This healthcare leader has weathered some drastic financial storms, only to help HSS come through the challenges stronger.
Stacey Malakoff, chief financial officer for the Hospital for Special Surgery—a New York City–based healthcare provider with close to $2 billion in total revenue—wasn't planning to dedicate her career to healthcare finance, she aspired to work on Wall Street, but following the crash of 1987, life took her in a different direction—something she says she feels grateful for.
"I'm in my 32nd year with the Hospital for Special Surgery, I've been CFO for about 25 of them, and it's a phenomenal place," Malakoff says. "My job has changed every day for the last 32 years, but we don't vary from our mission. The purpose of this place is to get people back to doing what they love better and pain-free."
Malakoff recently connected with HealthLeaders to discuss how she has managed the facility's financial health over the last three decades, and where she hopes to take the organization in the future.
HealthLeaders: Over the time that you've been with the organization, you must have seen peaks and valleys of great financial success and also great financial stress. How has the organization managed those peaks and valleys?
Stacey Malakoff: When I started here in1990, we had somewhere around $90 million in revenue. Imagine a hospital in 1990 with just $90 million in revenue, eight operating rooms, and about 25 orthopedists on staff. New York State was in a regulated environment in the '90s and so the hospital didn't have a strong balance sheet. It was basically breaking even to losing money. The state helped you along, but when deregulation occurred in 1998, HSS simultaneously went through a growth period. [And] we started to see a financially stronger HSS, especially over the last 15 years.
HL: How did the pandemic impact HSS financially?
Malakoff: Financially, the impact was much bigger for us than it was medically because we had doctors treating COVID-19 patients. So, you are taking a hospital that was running at over 100% capacity, and you completely shut it down. We also kept everyone on our payroll, and there were no furloughs or layoffs. But our capacity dropped to about 5% because we could only do emergency cases and we basically turned into a med-surg hospital and had to train our staff to become med-surg. We spent a week doing that, which was expensive.
Looking at things from a financial perspective, you're trying to figure out where the cash is coming from, the insurance carriers [are] still paying receivables, and making sure we have lines of credit and cash coming in to support the institution. It's stressful to figure out how to keep going financially, but we're lucky to have a strong balance sheet. But watching that cash get depleted, you've got to figure out how to start back up. We're figuring out how to move HSS forward.
HL: What strategies are in place to move HSS forward?
Malakoff: We plan on having a positive margin this year—we'll miss our budget—but we'll be profitable—somewhere between a 1% and a 1.5% margin before anything in the market. That's just operations. So, we're preparing HSS with strong leadership and strong financials moving forward in challenging times. We're taking a proactive approach to evolving our care delivery system to be more flexible and cost-effective, while never, ever-changing our outcomes or quality, or our patient experience.
We were dealing with supply chain disruptions. Material shortages, and transportation issues during COVID. So, this year we opened a warehouse and we're now keeping materials in storage. We can't wait six to eight weeks for critical supplies, so now when we do have a shortage, we're able to pull items for our warehouse. We also work closely with our physicians and senior leaders when there's a shortage to quickly develop alternative vendor and product options.
We want to continue to do the best we can to keep our A-plus rating. But we also want to make sure to get back to our strong financial foundation, which we had prior to COVID. We are undertaking plans to improve our revenue growth. We want to enable our current MD practices to grow and add more people and see more patients effectively.
We also need to look at our efficiency, and managing the shift to outpatient from inpatient capacity. Everything that we're looking at will ensure that we're reshaping for the future.
Amanda Schiavo is the Finance Editor for HealthLeaders.