← Becker’s Healthcare Podcast
Becker’s Healthcare Podcast
Financial Pressures and Innovation at Carle Health with Aron Klein
00:21:54
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- [00:02]
A
@ Athenahealth, we know your ambulatory practice wants healthier a healthier business, healthier care teams and healthier patients. But the complexities of modern healthcare tech make it hard for you and your care teams to focus on what matters most. That's where athenahealth can help our AI native all in one solutions reduce administrative burdens, streamline billing and payments, and deliver critical insights when clinicians need it most. That means fewer clicks, more time for patients, and stronger bottom Practicing medicine is complex, but running a practice can be that much simpler with Athenahealth, see how simpler is healthier@athenahealth.com.
- [00:44]
B
This is Alan Condon, back with another episode of the Becker CFO and Revenue Cycle Podcast. Today I'm delighted to be joined by Aaron Klein, Senior Vice President of Financial Operations and Supply Chain at Carol Health. Aaron, pleasure to have you make your debut. Your first time appearance on the Beckers podcast. Surprised it took us so long to get around to you. But for those of our listeners who mightn't be as well acquainted or familiar or yourself or leaders like yourself at Carl Health, do you mind giving us a little bit more about your role and your background at the health system?
- [01:17]
C
Yeah. Thank you Alan. I'm excited to be here today and look forward to our conversation. As you mentioned, my name is Aaron Klein and I currently serve as the Senior Vice President of Financial Operations and Supply Chain for Carle Health. I've been in the healthcare industry industry for about 25 years now. Started my career at Advocate Healthcare in the Chicago market at Lutheran General Hospital, spending 10 years at Lutheran General and then moving down to Central Illinois and Bloomington Normal when Advocate acquired or merged with Broman healthcare back in 2010. Throughout the next decade, spent 10 years with Advocate Broman Medical center and the Central Illinois region of Advocate Healthcare, and then ultimately in 2020 Advocate sold that region to Carl Health, which is how I joined Carle Health System to become a member of the executive team at Carl Health. So long long career in healthcare and healthcare finance in particular. As far as Carle Health goes, we are currently a $5 billion health system really centered around Central Illinois, vertically integrated. We have a health plan that we're in the process of sunsetting this year actually. But we have eight hospitals, about 1600 providers, and our hospitals range from small critical access hospitals to a level one trauma center in Champaign Urbana at Carl Foundation Hospital, our kind of our flagship hospital for the organization and really where the organization started to begin with. We've grown over the past years, like I said, through mergers and Acquisitions and really that acquisition of the central region, what we call the central region in Bloomington Normal now from Advocate Healthcare and then in 2023 we acquired three hospitals and providers in the Peoria market from UnityPoint Health out of Iowa. So over time have grown and seen a lot of good growth across the organization over the past five years.
- [03:10]
B
Yeah, fantastic. And I understand given all the mergers and acquisitions and consolidation Healthcare you do have to catch yourself every now and then when you're naming specific hospitals or health systems. But $5 billion health system headquartered in central Illinois been involved in a few m and as recently in recent years as well, ton of growth. And to your point, maybe it's something we might touch on later, the decision around the sun setting that health plan. But Aaron, pleasure to have you on. Excited to dive in. I think if you could narrow it down to two or three trends that you're paying closest attention to today and the role you obviously sit in, a unique role in terms of SVP of financial operations and supply chain. What are the two or three trends that you're paying closest attention to today and why?
