Please note: The following is an AI-generated transcript that has not been spell checked. Misspellings are not intentional, but are to be expected. To watch a video of this session, please find the link below. Thank you.

Peter Martin  0:03  

Hello, and welcome to the high reliability podcast. I’m your host Peter Martin, president of Gosselin/Martin Associates. As always, thank you for clicking on this podcast. Our podcast today is rebroadcast from a recent episode that appeared on our healthcare facilities Network YouTube channel. In this episode, we talk finance, we talk budgets, we talk relationships with our two guests, Robert Hakkar, Director of Facilities Management and Jim Corwin, Chief Financial Officer, Robert and Jim work for community Memorial Health Care mentor, California. As always, thanks for clicking on high reliability, and enjoy this episode. You know, when we started the health care facilities network, this is the type of episode that we envision doing. Because it brings together a Director of Facilities Management, Robert hacker, is CFO Jim Corwin at the same table. And those of you who work in healthcare facilities management, or have worked in health care facilities management, know how important the relationship between your director of FM, your manager of FM, your people with FM, and that CFO is the CFO has the Chatbot. But the CFO isn’t always attuned with what FM is doing. And sometimes FM doesn’t keep their CFO apprised of what they’re doing. So it’s a critical relationship that is not always intact, on the facilities level for a variety of reasons. And this is why we’re excited to bring you this episode. You know, in just tell you, one of the difficulties is always titling episodes, not a big fan of doing it. And this one was particularly difficult because Jim and Robert touch on so many different themes, and we had originally envisioned it as more of a finance type episode. But it quickly evolved into something a little bit different. And obviously, you let it go that direction, because I think what it does, you know, as I look back on this episode, most of them in their entirety, there are so many keys that these two gentlemen offer to developing that relationship between these two critical departments. And so when we were thinking about naming it, it was really difficult to you know, it wasn’t exactly a finance episode, and it wasn’t, you know, a relationship episode. So we came up with top finance and build a relationship, which are kind of two, you know, they may not be in perfect synchronicity with each other. But I think both themes are exhibited in here. So it was, it was a fun episode to do. And again, I think that it is just so critically important of a relationship to have, all relationships are important these days in the work environment, but with your CFO is even more critical. So I, I thank Jim and Robert, for appearing on this particular episode, we’ll do more of this in the future. Because again, you know, we can talk about, we can talk about finance, and we can talk about budgets, and we can talk about that, you know, not all healthcare facility professionals are comfortable doing that, because it hasn’t always been a skill that was needed, maybe when you were coming up in the 80s 90s and early 2000s. But it is really important now. But if you can’t build that relationship first, then it doesn’t necessarily matter how much business acumen you have, excuse me, your finance acumen that you have, you need to build a relationship to they both go together, can’t have one without the other. And so with that, I am going to click over to us for episode two of talk finance and build a relationship with your CFO. And as always, thank you for clicking on this episode. Have a wonderful day. Today’s episode is a different one for the health care facilities network. I hope it’s one that you enjoy. Today we are going to look at health care facilities management, finances. It’s the first episode we’ve done about finances and I’ve enlisted two great guests to help me in this endeavor. first guest is Robert hacker and I’m gonna ask them in to to introduce themselves in a bit but we have Robert hacker. He’s the Director of Facilities Management, and we have Jim Cohen. Jim is the CFO. So Robert and Jim work together. And gentlemen, Robert, let’s go to you first, where do you work together? Tell us your title. Tell us who you are and where do you work?

Robert Hacker  4:36  

My name is Robert hacker. I’m the facilities director for a small to hospital system out here in Southern California. Community Health. Community health care, I believe is our new title now. Community Memorial Health System was our old title. But I’m responsible for two hospital system and about 23 clinics or so Typical Facilities Management scapegoat for everything.

Peter Martin  5:06  

And wherever you are located at one of your facilities is in Ventura and the other in Ojai. Correct. Excellent. Excellent. And you may recognize Robert, from our intern episode that we did. This is Roberts. Fourth is the fourth time, right?

Robert Hacker  5:20  

I think this will be number five, total, five, previous.

Peter Martin  5:24  

He’s got the he’s got the early lead for the GM health care facilities network, Robert. Thank you, Jim.

Jim Corwin  5:32  

Hey, Peter, thanks for having me. So, my name is Jim Corwin. I’m the Chief Financial Officer for, as Robert said, it used to be community Memorial Health System. We are now community Memorial Health Care. And health care is one word there. And we’re trying to new branding strategy there. So I’m going to, you know, I was a professional musician, actually for about five or six years. And then I got into healthcare finance, which I just fell in love with. And I’ve been a CFO since 1997. Okay, so my 26th year of being a CFO, I was with tenant for 12 years. And for five of those isn’t CFO. And then I was the regional CFO, for the state of California for Providence Health Systems, which is sort of a Seattle based company. I was in charge of their, their hospital division for a while. And then they developed a physician division, and they didn’t have a leader. So they asked me very nicely, your jobs at stake, if you don’t take it, but a few bucks. And a few minutes later, they put me over a physician division. So from 2008 to 2020, I ran their physician division and grow, grew from 300 doctors to 900 physicians, we had 120 clinics, and I wasn’t running about three quarters of a billion dollars through their net revenue, which is not dissimilar to our size. Robert said it beautifully. We have two acute care hospitals. I see us as a three hospital system just because we have a Smith. And the skilled nursing facility is 75 beds. It’s robust. It has a lot of care and need. reimbursements just gone berserk in the sniff area. It’s made it more difficult. So Robert really has three facilities, we’re very lucky that two of them are fairly new. So that means we don’t have that huge central plant exposure. But our Ohio acute care hospitals in bad shape. So I joined here four years ago, and they’re just starting my fourth year. I started in August of 2020. And I just love being in a standalone, you know, I always worked for health systems, Peter. So I was always about executing what they asked me to do. This was kind of fun, because Robert, and I get to actually make the decisions. I just wish we had more money. That’s the only constraint Robert and I have. So it’s perfect topic for you today, Peter, because that is our single biggest challenge is the ability to afford what needs to be done.

