By Monica E. Oss, Chief Executive Officer, OPEN MINDS
What a difference a few months make. A just-released survey of health care chief financial officers (CFO)—How Health Care CFOs Can Adapt To Emerging Industry Conditions—found a considerable shift in CFO outlook from the first quarter to the end of the second quarter.
Earlier in the year, CFOs were focused on preparing for a year of growth—identifying internal issues like workforce, tech platforms, cybersecurity, and cost efficiencies as essential to make growth happen. Roll forward six months, and the CFO outlook has shifted. Now 84% are not as certain about growth due to changing external market factors. Those internal issues now seem less urgent.
What are the external factors that CFOs are most concerned about? Supply chain disruptions related to tariffs, drug pricing policy changes, changes in Medicaid rules, and regulatory changes around data and reporting top the list. For executives of organizations with inpatient services, prescription drugs and medical equipment/supplies account for about 20% of expenses—and a large share of these are imported. Potential new tariffs could increase costs by 15% or more and disrupt supplier relationships. And with the recent passage of the Congressional budget reconciliation bill, executives have increased concerns about serving a population that will be increasingly uninsured.
Another interesting concern from CFOs is that the investments that have been made are not having the anticipated impact. Of note, 78% reported engaging in M&A—but 50% have not seen the positive impact anticipated. Ninety-one percent are participating in strategic alliances, but only 34% are seeing the results anticipated. And 81% are reducing service offerings and trimming business lines, but only 50% have seen a positive impact on their margins from these activities.
We had a great example of how one CFO led the process of adjusting service offerings—and getting a positive financial return—in the recent case study, Improving Service Delivery While Cutting Costs: Lessons From Mainstay Life Services. Jodie Esper, CFO at Mainstay Life Services, shared how she led the process of restructuring their service offerings in a changing reimbursement landscape.
Based in Pittsburgh, Mainstay provides residential and support services for individuals with intellectual and developmental disabilities (I/DD), including autism. The $34 million organization operates 40 service locations with a staff of 400.
Ms. Esper shared the impact of recent shifts in their market. The State of Pennsylvania launched a plan for performance-based contracting for I/DD—with 71 mandated measures. This meant that the organization needed new approaches for delivering services in order to manage to those metrics and maximize performance-based compensation. Their service line restructuring plan included two redesign elements. First, the organization shifted its residential services from strictly overnight as well as shifting the staff in group homes to a model that uses remote support technologies. And secondly, Mainstay installed telehealth services in residential and community programs for real-time medical consultation to reduce unnecessary emergency room (ER) visits. As of 2025, five homes and 16 individuals are supported through the remote support model, generating $40,000 in monthly savings
To make this shift in service lines happen, Mainstay hired its own remote support professionals to monitor residents overnight, adopted a new electronic health record, and implemented a business intelligence (BI) platform. As a result, Mainstay now has no debt, over six months of reserves, and a growing portfolio of innovative services—including a financial services subsidiary.
Ms. Esper provided three recommendations for other executives to ensure success when shifting their service delivery models in response to more performance-based reimbursement. These recommendations included enhancing a metrics-based approach to management, aligning budgeting with strategy and performance requirements, and adopting a culture of accountability.
As provider organizations receive more revenue based on performance, executives need a metrics-based approach to decision-making. This means that managers need to be data fluent and capable of having the “tough conversations” with staff to improve performance. To facilitate this evolution, organizations need both a BI system and development of managers’ proficiency in interpreting the resulting data. To this end, Mainstay custom-built a leadership development curriculum and required all newly onboarded managers to complete an eight-week leadership series covering emotional intelligence, performance management, budgeting, and BI tools.
“We do leadership training with anybody who has been newly promoted or has been newly hired into a management position,” said Ms. Esper. “Any leader in our organization must go through this training. It’s a lot about teaching people how to handle performance issues and equipping them to be good managers and leaders. We make sure that we’ve provided them with those tools.”
To optimize organizational performance, Ms. Esper emphasized that leadership teams need to align their strategic planning process, their performance requirements, and their budgeting process. Strategy and performance requirements are most often integrated, but budgeting processes are sometimes out of sync. To achieve this, Mainstay built an organization-wide BI system, linked data transparency to funding and staffing decisions, monitored performance against benchmarks, and automated reports for agile governance.
“You can’t negotiate if you don’t know the cost of your services,” said Ms. Esper. “And most importantly, we know that funding will continue to change, and quality requirements will change. Everything will change. We know we need to be prepared for those changes.”
Last but not least, even with data-driven decision-making tools and alignment of budgeting with strategy, Ms. Esper emphasized that leaders need to create a culture of accountability. Managers need to not only understand the metrics and performance requirements of their organization and their teams but also own the responsibility for managing that performance. The Mainstay approach to accountability has been to reinforce managerial responsibility through regular operational performance reviews and monthly check-ins for underperforming programs.
“We want to continue to get better and make sure that we have the right information for our organization,” said Ms. Esper. “This is not a one-time investment. It truly becomes a continuous part of the way you manage your organization. It’s really about a culture of accountability. Once you’re monitoring daily operations, or you’re doing regular reviews, or you’re using the data to prioritize where you need to improve, it becomes for your organization the single source of truth.”
The changes to the health and human service system brought by changing national policy and the recent budget bill are going to drive more focus on performance and more value-based reimbursement. Executive teams will need to be prepared to make shifts in services and how they manage them. “It’s about organizational alignment,” said Ms. Esper. “For our organization, everything goes together. That’s how we’re truly successful at things like the technology initiatives and quality initiatives. Everything that we’re doing to strengthen our organization and our operations is all nicely working together and tied together, and we’re heavily invested in seeing this continue to be a success.”