- [03:53]
C
Yeah, so really probably my top two are just the unending pressure on revenue across health systems across the country and then really the potential of AI and automation. And I'll go into a little bit of depth on both of those. So in terms of revenue pressure, you know, we continue to see payer policies and denial trends that really outpace growth as an organization and create tremendous challenges on our organization. You really see some of the payer policy changes that have happened over time, although some are getting postponed. And so I'll use a couple of examples. Many in the industry would know that one large MA payer has recently announced that beginning November 15, although it's been delayed until January 1 now of 2026, that they will no longer potentially deny inpatient status for a Medicare Advantage patient, but ultimately after billing may look at the severity of illness and unilaterally downgrade payment for that level of care to an observation like rate. And so just some of those types of payer policies and practices just continuing to put pressure on overall financial performance of organizations and then add to that really the growth of denials that we've seen across both commercial Medicare Advantage and Medicaid MCO payers throughout the industry. We see just tremendous growth year over year in denial activity. While we have tremendous success in overturning denials, I would say well over 95% of our denials were able to ultimately overturn. It just adds cost to the process and adds resources in order to collect the cash that we are ultimately due for the services that we provided. So payer policies denials is a significant trend that we're obviously paying attention to. One big beautiful bill act and what's going to come down the pipe now with the implementation of that act as we get closer and closer to 2027 when we really start to see some of the impacts. Now on positive note, we have a little bit of Runway to create and implement plans before some of that takes effect. But at the same time sometimes that Runway creates some complacency amongst others throughout organizations where other priorities may come up that we don't necessarily have the focus that we need to in order to take the steps that we need to make sure that we're sustainable beyond 2027. And then last but not least, I would probably say other regulatory concerns in the payment pressure space. So thinking about you know, kind of the, the basis of the government shutdown over the past several weeks and you know, the meaning that you know, but really the focus on continuing or wanting to extend those enhanced ACA subsidies and not knowing what's going to happen now in 2026 with that ACA covered lives throughout the, throughout this, throughout the country and whether or not more folks will end up uninsured as well as you know, potential for site neutral payment policies and other other impacts from a regulatory standpoint. So those are probably the top issues in the revenue pressure segment that I would really think about. At the same time, you know, focused on our revenue cycle processes and other processes throughout Carle, the potential of artificial intelligence and automation throughout all different mechanisms within healthcare. So Carle Health has really taken somewhat of a conservative approach to artificial intelligence. We've piloted and implemented a handful of AI tools through ambient listening and we're exploring some AI computer assisted coding now and other other applications but really wanting to have proof of concept before we enter into those spaces in the artificial intelligence space. At the same time we've been I would say maybe not early adopters but fairly early adopters in the space of automation, especially in the revenue cycle space. And so we have a vendor partner that we've partnered with for about five years now to create automation and robotic process automation bots, bot technology to really enhance our team members workflows and supplement their work. Whether that's through you know, prior authorizations, automation of prior authorizations, automation of pre registration work claim statusing. We're in the process right now of really focusing on documentation request responses in terms of denials for Documentation requests. So automating that whole process through robotic process automation. And so again we're not, we're not looking to replace staff, but really expand their bandwidth. Just knowing that the growth and denials that we've seen across the industry, we can't continue to add staff, we need to really add technology to supplement their work and expand their bandwidth on a daily basis. And so trying to take some of that nominal tasks out of their hands and allow them to really leverage their critical thinking skills to focus on more upstream processes and focused on collecting cash overall. So I would say those are probably the two biggest trends that I'm focused on right now. So I'll leave it at that, I guess.
- [09:03]
B
Yeah, no, I mean really appreciate the level of specificity and insight across the board in terms of that revenue pressure. It's interesting. I think obviously you're doing quite a lot of health in terms of automation, potentially using some AI in specific areas like ambient listening, like you said. But what I'm kind of more curious to hear a little bit more about is maybe specifically one bit deeper into to the revenue cycle and kind of areas that you're using automation, potential AI to enhance, protect your financial performance. I should say what I'm most curious about is payers have been using AI for quite some time and I feel like it's at a point now where providers are playing a little bit of catch up with these new tools, these new kind of abilities and processes in the revenue cycle. Where do you see this AI arms race, for lack of a better term, evolving between payers, between providers as tools get more sophisticated? Like you said, denials are at an alarming rate recently for providers. But how do you see this kind of push pull dynamic evolving over the coming years? As these tools become more sophisticated, AI starts becoming more ingrained in the revenue cycle.