Peter Martin  8:34  

Well, that’s actually where I want to start, Jim is your money and kind of talking about perhaps some of the challenges of today that are a little unique, I’d imagine money is tighter than ever but before you answer that, so you said you were a musician? Were you a full time musician prior to

Jim Corwin  8:53  

admission? When did you 1979 to 1984 I was a bass player. I come from a family of musicians so my father was at leas bandleader for many years. And and my grandfather was a songwriter named Johnny Mercer. So Johnny Mercer wrote founding Capitol Records he wrote Moon River hurray for

Peter Martin  9:18  

Hollywood. I think I’ve heard that name Johnny Mercer before

Jim Corwin  9:21  

Yeah, yeah, he’s pretty well known. So I still you know, manage his publishing catalog so Wow. Robert, doesn’t give me much time to do that.

Unknown Speaker  9:35  

I thought this was the health facilities network.

Peter Martin  9:38  

Well, it is but you know, whenever i That’s why I love talking to people is because you find every that’s really unique. And so it is the health care facilities network, and you made a transition in so did you make the transition into finance out of the band? How did that like how does that happen? Yeah,

Jim Corwin  9:56  

I hurt I hurt my back and moving that weapon and realize my grandfather has set aside some money for college. And so I figured I’m just going to take advantage of it, moved around a couple of industries and then found health care in 1990. And I met a healthcare CFO, he says, if you get good at health care, you will always be employee. And that people are always going to need health care, and it’s only going to get worse, it’s not going to get better, in the sense that people are gonna get older and need more care. So if you want security, get good at health care, you will have a job.

Peter Martin  10:36  

He was right. Yeah. With all the difficulties the market faces today, there’s still a lot of truth in that in that statement. So talk about today, Jim. And, Robert, obviously, we’ll kick it. Over to you. I know you’re probably chomping at the bit. But Jim, can you talk a little bit about the current market, current state of health care, the availability of capital, the tightness of dollars? How do you assess today?

Healthcare Infrastructure Challenges and Solutions

Jim Corwin  11:03  

Well, what I’m just in the Status development over the last 15 years, Peter, is nobody wants to pay for health care. Everybody wants it, and they want it to be very good. But nobody wants to pony up the cash for it. We’re unique in the senses, we have forces. I saw a great speaker one time said the most successful healthcare systems in countries are where they just have one system. So forget universal care, forget anything. They have one system. You know, in Switzerland, it’s privatized. We have four systems, we have Medicare, Medicaid, private insurance, and no insurance. So one of our four quadrants, coverage is nothing. And that that segment is growing. California has, you know, participated in managed care 30 years ago thinking that the whole world’s gonna go to Manage Care, and the rest of the country said, No, thanks. And so California is unique in the sense that they’ve accepted lower payments. You know, Medicare has been ratcheting down their payment, I call them medical on steroids. And so in the old days, if you were 50 60%, Medicare, you could make some real money. And remember, we’re not for profit feeders. So our whole goal is to generate it, we’re not for profit, but not not for money. We need the money to reinvest. And really our reinvestment, it’s pretty clear new services reinvest in people, but reinvest in our infrastructure. And that’s the status part because when people had money, they didn’t invest in the infrastructure, that was the time to do it. Because I mean, oh, my gosh, I can’t every time I’ve ever taken over a hospital, you needed $20 million, just to get the central plant where you needed just the central plant. And $20 million of central plant improvement gets you nothing, relative to care, it saves you a ton of money on maintenance and repairs and stuff. But you really want your money to go into patient care. So you know, I’m really dying to see what Robert does. He’s got to have three new facilities, we’ve got to do something with our acute care now. Hi. But you know, I think the secret is, at least from a central planning perspective, is going to maintain it because he does have two relatively new structures that few people have the luxury of, although with the AB 1953, the earthquake seismic requirements, Peter, a lot of people who built some newer infrastructures, but we’re now these hybrid facilities of new and old, and the old is very old.

Peter Martin  14:22  

So you talked about the the four year the four different systems that we have just last time and kind of big picture relative to the tightness of dollars and the ability to get capital and this is even outside of your system just kind of globally. Have you seen a market such as exists today in your experience in healthcare?

Jim Corwin  14:43  

No, this is the worst. I’ve seen it. I’d really liked to hear Robert, let me give it another minute but I’ve never seen anything like where we’re at now because the dollar need is bigger. You know, these just these elevators You know, hospitals have so many elevators, just the elevators, you’re talking millions and millions and millions of dollars. And that’s not even done basic stuff. So we don’t even know how Robert has kept our facility running in the current state because we still have an old tower. We’re maintaining less direct acute care, but we’re still running a lot of clinical services out of there. And we’ve got a real worn down infrastructure in Ojai. And I’m amazed, Robert, I mean, literally, and we give them a shoestring budget. So I mean, I pose the question. Yeah. How do you do it?

