← Becker’s Healthcare Podcast
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- [00:00]
A
This is Madeline Ashley with the Becker CFO and Revenue Cycle podcast. And I'm excited to be joined today by Nick Barcelona, CFO of WVU Medicine. Nick, it's great to have you back on the podcast.
- [00:13]
B
Thank you. And it's great to be here.
- [00:15]
A
So for our listeners who haven't tuned into our first podcast together, do you mind sharing just a little bit about your background and more about WVU Medicine?
- [00:24]
B
Sure. Happy to do so, Madeline. Thank you again. I'm Nick Barcelona, the system CFO for WVU Medicine. I am actually this month hitting my two year anniversary of being here in West Virginia. So very exciting. Prior to my time in West Virginia, I was the system CFO for Temple Health in Philadelphia. Prior to Philly, I spent more than 15 years at UPMC in a variety of different operational and financial leadership roles. And way back when I started my career actually at General Electric, first as an engineer and then moved into finance. So that's me, WVU Medicine. We are a growing regional health system predominantly based in West Virginia, but also have hospitals in Ohio, Pennsylvania and Maryland. We have started our own health Plan as of 2 1/2 or so years ago, Peak Health. And we are very focused on improving the health trajectory of West Virginians and all those beyond that we serve.
- [01:30]
A
Thank you so much for sharing your background there. So to kick us off, and you mentioned it right at the beginning, you are approaching your two year anniversary at WVU Medicine. I would love to hear maybe two to three defining moments or lessons learned that have helped shape your approach to leading the system's financial strategy.
- [01:49]
B
Yeah, well, this is a good question and sort of forces reflection and I think in, in today's environment and world, we often don't spend enough time on reflection. We're just so focused on fighting the fires of the day. So I actually really like this question and appreciate it. I think couple things I would say probably the most defining moment or the biggest Aha. Was just coming in and getting to experience the culture that Albert and the team at WVU Medicine have built. Right. You interview for a new role, you move there, maybe know some folks that are there or were there. And so you have a preconceived notion about what that culture is going to be like, but you don't really know often until you're sort of part of the team. And I think WVU Medicine and what we've built is really structured a little differently than some of the other places I've been where we have a lot of autonomy and authority at the local business Unit level. Yes, we have a corporate structure and we're very proud of how lean that corporate structure is. And we view that as part of our secret sauce. And we keep that corporate structure under 7.5%. And that makes up finance, HR, legal, IT and compliance. But you know, what we really do is we have a lot of autonomy and authority for those local business units and that allows us to recruit and retain great leaders at those business units. And it really requires us to recruit great leaders for those local levels in order for this structure to work. And so that was probably the biggest eye opening moment for me was to actually get here and just see how much, you know, we put in the hands of those local leaders. And I think that allows us again to have those strong and recruit and retain those strong leaders. It allows us to maintain very positive relationships in those communities and allows us to live up to our mission of investing in those, those communities. And maybe the second, you know, moment, if you will, that was a defining moment, was the first time we went through our strategic capital planning process. We do a five year strategic capital plan and it's, I would say, a little bit more robust and detailed than I've experienced in my career where we're going down to like individual, you know, capital line items for all of our entities. So whether that's the big ones, which I think happens everywhere, but even some of our smaller facilities, so like a grant memorial, you know, and we're talking about, you know, relatively smaller capital investments in the grand scheme of the system, but really important and large capital investments in the eyes of our stakeholders that live in those communities. And you know, I think that was a bit of an eye opening process for me. And I think it's a really good and healthy one that we have here. And I think from our biggest entity to our smallest entity, I think our operational leaders and CFOs really appreciate that attention to detail. And I think that's also allowed us to keep up with the rapid growth that we've gone through over the last three or four years. That attention to detail, that commitment and that accountability that we have at those individual business unit levels.
- [04:59]
A
Yeah, that's great to hear. And you know, over these nearly last two years of your time with, with the system, could you even share some steps you've taken to build resilience amid, I mean, and you kind of touched on this, some of the industry pressures we're seeing, labor supply costs, reimbursement rates, and even, you know, the unknowns of potential policy changes right now.
