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- [00:00]
A
This is Madeline Ashley with the Becker CFO and Revenue Cycle podcast. And I'm thrilled to be joined today by Rick Talento, CFO of Inova. Rick, thank you for joining me.
- [00:11]
B
Thank you, Madeline. I'm glad to be here with you today.
- [00:14]
A
Same. So, before we kick things off, would you mind sharing with our listeners a little bit about your background in healthcare and more about Inova?
- [00:22]
B
Sure. So in terms of my career, I started my career with Ernst and Young many, many years ago. I spent six years there, had a lot of experience with public companies as well as healthcare. And then ANOVA was one of my clients. And I had the opportunity to join Inova in my first stint with Anova, where I spent 10 years as the corporate controller. Upon leaving, I entered the private equity market for about four years where I went through a couple of large transactions. These were international in nature, so I had a great experience there. I then went to Ascension Health where I worked as a CFO for three plus years in the Washington D.C. hospital. And then I went back to inova back in 2013 where I was the head of finance for a number of our hospitals. And then in 2022, I became the CFO for all the Nova hospitals and service lines. And then In March of 2024, I became the interim CFO for the system. And then in November, I became the permanent cfo. And all good since then. In terms of Inova, we are located in Northern Virginia. We have five hospitals and a number of ambulatory networks with over 200 sites serving the greater Washington, D.C. area. Our 1,000-bed flagship hospital, Fairfax, is Northern Virginia's only Level 1 trauma center on Level 4 NICU and has been ranked the number one hospital in the Washington D.C. area by U.S. news & World Report for the last several years. We have a very strong market share in our region with over 2 million patient encounters. And we are the largest private employer in Greater Washington, D.C. with over 25,000 team members. And from a revenue perspective, we're projected to hit about $7 billion in total operating revenue in 2025.
- [01:55]
A
Amazing. I truly appreciate you sharing. That's kind of cool to hear how you sort of started at the beginning of your career at INOVA and then made your way back.
- [02:03]
B
Yes. Glad to be back. The work that we do here, it's all about taking care of patients and just being part of that venue and supporting and working with our caregivers is just an amazing experience that I would highly recommend to many others.
- [02:18]
A
Well, I'm excited to dive into a little bit more about the system today, but I want to kick off by just asking you across your time in healthcare and particularly right now as the industry continues to evolve, could you share with me maybe two to three trends that you're keeping a close financial eye on and maybe why these trends are so important to you?
- [02:37]
B
Sure. Well, first of all, I'm sure like many other systems, the one big beautiful bill act that was passed in July of this year is a big focus for us. There are a number of regulatory changes that will have an adverse impact to us financially. The main four areas that are included there are a number of ACH changes starting with the subsidy reductions at the end of this year which will impact us starting next year. There's a Medicaid eligibility where there are going to be new work requirements and more frequent redeterminations that will start to impact us in 2027. Then there's a Medicaid provider tax reduction that will be kicking in reductions over the next several years starting in the fourth quarter of 2027. Then we have the Medicaid directed payment reduction that will basically get our payments down to the Medicare parity with Medicare and that will start to kick in around the beginning of 2028. As an organization, we began as an executive team planning early this year to proactively develop mitigation strategies in response to these regulatory impacts. We set up five different work streams but ultimately coming together around financial mitigation, care model, operations, legal and workforce. A number of these mitigation strategies are in the works. We expect to implement many of these strategies over the next couple years as some of the impacts from the legislation start to impact us. But we also have to keep in mind that these are not just those items that will impact us. We have to keep in mind that there is a 340 potential 340b reform site neutrality and then for us locally here in the D.C. area, the reduction in the federal workforce and services leaving the area also have will have an impact most likely on our growth patterns in the next several years. Another topic that's not new but in terms of that we're focusing on is the focus is around payer dynamics and related margin pressures. Most health systems continue to face mounting financial strain as operating costs continue to rise while payer reimbursement rates remain flat or are growing at a much lower rate. This spread is being further exacerbated by the continued higher administrative burden we face, including higher labor, vendor and technology costs and ensuring we are getting paid in accordance with our payer agreements. Fostering a much more collaborative relationship with our payers around improving processes such as denials, appeals, and especially peer authorizations. And the use of technology such as payer platforms where we can share data and have more timely information exchange. I believe this will ultimately lower the cost of healthcare and improve outcomes and experiences for our patients. We feel that the payer that can partner with systems around timely pre auths to get immediate care and use the proper technology will be the ultimate payer in the choice in our marketplace. So those are two of the main areas that we're focusing on. Obviously, the big beautiful bill is taking a lot of our time and we will feel the impacts of that over the next several years.
- [05:33]
A
I was curious if maybe you could share with me if this impacts you at all from the bill perspective. You know, the rural healthcare funding. Have you guys kind of done any looking into that and maybe in your Virginia area that you serve, if there will be any impacts there, if any of your hospitals would be under this?
