Nemaha County Hospital turned toward outpatient treatment, which now accounts for 80% of its business — roughly 25,000 outpatients annually.

This shift responded to immediate financial pressures and positioned the hospital for enhanced stability by leveraging the growing demand for outpatient care. But it required a willingness to pivot. As Stacy noted in another interview with Health Leaders, “We try to stay in the market by bringing in as many outpatient doctors that we can from the bigger cities so that they can see patients here.”

Innovation in rural healthcare

In adapting to the broader financial landscape, Nemaha County Hospital also innovated its operations. It streamlined efficiency by merging medical records with the business office and introduced cross-training among staff.

By emphasizing workforce optimization, revenue cycle education, and financial management, Stacy showcased effective leadership in addressing the unique challenges of critical access healthcare. These innovative strategies not only cater to immediate financial and operational needs but also allow for sustainable healthcare delivery in rural settings.

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