Peter Martin  15:46  

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Healthcare Finance and Risk Management

Jim Corwin  16:15  

it really is. Yeah,

Robert Hacker  16:19  

it forces us to really and truly make decisions that we don’t want to make. And what I mean by that is, sometimes we’re gonna defer certain things off, we may employ other maintenance strategies. You know, a lot of my peers will talk about, you know, some of the more trendy topics, reliability, centered maintenance has come into play in the last 10 years or so. But, you know, sometimes we’re employing run to failure. And a lot of people don’t like that. But guess what, we may have to let things go and what go well past its lifecycle. And that kind of catches up to us later on. As Jim was saying, you know, and he kept pointing out the positive that we have two newer facilities, I’d like to say we have two very old facilities, one facility that both Jim and I are sitting in right now, a very old facility, and then we have a very old critical access hospital up in Ohio. The newer facilities I’m not worried about as much, obviously newer facilities have their own issues. The first few years, they’re higher cost, then once they start, they’re, you know, getting on to that level curve. But, you know, it’s hard sometimes to make decisions, and then people don’t like the decisions afterwards. What can you do to prevent that from occurring in the future? Well, guess what? We can’t always prevent failures from occurring. So, you know, when we talk about finances, one of the things that I talked with Jim all the time about, I guess, how do we get paid? You know, and he was talking about, like, the four different basic pairs that we have are different categories. But you know, Jim, you and I’ve talked about, you know, what is capitation? What does that really mean? When we have a capitated market, you know, you have X amount of people that were taking full risk on, what does that actually mean?

Hospital Revenue Streams

Jim Corwin  18:27  

Yeah, I mean, that is actually my expertise. The both Robert and Peter, when I was was Providence, I had 200,000 and capitated lives, well, what’s happening is the insurance companies are trying to partner especially in California, also Minnesota, Texas a little bit, but they need a partner to share the risk with what they’ve they did a lot of in the mid 90s. And still trying to do but it’s thinned out a little bit, is they want a risk partner. So what they’ll do is they’ll go to health systems like us, and go first. You’re rare because you’re a fully integrated health system, you have joint ventures, you have clinics, you have not only three entities, one of them is skilled nursing, which is very vital and moving acute care through the system. But what they do then is they give us a portion of the premium. So what we’ve got to do right now, we haven’t dabbled as much as I’m used to into the overall it’s pretty sure the premium with us, well, what do we do right now we take a primary care cap in our clinics, which means they give us a 25 bucks per person, and they just give us lump sum payments and they say, Here’s your quality goals, take care of everybody and they kind of washed their hands, a little bit of it. They monitor it, but we’re getting the Premium. When I was with Providence, we took full risk, which means we would take risk in the hospital. And I take full risks on the professional services with my doctor group because I had all the multispecialty. So I could take a lot of the premium dollar. So you know, a typical rate for commercial might be at 90 bucks a person, for seniors, it might be four to 500, even more per person. But remember, you get four or 500 bucks a month times 12, you get six grand to take care of this one person, you better keep them healthy. The one advantage of capitation, if you do it right, is people will stay healthy. And in the late 80s, they were doing it and doctors are keeping the money and denying care. And it just blew up in their face when we retooled everything in the mid 90s, early 2000s, and really developed high quality wellness programs. And so I would invest even send people to their homes. And I would use that premium dollar to do that. And you find out there’s a lot of extra money left if you do that. Because it you know, high end hospital care is built into that premium. If you keep it out of the hospital, you can really do well. But it’s a very it’s a large and exotic infrastructure and you know how need to know how to manage it. So I’m preparing us to be able to do that in the next three to five years. What does that mean, I’m beefing up my case management area, those types of things to be prepared to take capitation. But we’re really not designed in Ventura is not a big managed care market yet. But for us to compete, we’re going to have to do that. And we have a wide enough services that we can take some risks, once we know what we’re doing, Peter, and so we’re not there yet. So I’m not going to take that risk, because it would blow up in our face. But it can really work well. But you got to you got to be a good person in some way. Sure. But you as we’re looking, I don’t know if that made sense, Peter, or if it left any questions.

Peter Martin  22:31  

So how does I like your explanation of capitation? I liked the visual of the doctor in the late 80s denying services too, because that tells a story. But how did those How did those revenue streams How did you that impacts you know, you’re up here dealing with those issues and now Robertstown here on infrastructure running the hospitals, how to revenue streams, how to how does a revenue stream or lack of a revenue stream impact somebody Roberts level keeping that hospital going? So that would be the second question by Robert the first one I’d like to ask. And you and I have talked about this a lot. And this is one of the reasons that I’ve asked you to come back on because you speak about it very eloquently. What are some revenue streams that a hospital has that you pay attention to because it impacts your work and healthcare facilities management?

Unknown Speaker  23:25  

This this is

Jim Corwin  23:29  

because Robert cares about everything. Sorry. Ever seen that that day? Jim? You know we’re working on this you can suspend a bed for six months because you can make more on the GME money you know he I’m gonna jump in I want him to answer but it couple of things he does that I’ve never had with an engineer one he understands revenue like administrators do for one. And he actually because he knows I’m not in the room a lot of times because they don’t love to meet without the CFO. And so he becomes a true Gator

Unknown Speaker  24:08  

they meet without the CFO, you’ve got the money.