- [05:54]
B
Well, right now none of our hospitals are role status. However, I believe that the, our, our hospital association in Virginia is working on understanding the bill and crafting some preprints now. So right now it's still to be determined, but most likely the impact to us will probably be not. Not that material for us.
- [06:13]
A
Yeah, you know, that's actually a lot of the CFOs that I've talked with. You know, there's a lot of unknowns kind of just keeping their eyes peeled and working with, you know, like you said, hospital associations just locally keeping an eye on that. So I was just curious. No, but I appreciate you sharing those trends there. Could you just kind of, in switching gears here, could you share with me maybe some of the things you're most excited about at INOVA right now and maybe even into 2026?
- [06:39]
B
Yeah. Great. Yes. I'm actually very proud of the way that INOVA is excelling across all of our key pillars of performance around our system priorities. Our first is around our people, which is our most important asset. You know, we're experiencing a record low turnover. Exceptional employee engagement scores and consistent recognition is a top place to work from a patient perspective. ANOVA maintains outstanding quality scores and all five of our hospitals are designated as magnet facilities. We were also recently honored as the Press Ganey Health System of the year for 2025, which we are most proud of in terms of our community. We are deeply committed to supporting the uninsured and underinsured populations throughout our region. We have over 30 InovaCare clinic sites and adding three more in 2025 with over 150,000 patient encounters in 2024. From a growth perspective, our top line revenue has increased nearly 70% over the past five years. Our expanding market share reflects a growing preference among patients for our services. We continue to invest significantly where our capital plans for the next five years calls for about a $5.5 billion spend, underscoring our long term commitment to the communities we are very privileged to serve. Now, in conjunction with those, those system priorities, we are meeting another area around our financial stewardship. We're meeting our financial targets and plan and again, the key thing there is to allow us to continue to invest in our people, training, technology, equipment and facilities. So that's an area that we're just very proud of here at anova.
- [08:09]
A
And you know, you kind of touched on the growth aspect there. But you know, how are you looking at growth and expansions over the next 12 to even 2 to 3 years? 12 months to 2 to 3 years?
- [08:21]
B
Yeah, good question. So as I mentioned, while we do enjoy a great demand for our home market, there's a lot more opportunity. And our strategy is to develop our product, AnovaCare, which is a patient centered and evidence based, end to end seamless system of care that is consistent clinically and experientially everywhere ANOVA operates. We also recognize in today's healthcare environment that strategy and financial stewardship is essential. We have to make strategic decisions on where and how we are going to prioritize growth. We have a clinical enterprise program strategy that intentionally targets the future direction, scope, size and geographical distribution of our clinical programs as vehicles for crafting anovaCare. In alignment with our clinical enterprise program portfolio, we are intentionally expanding programs and facilities throughout Northern Virginia, prioritizing inventory growth anchored by primary care, recruiting key providers to strengthen our care teams and elevating digital experience for our patients. And as you mentioned, we don't look at necessarily at 12 months. We look at the growth plans over a three year period. We have our business, business, our service lines that do business plans over three years that we look at annually. And again, our whole goal here is to have a, our strategy is really have a differentiated product care like NovaCare that will grow and retain a little base of patients and will be a value proposition to our payers as well. As I mentioned earlier, so that's how we look at growth. We're excited for the future. Obviously we have some headwinds in front of us, but we continue to look forward to grow over the next several years.
- [09:57]
A
And my Final question for you here. You know, as the industry continues to ebb and flow and we're and we're seeing changes and a lot of unknowns right now, could you share maybe some advice you might have for some incoming financial leaders in the industry? If you had to tell yourself one piece of advice when you were first starting in healthcare, what would you say?
- [10:16]
B
Well, thanks for that. Great question. I would look at it too from two perspectives. One is as a relatively new CFO myself, I found it very important to partner and be an active participant with our clinical enterprise, clinically and operationally. So that I am actually at the table asking questions, being a partner, challenging and so on and so forth. I think the second piece of advice that I would give folks, including myself, is developing and having a much stronger relationship with our information technology leadership team. As you know, in healthcare over the next couple of years we're going to see a lot of drop off in terms of retirements and so on, both providers and allied professionals and nurses. So technology is going to be a big piece of how we can combat reduced number of resources in our facilities. So I believe that as we employ technology that becomes more obsolete as we much quicker that being in a close relationship with your information technology team, whether you're looking at business applications or clinical applications, looking at the use cases for AI, generative AI, agentic AI and making sure that you wonder that we as a finance team understand the ROI that is being calculated and measured and that we're making the right investments I think is going to be key to the next several years in healthcare.
- [11:39]
A
Well, that's some great advice. I'm sure our listeners will take heed to. Rick, it's been such a pleasure getting to speak with you and learn more about the exciting things happening at inova and I'm so excited to connect with you again down the line. Thanks so much for being on.
- [11:53]
B
Thank you Madeline. I appreciate your time as well.