- [10:17]
C
So to your point, I do really think it's an arms race at this point and payers are definitely ahead of the game. I think they've had deeper pockets as larger or organizations compared to health systems where they could invest in AI technology to create some of these burdens on health systems. And so we're really in that catch up mode right now as an industry I believe, but I don't think we have a choice and so I think we have to leverage technology where we can. Again, I don't think we can add people resources necessarily, just generally speaking it seems like we have a limited candidate pool anytime we have open positions in the revenue cycle process. You know, we're always fighting for coders for follow up reps for people that want to really do difficult work. And so we really have to invest in technology to support them. At the same time, you know, I do think there's a place for just enhanced provider payer relationships and sharing of information and the burdens that are created. And how can we leverage partnerships with payers to really improve that overall relationship to potentially ward off some of those denials We've had some payers or new entrants in the payer space approach us as an organization and say really, you know, would you be willing to accept a lower contracted rate as an example that would A, eliminate all prior authorization requirements and B, eliminate any patient out of pocket cost. And so, you know, to a certain extent that's somewhat appealing depending on what the proposed rates are, if you eliminate some of that administrative burden as well as the patient out of pocket because at the end of the day then patients have a better experience and you're not chasing patient payments or patient responsibility. And so I think there will be unique models that come forward based on some of the pressures that you're seeing in the space. And it's just an, it'll be interesting to see how that evolves, evolves over the next handful of years to really see, you know, again how employers deal with this as well as just healthcare systems because it is becoming more and more challenging every day.
- [12:29]
B
Yeah, no, fascinating to kind of get your perspective and to your point, interesting to see where we are, I guess 18 months, 24 months down the line as we do kind of move more and more down this AI assisted coding, rev cycle automation and kind of what, what the payers might do in response. But challenges we've talked about quite there in terms of the revenue pressure across the board. Aaron, on the other side of the coin, when you think about Carl health future of healthcare in your market for your health system, what are you most excited about right now?
- [13:01]
C
Yeah, that's a great question. I think I could almost flip much of what we just talked about into things that I'm excited about. And it's, you know, the overall direction of the healthcare market is somewhat challenging. Right. But at the same time there's unending possibilities and challenges that are presented every day that gives us an opportunity to find new solutions and it ultimately becomes in my mind professionally rewarding to really look and seek those solutions for, for our greatest challenges every day. You know, given my roles and responsibilities across the organization, I get to operate in the space of revenue cycle in finance, operations and supply chain. And a number of different areas of the organization. And it's really kind of exciting to be able to contribute to a large organization and find again, solutions to some of these most challenging problems. We've spent a lot of time over the past year, year and a half, really kind of experimenting with new solutions, and sometimes those solutions don't succeed and we have to change course or call an audible and, and call a new play. But ultimately it is, again, professionally rewarding. I would also say one of the things that I'm excited about, although it just gives us opportunity, is health systems and hospitals in particular, were really the hero during the pandemic. And based on some media coverage today, we've somewhat become the villain. And that's up to us to really find ways to make healthcare more affordable and more accessible for patients and create higher value for patients so they don't necessarily see as a burden on them. And so it's really, I think, imperative for us, as finance leaders, as well as all leaders throughout the health system, to recognize that financial burden on patients and how, again, can we find solutions to really focus on patient access and affordability? And that really starts putting my finance operations hat on. That really starts from a perspective of how do we create the most efficient and effective health system so that we can lower costs over. Over time and hopefully contribute better value to patients as they seek care. So I think just again, that overall healthcare market, as challenging as it may be, that also creates an opportunity for professional growth and development. And I find that really exciting.
- [15:15]
B
Yeah, yeah. Which ties directly into the last question I have for you, Aaron. I think you've talked quite a bit at the start of the podcast in terms of recent growth at Carol Health. A number of acquisitions, I believe. Three hospital provider organizations in 2023, expanding some services across the. When you look ahead the next 12 months or so, what are the key areas that Carol Health is really looking to hone in on and grow?