Jim Corwin  24:11  

Yeah, you know, they do planning and it’s the early stages and really they see it is we’re just starting a new service or we’re doing something but Robert really acts as the gatekeeper which I’m not used to. I’m used to engineering people just scoping it out and saying Here it is. Here’s the high dollar low dollar medium dollar sing. And and sometimes it’ll leave at the start. But Robert says I’m not doing a thing, too. We understand that there’s an affordability index on this project. And and that’s huge. If you get anything out of this podcast, that’s true added value can bring as a head of facilities that you got to know we got to feel figure out how to pay it. And if you’re good CFO, your answer isn’t always no, it’s let’s figure out the option we can afford. And that’s another thing, Robert, amazing at that he’ll come up with a solution, he won’t throw his hands up. And his answer isn’t always the biggest dollar one, he’ll have the right way to do it. And the next level of affordability, but it’ll work better. And then here’s the shoestring budget, this will just keep it going for three more years. So, Robert, I don’t know how we do that, or when you started doing that, but it’s an added value that you bring to an operations that I’ve rarely seen?

Patient Demographics and Payer Mix

Robert Hacker  25:42  

Well, I think that’s one of the reasons why we’re having this podcast is there’s a lot of folks out there, you know, my peers that don’t have the financial background that I do. And you were talking about it a little bit about the different types of payers that we have, whether it be Medicare, medical, private insurance, or, you know, some of the, what I would call the Obama care plans, you know, or the indigent population, I pay very much attention to what that payer mix is, because all of a sudden, if we’re starting to get more Medicare patients, we’re getting old. Typically, we’re getting older folks. And there’s an effect that it’s going to have on me. Typically, I don’t care what the temperature is inside the patient room, they’re too cold. You know, and so we’re getting these calls, it’s too cold, it’s too cold. And we’re like, What are you talking about, you know, somebody’s four degrees inside the room. We also have issues with, you know, their loved ones, you know, maybe it’s grandma or grandpa who’s in the hospital, when their spouse comes to visit, we have other issues that start to develop around parking, I hate to say it this way, but and I’m being very stereotypical, we have minor accidents in the parking structure, they don’t necessarily always park in the parking stall itself, they take up two spaces, little things like that. And then of course, if we’re getting, you know, a larger portion of Medicare, we start to have more visitors that come because we have, you know, grandma or grandpa that’s in the hospital. And, you know, here’s all the the kids that want to come out and see grandma or grandpa, and it might be the last time to see him. So there’s, there’s other issues that come about. On the other side, if the payer mix starts to shift to Medicare, you know, typically, these are people who don’t have a lot of money, or they have Miguel,

Unknown Speaker  27:44  

I think you mean Medicare?

Robert Hacker  27:47  

Well, I said Medicare twice, I’m sorry, that typically, we’ll have other issues that start to develop, we have more vandalism, we have more theft, we have more disobedience within the hospital. And these are little things that pop up. And I have this conversation with Jim. So Jim, I’m seeing that, you know, I’m starting to recognize and I’m seeing these issues developing in the hospital. And then I’ll go back to him as Hey, has our pyramix changed. And he’s like, Yeah, you know, it has gone up. And I can actually tie these things together, the correlation is there. So I have to prepare for it. So as we are preparing our budgets, I come back and I say, Look, if we’re going in this direction, these are the things I have to worry about. You know, a lot of times we don’t even look at it. But the theft of cars, you know, cars getting broken into in our parking structure. I can actually show a correlation very quickly, right how as our paramedics, it started to shift how that volume has gone up, those incidents have gone up higher. So it’s little things like that, that we’re looking at and trying to control and make sure where we’re headed. Because to me the payer mix. I’m looking at it for two reasons. Number one, I know what what the income is for Jim. Okay, obviously, he’s gonna want as many commercial insurer patients as we can, understanding that everybody’s going after him. Right. But if it goes the opposite way, how do I start to tweak and prepare for those things, understanding that there’s going to be more damage. I hate to say it to walls to signs to little things that can be easily taken.

Peter Martin  29:34  

Yeah. How do you track that? Robert?

Robert Hacker  29:39  

I kind of watch it just there’s a certain sense that I can feel its inherent ability that you can kind of feel we can track it statistically. Now I don’t have a statistician on my staff, which I’d love to have to do some advanced analytics. Yeah, it really would be nice to come out and say hey, but I can’t afford it. And we as a system can’t afford it right now. So some of this we can look at, we will track, you know, how many assaults that take place, how many burglaries how many thefts, you know, in its little things that you watch. And you can actually see it, you know how many calls that we’re getting are we all of a sudden getting a lot of calls in the summer, that it’s too cold? Wait a minute, well, typically, it’s the opposite way around. But knowing that it’s going that way, I’ve got to prepare for it. And it’s little things. Again, some of the older folks we have, one of the things you’ll notice, right off the bat, is our handicap parking. All of a sudden, it’s impacted before the other parking. And a lot of times people don’t put those things together. And what’s actually occurring.