- [05:20]
B
Yeah, boy, that's. It seems to be a timely question. And I'll maybe answer this though, a little bit differently than you probably would expect. I mean, I, you know, I think, look, look at the Merriam Webster definition, right? Resilience is the ability to adapt well in the face of adversity, trauma, tragedy, threats or significant sources of stress. Boy, that's, that's a daunting task, right? Or a daunting thing to ask. And you know, I think what I would say is, yes, we have made a lot of investments, a lot of steps and are constantly focused building and maintaining that resilience. But I will also say resilience can be exhausting. And one of the things that I think we really need to be conscious of and this is something that we spend time thinking about and really trying to address in our organization. And it goes back to culture, but it's positive adaptation. It's not just about enduring or surviving all of those things that are listed there, right? Adversity, trauma, tragedy, threat, et cetera. But it's actually being able to thrive and maintain your well being in the face of all those challenges. And I answer it that way because I think the reality for those that have been in healthcare for some time is there is always something, always. If you go back to the great financial crisis and since then, I feel like every year, every other year, there's some big major thing that experience, you know, and most recently, of course, right, we have the pandemic and you know, and then we have financial stress and you have tariffs and now you have, you know, Fed funding. And I think the, the mistake that's often made is thinking that like you're just going to survive and then it's going to get back to normal. That never happens. Right? And I think you need to be prepared to build, you know, a positive, you know, reality for folks that this is adversity, this is challenging, but how do we adapt to it in a positive way and face that adversity and be realistic about the challenges and how we're going to navigate through them and that really, that's the job of your leadership, right? That is our job. I think you heard me maybe say this the last time we met, like, you know, all of the folks in the C suite, not just the CEO, part of our title is like you're the Chief Culture officer too, and you have to maintain that healthy culture and your team looks to you and they look to your reactions. And this is true of the CFO as well, right. You know, they look to how you're messaging the financial performance, how you're messaging the broader economic indicators, how you're messaging what's going on in Washington and others. And so, you know, it doesn't make it go away, but you know, you have to maintain focus on having a positive attitude. And that's something that I take very seriously as part of my role in the leadership team.
- [08:24]
A
Yeah, positive mindset is always an important skill to have and can sometimes get overlooked, especially when people get bogged down with ever changing situations in this industry. So those are some good insights there. I want to shift gears a little bit and talk to you about a growing trend. We're seeing non contiguous M and A. So for example, in early March we saw that, I believe it was early March actually Prime, which is in California, Prime Healthcare completed its acquisition of eight St. Louis, Missouri based Ascension Hospitals, but they were in Illinois. So this is where that non contiguous MA comes in. This being said, we are seeing more of it across other systems. Could you share maybe some of the primary factors that would compel maybe an organization, your organization, to pursue a merger acquisition like this? And do you expect to see more of these transactions occur in the future?
- [09:21]
B
And certainly one that we spend a lot of time thinking about. Right. We've grown dramatically. We've nearly tripled in size in the last call it four years from a revenue perspective north of 7 billion now and 25 hospitals. And so we've experienced quite a bit of M and A. Our MA has been contiguous from geographic market perspective. And so, you know, I think because of all of the external pressures that are out there, you're going to see an acceleration in M and A. I think that's the reality of what's happening. You're probably hearing and reading a lot about this related to the big beautiful bill and the potential implications to Medicaid funding and the number of hospitals that will close or systems that will come under significant financial stress because of that. And overall I agree with all of those statements. I think that's accurate. But specifically related to non contiguous ma, we're of the opinion and Albert Wright, our CEO, and Jessica Alsop, our General counsel, Chief Legal officer and Ben Gerber, our Chief Strategy Officer and CEO of our insurance company, Pete. The four of us spend an awful lot of time debating this topic because I think when you get into those times of great stress, more organizations are sort of raising their hands and asking for help or seeking out partners. Partners. And you know, that's certainly been true for folks talking to us as well. So you have to have your, you know, your strategy defined in your methods and metrics that you evaluate when answering or responding to those types of questions. You have to be aligned on that. I think we are of the opinion and you know, I don't want to speak for everyone, but I think Albert would agree that, you know, we don't see the value in these non contiguous M and A deals that you're seeing. Certainly for nonprofit healthcare mission oriented organizations like ours. Yes, there's scale, yes, there are other potential benefits that you bring to the table. But for us, we have a lot of pride and passion in our brand. We have a lot of appreciation and depth of support from our region from a geographic perspective and certainly in an environment of uncertainty related to Medicaid. And Medicaid, whether we like it or not, is a very local business. Right. Like you have to work very closely with your state or surrounding states that you are in and establish those relationships and work together because these are very challenging problems to solve and they're not going to be solved overnight. So for us, you know, I think for lack of a better way to say it, sort of the pros do not outweigh the cons, at least in our mind. And you know, you have to be careful. You don't eat your words. But from my perspective, I think we see a lot of value in contiguing growth and you know, contiguous geographic growth and expansion. But we're, we're not there on, on some of these non contiguous and you know, like everyone has a different lens that they look through. We respect that. But that's, that's kind of where we land on this.