- [15:41]
C
Yeah, that. Another great question. And so to your point, we've grown through acquisition considerably over the past five years and have spent really those five years focused on integration and system conversion and implementing Epic in those. In those hospitals and physician practices, etc. And so now, this year, we've really started to turn our focus and attention toward operating more like a system and really kind of driving, again, value across the organization. And we've now really started again to shift our focus to greater operational efficiencies, given the fact that the market that I came from in Bloomington Normal was part of Advocate Healthcare, which was a little Bit somewhat remote from central Illinois and the Peoria market was acquired from Unity Point Health out of Iowa. So again somewhat geographically removed from the broader Unity Point system. Now that those markets have joined Carle Health, we do have a little bit tighter geographic reach and so we have an opportunity to really leverage providers and even staff across our regions while also really focusing on minimizing duplication of some high end services where you know, we may have in those markets had to have those services because of how far geographically removed they were from, from kind of partner hospitals. We have an ability now to really focus on kind of leveraging our systemness and not necessarily duplicating some of those higher end services and really maintaining system intra system referrals. So again our focus now is system maturation and driving modernization throughout the system. And again then I think coupled with that, how do we invest in technology and capabilities that enhance access and really meet patients where they are to provide the services that they need. So you know, we want to take advantage of scale where we can in things like revenue cycle functions or IT infrastructure. But we ultimately realize that you know, care is local and we need to be able to provide the services in the local communities that need to be there. But again for some of those higher end services we may have, we may be looking to have one focal point for a high end surgeon as one example or a high end service that we don't have to replicate in multiple markets. And so really that's the work that we're undertaking now. And it's really exciting to think about how we can really focus on growth and meeting the patient population where they, where they are.
- [18:16]
B
Last question I have for you as it relates to that. Just kind of interested to kind of see the, the M and A standpoint of Carl Health recently. Kind of how you're looking at growth in the future in the last couple quarters, the last couple years we've seen not necessarily in Illinois. Well, when we think about advocate health 5 state massive health system now we think about some of these mergers that have taken place on the east Coast. For example, I think Northwell Health and Nuvents Health in New York and Connecticut, I think about Sanford, Sanford Health and Marshfield Clinic. A few of these mergers that are moving across state lines. Is that something potentially Carol Health would ever take a look at or very, very focused at the local market like you'd said. And then I guess central to that on a national basis, do you see more of these mega mergers taking place multi regional health systems across the board? Any kind of insight. I'd love to just kind of get your take on that.
- [19:11]
C
So I, I really think, you know, Carl Health is really focused on serving the Illinois community and I don't, I don't foresee us necessarily looking to grow beyond the state of Illinois. We really want to control our own destiny as an organization and again, really focus on the communities in the state of Illinois that we serve from, from the east border of Dan, you know, in the town of Danville, all the way over to Peoria and beyond. We also, you know, have a hospital down in Olney, Illinois and Southern Illinois. And so again, we may look for growth within the state, but I don't foresee us growing beyond the state of Illinois. At the same time, I do see, you know, potentially larger mergers, multi state mergers continuing to happen. To your point, Advocate Atrium Sanford and some of those other systems that continue to grow. I think there is opportunity there from, you know, corporate overhead departments like revenue cycle efficiency and supply chain efficiency, et cetera. I just don't believe that's a tactic or a strategy that Carl has a desire to go down that path at this time. And so it will be interesting to see where the market goes because I think there's people in the healthcare industry that see positives related to growth on a large scale like that, but then there's others in the media and other areas that may not necessarily be as appreciative of some of that growth. And so, you know, consolidation isn't always a great thing from a market standpoint. So it'll be interesting to see where the market goes overall.
- [20:42]
B
Yeah, no, absolutely, I think, very interesting. Just to get your perspective, your take on that as from Carol Health's perspective, just more broadly as we kind of see consolidation start to tick up over recent quarters. Aaron, a real pleasure to have you in the podcast. I certainly learned a lot. No doubt a lot of our revenue cycle listeners will have as well. Thank you so much for taking the time out of your busy schedule. We really, really appreciate it and look forward to connecting with you again down the thank you Alan.
- [21:07]
C
I appreciate it.
- [21:10]
A
At athenahealth, we know your ambulatory practice wants healthier a healthier business, healthier care teams and healthier patients. But the complexities of modern healthcare tech make it hard for you and your care teams to focus on what matters most. That's where athenahealth can help our AI native all in one solutions. Reduce administrative burdens, streamline billing and payments, and deliver critical insights when clinicians need it most. That means fewer clicks, more time for patients and stronger bottom lines. Practicing medicine is complex, but running a practice can be that much simpler with Athenahealth. See how simpler is healthier@athenahealth.com.