Jim Corwin  30:47  

Peter, when I was a regional, state, CFO for Providence, I actually got to finance people to support the seven engineers that we had across our state system, because you needed that they really need financial support. Especially if they have financial, that the

Peter Martin  31:12  

US was fighting Robert, I know your urine up in your baseball on. And I’m just thinking, you know, as you guys were talking, you these sports teams have staffs full of analytic people, to say something as mundane as go for a two point, you know, in football, go for a two point conversion, if you’re down nine with three minutes. Yet here we are a hospital and health care system that is infinitely more infinitely more important than the Rams game or the Patriots game or complex. And you could take that analytics and put it to really good use, you know, and yet you’re struggling for funds. It’s not as social comment, it’s just kind of interesting, where the focus goes, when

Jim Corwin  31:55  

the industry doesn’t recognize infrastructure, for some reason, they only focus on the direct care. But there’s very rarely money, there are some things in the cost report that have been fading and shrinking. That has some consideration for that. That’s why my number one thing is to track my cash flow, and start with my debt service. And then I have to generate a certain amount not I personally, but as a system, we have to generate capital for Robert and right now, we haven’t been doing that we’ve been meeting our debt obligation. And we’ve had a few bucks left over that really have gotten to replace the equipment. So I mean, my goal is to get us to 4050 60 million a year, in extra because Robert could easily consume. If I gave him $50 million. He wanted wasted. He would use it and do a ton of stuff that needs to be done that’s going to really start crumbling. I mean, I’m more worried for the finance guy and the engineer guy 15 years from now, because we’re really going to hand them very dangerous infrastructure, because we did our best to keep it running with what we had. But nobody considers the kind of capital you need to run a hospital. And that’s where I think, if I had to say there’s probably a biggest failure right now under the funding of health care, it’s the lack of consideration for infrastructure to support the process.

Peter Martin  33:43  

Wow, have you always been? Have you always focused on that, Jim, in your role? And I mean, that is a compliment. I?

Jim Corwin  33:51  

You know, it’s funny. I mean, I started as a capital account. And so that may have kind of, because then I always partnered with Roberts position, because Robert often is not only in charge of fixing repair and central plant, but usually the big construction projects. He’s got to have a deep hand in because all these third party people show up on our site and start going, Hey, we can do this than that. And Robert has said no, no, no timeout, you don’t understand. You don’t understand the distance to a power line or this or that. So, you know, he’s engaged. But I noticed that when I was in a capital account, I just marvel at the facilities position, I think is one of the most important positions in in the ER health system is a top notch facilities, people and really the people they get underneath them, because they need really a very diverse team. Because at some point you get tired of plumbers. Obviously I’m sorry, I was gonna say a bad word. You get tired and plumbers messes stuff up in numbering charging you and after a while Robert just goes, I’m gonna hire a plumber. I’m gonna hire a painter. I’m gonna hire this. Yeah. But it’s just insane. I’m actually quite surprised Our hospitals are still some of our buildings are still fan.

Peter Martin  35:24  

Rep. Robert, what are you talking about? Revenue Streams and what you follow now typically like, census is census a good is patient census a good barometer to to base cash and the solvency of a hospital and from your experience?

Robert Hacker  35:45  

Absolutely not. I think that’s the old school thinking. And you’ll hear a lot of old CEOs, administrators talking about heads and beds, how many heads and beds do we have today? That really doesn’t tell you anything. Because if you’re losing money on a per patient, day, a basis, and all of a sudden you have a lot of those patients, you’re losing a lot more money more efficiently? Or do you have a mix where hey, you know what, we’re just at the break even point or we’re actually making money. So you know, when I, when I hear people focus on Oh, the hospitals full, there’s some good financial aspects to that, and I go back, and Jim knows this just as well, the, when the hospital becomes full, it becomes more efficient at processing people through there’s a natural push and pull effect. You want that to be in place. When the hospital is not full, there’s not necessarily the natural incentive to move patients through at a rapid pace. Not that I’m taking quality away from it. But you know what, it’s almost lunchtime, I will get to that house, when they come back from lunch. Whether that be something as simple as their discharge meds, you know, education before they go home to social service, visit those things, if Hey, that beds ready to go, we have somebody waiting in the IDI to come up, they might actually go ahead and do that before they take much understanding that it goes so that sometimes makes the flow a little bit faster when it gets to be full. But you’ve got to manage it. And this is where I say that the new breed of CEOs coming into hospitals is different. They’re starting to really understand the actuaries and understanding what risk really is where they hadn’t had to before. Prior to 1983. When DRG came into effect. Everything was cost plus, it didn’t matter what it cost us, we just build it and we put a profit on top of it. So you couldn’t lose?

Jim Corwin  37:49  

Well, yeah, I mean, here it is, I always caution. When I was at Providence, they always wanted to build build, build, we you know, we’re impacted, let’s add 50 more beds, let’s add 50 more beds. The problem here is that that next level of impacted volume, this is where it really is terrible, Peter, because the community needs, right. But right now impacted volume is only no pay or low payment account. There’s not the next level of Blue Cross pays, impacted and can’t get into your hospital. It’s always low paying business. And so I’ve always used to get pressured to do performance, we’ll use our core payer MC, we’re going to add 100 beds, you know, so we’re 30% this 20% that I go no, because that next 50 to 100 patients is all going to be met a cow and lower pay. So I recommend we look at it from that perspective. But you know, people want to grow and do these projects. And that’s where I’ve seen health systems make bad decisions, because they just say, you know, build it and they will come but the payer mix is bad, you know, our medical has grown from 12% to 20%. Now, that doesn’t sound you know, a lot of people have worse than that. But that’s eight points on 12 points, you know, that’s a 75% increase in Medicare. Well, that that kills us, you know, and the Medicare payment rates really low in California, although they’re starting to talk about bringing it up. And that that to me makes the most sense right now we should be investing in lower paid patients because if you didn’t Well, Peter, you’re gonna be so much better if you could take a low income medical person, get them in touch with a care provider before they get sick. I guarantee you, you’ll save a ton of money or keep them out of the hospital. That’s why I like getting that premium where we have doctors and clinics, and we am outreach people. So that’s a big project I just worked on is working with a managed care health plan to get us about $9 million of funding strictly for welfare and quality. You know, we haven’t done that in the past, we’ve always just tried to negotiate our rate and say, hey, you know, give us 8%? No, we’ll give you to go seven, three, you know, that kind of stupid stuff. I’m trying to get money for quality on the clinic side. So we can keep these people above us. But sorry, Robert, I know you had a comment.