- [12:27]
A
Yeah, no, I agree. It's different for every, every organization and it was just interesting to get your thoughts there and it'll also be interesting just to see how these types of transactions, you know, continue to occur and the trends we see kind of switching it back to WVU Medicine now almost, I think we're now halfway through the year. It's crazy to think that. But can you share maybe two to three top financial priorities you're thinking for the system through the rest of the year into, into next year?
- [12:56]
B
Yeah, well, we continue to invest in breadth and depth and so that's, you know, strategic capital investment and recruitment in our regions. So beyond sort of the central region and Morgantown area where I sit today, but you know, outside in areas, you know, such as Wheeling and Charleston and Martinsburg, Princeton, et cetera. So that's a core part of our strategy and a real focus for us in 2025, you know, we recently announced, you know, north of 460 million in strategic capital. None of it was in Morgantown. It was across all these different regions. So that investment and commitment to breadth and depth is a cor. Part of our strategy both in the short term and long term and certainly something we're focused on in 2025. You know, workforce continues to be, you know, part of. Your question about resiliency, I'm sure, was related to that. It continues to be a challenge, I think, for us and many others. You know, I think specific to that one, we've been very focused on our employee benefits and the benefit design and how we can manage that effectively for certainly first and foremost for our employees and their covered, but also from an expense growth perspective and having our integrated delivery network or IDN strategy with our insurance company peak and what we've done from a PBM perspective and some of the moves that we've made there are paying dividends. And I think that's another core part of our strategy, certainly for the rest of 25 and beyond and probably last but maybe not least, is sort of balance sheet simplification and fortification. Right. And so because we've grown so rapidly, we have a number of different entities that sort of, you know, everybody brings their baggage with them, so to speak. And you know, simplifying that has been a key part of our strategy. We priced the bond transaction actually last month. And so that's, you know, a continuation of that strategy. We hired and formed really a new sort of manager of debt management and dedicated treasury function. We brought in an outside FA and are really sort of focused on that simplification. And the reason for that. Right. Is to lead to the fortification. Because one of the things that I'll tell you, and I think if you're not thinking about it as a CFO right now, you should be. Is in the current environment, with all of the uncertainty around federal funding, making sure that you have the appropriate dry powder is a core part of your function. Right? That's part. When you think about the fiduciary responsibility of your board and your leadership, you gotta be having those conversations and we're certainly having them right now. That's a really an important part of what we're doing as an organization. Because, you know, I'm not saying anything, I think any. Anyone out there, including the CFOs or the bankers, would disagree with, but like, you know, you always want to seek additional capacity when you don't need it, and you never want to seek it when you do need it, right? That's when you end up paying a fortune for it. So that's. That's probably the third thing I'd say that we're really focused on right now.
- [16:03]
A
Know that. Busy but exciting time right now for WVU medicine. Again. Nick, it's always such a pleasure getting to speak with you, especially on healthcare trends that we're seeing right now as well. I truly appreciate you taking the time today and look forward to the next time we get to chat.
- [16:20]
B
Yeah. Thank you so much. And please have a happy and safe fourth of July.
- [16:25]
A
Yeah, you too. All right, thanks.
- [16:27]
B
Thanks. Take care.