Robert Hacker  40:39  

That was restarted to change more from a from a hospital and episode of care and trying to keep them out, which makes us sound much more like an insurance company, we’re starting to think and act like an insurance company. It’s cheaper to take care of them in the clinic setting versus the high cost hospital setting.

Managing Facilites and Finance 

Peter Martin  41:01  

So you and I, if if talked about this? A bit, Robert. Let’s say that so your, your director of FM, suppose there’s a director of FM who’s listening to this and say, and this is all well and good, you know, love hearing about the payer mix. But this doesn’t impact me. Why does? Why does it impact them? Tell them why it impacts them? And why? You need to at least be a little bit cognizant of the payer mix. If you want to be successful as a director today. That question makes sense.

Robert Hacker  41:35  

Yeah, it makes sense to me. I think it’s, it’s, in my opinion, and this is what’s important to me, when I understand what’s happening with our system, or whether what’s our system ready, where else, when I started to see where the where the problems are, where the money’s coming in, and the effects that it’s going to have on me, I can then actually go back to our CFO, and I can come to him and say, Hey, Jim, you know what, we’re thinking about building this new clinic? And there’s a lot of buzz around it. And I’m like, you know, I can build it. And, you know, do we have an ROI on? Do we know how many patients we need to see? It’s not my role, necessarily. But I need to be able to come back to Jeff to say, Hey, I’m going to spend a million dollars building this little clinic down the street? Are we sure that’s the right thing to do. To make sure that all the players are there, and then we’re thinking about it, just like I would do for anything else, you know, hey, we’ve got a boiler down? Is it time to replace the boiler? It’s a business case. And everything we do now, kind of resolves around a business case, does it make sense for me, I’m going to replace a 20 foot section of pipe, but I know that I’ve got a, you know, 100 foot section that’s running down above, you know, a critical area. If one section is going bad, we know that the rest of the pipe is going bad? Do I go ahead and replace all of it? Or do I replace only that 20 foot section. So I need to have that confidence that when I come to Jim, so Jim, you know, I have a problem with a chiller, I need to replace a chiller or, you know, I’ve got three old elevators. I shouldn’t say this out loud. But I know I’m being recorded. I’ve got one elevator that’s been down for four years, four years. And you know, it’s about $350,000, for me to get that elevator modernized. But that one is not as important to me because it’s an older building. That doesn’t necessarily that elevator doesn’t necessarily serve patients, it serves some of our staff and I can deal with issues with our staff a little bit easier than I can with patients. So I come back to him. And I said, you know, I have these three other elevators in our MLB. That’s a higher priority for me. And so what I believe is when I come to Jim and say, Hey, here’s really my priority and where it needs to be. He knows that I’ve done my research, and he knows that I’ve done my critical thinking to come to him. And I think that that that bond, that relationship going back and forth is important. Because otherwise I can just throw my hands up and say, hey, you know what, I need to do it. And if it’s not done, oh, you just said no. So it’s not my fault. Yeah,

Jim Corwin  44:25  

I think I think, Peter to really follow up on that. It’s less I think the challenge is when you’re in facilities management, that you you think I don’t impact the number. But that’s not Roberts job. Although Robert will actually give us some revenue ideas, but he’s rare. But if you understand it, you’re the only one that understands the condition of the facility in the next five years. So if you know the trend, you may say Jim, we’re heading in an upward trend. I can stall this for a little While when you think you’ll have cat, I’ll tell him here he goes, that’ll be good timing, I could do that bigger repair. So then that’ll change the way, he might just do a smaller fix to drag it out till some funds come in, or he might do the opposite. He goes, Jim, we’ve been Fletcher’s cast for the first time in a long time, let’s do a couple of big things right now. Because I see your payer mix is going down, and there’s not going to be as much available cash in three to five years. So let’s do something right now. Because we don’t do it now. It will never get done. So it’s less I can impact it or anything, but it’s if you have that awareness as if, as an FM, you can guide me on what it is. And the key is I have to trust that role. I think the worst thing is CFOs have this weird relationship with facility manager just because you didn’t want to spend all my money, you know, and it’s actually almost more often than not adversarial, which is going to kill. You know, it’s mom and dad aren’t the same. Each family’s going to crumble. You know, I think that’s one of the biggest relationships in the health system that if it’s functional, you’re going to be in his best shape. And you can be if it’s dysfunctional, and I’d love to hear from other facilities managers, because I’ve never seen a lot of facility.

Building credibility with the CFO

Peter Martin  46:40  

Yeah, that’s kind of part of the reason why I asked you that question. Relative. Have you always been this way? You admit, you mentioned the word infrastructure so many times like, well, very impressive. Let me ask not so much with Robert, Jim. Because it sounds like you guys have a strong relationship there. But based on your years of experience with tenant, and with Providence, how in your eyes? Does the facility director, the facility manager build credibility with you to be able to get to the relationship that you now have with Robert,

Jim Corwin  47:16  

how do they build for one, Robert reaches at all, whereas most facility managers won’t. So I would always do the outreach, I would build a trust factor with them. And so and I would tell them, how we’re going to have a great working relationship and how I can help you. And then my goal is, that’s what I’m here for. Because we have two things, keeping our facilities running and taking care of the patients are the two biggest things we can do. The challenge I have is that they’ll say, Well, I got marketing orders from the CEO, or they’ll circumvent it, or they’ll come up with their own way to finance. Oh, I got this guy to put this off way down here. He is going to change. So when they don’t partner with my role, I do. Stand. Remember, it was his last day. It was good engineer to guide newest stuff. But he always circumvented the advice I would give, you know, and it was strictly advice, but I don’t you know, and I’d be in this office all the time. Stan, I was just there yesterday. You then went ahead and did this. Well, the Coos didn’t have to get done. I got one bring me into the CFO and let’s talk about the way to do it and can afford it because this we don’t even have a capital budgets for this and corporate is not you know, allow you to go over you. You know when you’re part of these health systems. Yeah, it’s it’s literally draconian in nature. I mean, the one thing I hated working for health systems, I honestly felt like they were trying to fire me every day. And after a while, I just developed a thick skin. You know, Robert worked for a lot of health systems, big places, but it’s that circumventing why why do we do you know, they’re used for that adversarial relationship with the CFO, there’s gonna do nothing but hurt, hurt the entity. Now a lot of it too, comes from the CFO. Okay, so sometimes the engineer guy just has to go and slap the CFO and stimulate, look, I’m on your side, but you got to communicate with me, you know, and I’m not just some drunken sailor looking to spend all your money. Okay, because that’s really what a lot of CFOs act like, you know, and and you know that that’s not the case 85 to 90% of the time with these facilities, man, they have real problems. They have an infrastructure that almost can’t be kept with the amount of cash we have. That’s a real, real problem. On this systematic, it’s worse in California than anywhere else, because there’s no money in this state. But we got to, we’ve got to stop that madness. And this pairing is probably almost more important than the CFO and the CLL in some ways, because the CEO was getting one FTE for 100 grand, and Robert needs $10 million. So yeah, you can partner with the CLO all day long. But if you don’t have a good relationship with facilities management, you’re not, you’re not, you’re gonna be a lessor, CFO, period. Right?

Robert Hacker  50:43  

No, I agree. You know, it’s a, it takes time to develop that relationship. And it takes time to, to be honest to say, you know, what I would like to do X, and a lot of my peers, we would all say, hey, we would love to do certain things. We would love to have, you know, a robust, computerized maintenance management system and have a whole team that sitting there, not only making sure that everything’s done in a timely fashion, that we’re also getting data out of it, that we can actually drive some decisions. But sometimes we can’t afford for those analysts to be behind the scenes, that isn’t more important for us to have that analysts there, or that clinician that can actually see a patient in a clinic setting to try to help bring in that revenue. And so sometimes, we have to give a little in order to try to generate that, that revenue for us to do the secondary things that we want.

Peter Martin  51:44  

Do you find and I know we’re coming up at the end? Do you find it more difficult these days? And this question goes to both of you, because you both sit at these tables? Is it more difficult today to to say no to clinicians, to doctors, to these people who come at you these people, these these, these groups that come out and say we can make more because there’s so much pressure to make money, right? They come up every and everybody’s got ideas. So they come to you with ideas on ways to make money, which they may be well intentioned, but you gentlemen, are responsible for the implementation, the actual dollars is more difficult now to say no to to hold people off, or our pressures different today than they’ve been in the past?

Jim Corwin  52:30  

Well, I mean, let me start off in those pressures have always been there from MDs, I think one of my single biggest roles is to develop partnerships with doctors and explain to them and say no to them in a way that they understand. Because I will tell you, doctors are stubborn, they have all these great ideas. But if you say something to them, that makes sense. You can win them over. So I think the problem Robert and I have had is I’m I’m just heading into my fourth year, I’ve been there three years. And our facility had developed some bad habits in a clinic thing now. And it’s one of the reasons we’re in some of the difficulties that we’re in. Because we just didn’t say no. And I don’t really say no, I say, let me tell you why that’s gonna be a challenge in a day and I make sense. And then I can really tell what a doctor is made of, because if he just says, are you just missing a golden opportunity? Or if he listened and say, You know what, now that I hear your situation, maybe I can even partner with you. And you know what, get me just this piece of equipment, and then just get me this area to practice in. And that’s what Robert comes in handy on the space. And then can we shoot for this? And let’s time it out. So is it different? Now doctors have been the same for years, I think the challenges have become more sophisticated in some ways, and can respond back a little bit or you know, so it’s it’s a huge challenge, but that’s our single biggest responsibility is to be able to have those tough discussions. I’ve said more No more than my predecessor, my predecessor like to stay in his lane. He was a really good CFO, but he really didn’t like to. He let the administrators and stuff deal with the dots. But I say no, no, no. I managed 900 doctors for 12 years, man, I’m gonna 2008 to 2020 I’m gonna step in there and explain to him why the answer’s no. And it really shows if they’re the kind of doctor we want. I’ve got one doctor, I’m saying that’s a partner. We don’t want any have no interest in partnering with us all. about partnerships. So, you know, Robert gets the byproduct of that because all the heat goes on the CEO, the CFO and the CEO, from the MDS. And I like the fact that we’ve got our new CEO, I think, is a little more inclined to, to not say no, but not say yes. Which is very important.

Unknown Speaker  55:20  

Right. Robert, do you? What about your perspective?

Building Trust

Robert Hacker  55:26  

You know, I think being in this field close to 30 years, there are certain things that pressures kind of come and go. And it depends upon I hate to say what’s actually happening with society. You know, what boilers are gonna go chillers are gonna go pumps are gonna go. Infrastructure, you know, we’ve got an older building 50 6070 years old. You know, we always talk about, we should tear it down and build a new building. Great, that’s going to cost you know, a couple 100 million dollars. But do we have the money to do it, it’s impractical, we know that we can’t do it. We do this in our life, every day at home, we can buy a new car, we can buy a new house, but we might not be able to afford it. And we make those decisions. But at work, sometimes we throw that away. And I say, You know what, it’s not up to me, it’s up to Jim, Jim, I need to do this, you go find the money for me and figure it out. So both Jim and I had a CEO that we worked with before, who went to head up a children’s hospital. And I remember when he went there, he said he was going off to his retirement job. Because no DRG and a children’s hospital. And what happened is first year he got there, DRG was implemented for children’s hospitals. And it’s like, I’m back to the 80s. Again, trying to cut costs, and try to figure out where you can actually make a profit. And so the more efficient I can make the building the clinic, the better off we are, as a whole to make money. But I think the same pressures are there, that there’s always have been? Do I think the doctors are getting smarter and how they asked for things? Yes. Because even within the facilities world, we have seminars at the Ashi conference on how to ask for money, how to write business cases, how to talk to your CFO, how to talk to your CEO, how to talk to your CEO about money, how to ask for it, giving templates on how to write things, you know, it was all about how do I get how do I get versus how do we make this work? Because there’s multiple ways of making it work. You know, I look for those of you who are a little bit older, the old Sears good, better best. The three different tiers. Good, is okay. It will get us there. It might not be perfect, but it will get us there.

Jim Corwin  58:05  

I’m gonna keep it simple the wind up. Yeah, be honest, your CFO because I hated facilities, guys that says there’s no other option, and stuff. And then my 26 years I had seen other abilities to do the same thing. So be honest with them, and tell him we can get by we can fix this, but I’m telling you, Jim, two years from now you’re gonna have big, big, big problems. So and it’ll be way more expensive to fix that. So help him understand the magnitude and don’t don’t tell because I’m not an engineer. Okay, so you can buffalo me if you want to, you know what you can. You can, you can be as an honest person. I’m an honest guy. So I trust my, my, you guys have huge role. So I trust you implicitly. You can you can mislead me easily. And I’ll have to take your advice. Just don’t do that. But at the same time, Lay it on me. Don’t hold back. Because I’ll have to figure it out at some point. So build that relationship with your finance leadership. Being transparent, be honest, and challenge them to help you help the facility challenge me put me to work you know, that’s why I get paid a lot of money. Yeah, you know, but be honest beyond I just used to hate PhotoPills facilities, guys, when I knew for a fact. You’re just blowing smoke up mine. You know what?

Peter Martin  59:49  

Except, you wrapped it up really? Well. Jim, I was actually gonna say you. This could easily be a class on creating that relationship between the director of FM and the CFO and If you said one word that’s going to come out of it, like in my eyes, realistic realism, right? Just you deal with each other. And if you’re not, none of that other stuff matters if you can’t trust.

Jim Corwin  1:00:16  

So this was, well, well, we’ll wrapped up, Peter,

Peter Martin  1:00:21  

anything. This is a great discussion, Jim Corwin, Robert hacker, anything we didn’t cover? I know we got to get rollin, I kept over a little bit, but any final word?

Jim Corwin  1:00:30  

Personally, I’m so glad you’re doing something like this. Because this is something that’s rarely talked about. I don’t hear this, when you’re in the boardroom, when you’re in the XY and Z when you’re in a senior leadership management team. You know, too often the facilities person isn’t as engaged. Now, Robert gets a little more engagement than more than most, but it’s still not enough. You know, this is an under, understood, discuss and address, issue and relationship. And I’m very impressed that I’m even having this discussion with anybody, because I think it’s a great discussion.

Peter Martin  1:01:16  

But again, when I last when I asked Robert, you know, hey, why don’t we do this kind of finance one on one building the foundation and we didn’t build as much of the foundation as I wanted, because we got off on a great discussion about creating a trustful relationship. But he said, Hey, how about I’ll ask my CFO, if he wants to appears like that would be fantastic, because you need both of those perspectives, because at the end of the day, it’s going to come up through you eventually.

Jim Corwin  1:01:40  

Absolutely. Absolutely. And if any of your, your constituents have a feedback, I’m perfectly happy to answer any questions give any guidance. I have no problem with that.

Peter Martin  1:02:05  

Thank you, gentlemen. Peter Martin, healthcare facilities Network. Thanks for watching. We’ll be back

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