Decoding Healthcare Finance: A Deep Dive with Dr. Cristian Leineck

Well, good afternoon, everybody. Kevin Stephenson here. Thanks for joining me on I don't care with doctor Kevin Stephenson. Boy today, you're you are in for a treat. I don't think I've ever had anybody who has the capability of playing, you know, like theme song for me. So so I've invited one of my good friends, doctor Christian Linick. Kristin is a professor at Texas State University in San Marcus, Texas. The former home of Ralph the swimming pig. That's right. Christian audio would go back a few years. He is currently the regent for South and Central Texas for the American College of Healthcare Executives. And so I'm a past president, and so Christian and I spent a lot of time together. And, but Kristen is a, an award winning educator He's an award winning researcher. He's just written a new book. And more importantly, I think is he is a world class Mandalin player. So Christian -- Oh. -- walked out of claim care. Yeah. And thank you for not calling it a ukulele. I appreciate Hey, I've been to Hawaii. I know what a Yooka laylee looks like. So there we go. So so Kristen had to get started with Amanda Lynn. I gotta know this. Alright. So, I guess I've been playing Mandel in for about twenty years. Okay. Only because it was a requirement by my, father-in-law, future father-in-law to marry his daughter. They have the family band. He was a banjo player in Fort Worth, and they everybody played an instrument, and they did not have a mandolin. So There you go. Yeah, kind of the Bill Monroe method where he they was the only one in the family not playing an instrument, and they needed a mandolin. So he ended up picking that one. So That's the same thing here. Yeah. So Yeah. I was gonna say, it wasn't a bagpipe. Well, I was gonna say thank goodness it it only has four strings and I picked it up. It wasn't, wasn't it, as difficult as a guitar as so. Yeah. Yeah. Absolutely. Thank you for having me. This is gonna be fun. It's gonna be a lot of Hey, Tom, Adi. It's a little bit about you. Well, yeah. I've been teaching for I'm going on, fourteen or fifteen years full time down in San Marcus. And, of course, we have our Round Rock campus as well. A lot of remote stuff still going on, to prior to teaching in, the grad and undergrad programs and health administration, I was in field. Was a practitioner. I got into health administration. I like to say because the army told me to. I was, rotc undergrad, and I branched medical service corps. I filled out a form when we got to pick what branches we'd like to go or whatever. And I did put MSC first, but I also told them that I was a licensed, EMT. And I've been working on the ambulance for several years through high school. And then I actually held that job and ran a truck in Cincinnati with, a colleague of mine, also at school with me, and he was a paramedic. So we got to run an ALS truck, to get I did a lot of driving. He was in the back a lot. And so I got Branch Medical Service, and, that's the health administration wing, arm of army. And so, I ran, field evacuation unit, in the third armored calf, which is now at Ford Hood, but it was at Fort Carson back then. Patient EVAC for two years. And then what really got me into outpatient ambulatory care was the last two years, was in, I was the, executive officer of the dental clinics at Fort Carson, Colorado. And so all outpatient outpatient oral surgery, clinic embedded in the hospital. Was it a lot of hospital administration, a lot of hospital leadership meetings, but I worked for the the army dentist, which was a whole other, world taking care of, beneficiaries, dependents, obviously active duty, soldier readiness, deployability, and everything in between. And really got that outpatient, you know, got the bug, loved it. I ended up doing a hospital internship when I was wrapping up my MHA at Texas State, after I got out of the military, and I enjoyed it a good semester, but I knew I wanted to be outpatient again. And ever since I've been, working, ran the the business office, the accounts receivable, accounts payable department at Austin Radiological Association, for several years. And my kind of claim to fame is I ran a phosiatry group practice, pain management, world headquartered in, south in with tons of outpatient, satellite clinics all over. And we opened up a surgery suite on medical parkway, which was really fun. To do as well. So, yeah. That's very cool. So that's how I got to do it. Yeah. Very cool. So at Texas state, what do you teach? So I teach, two classes chronically, regularly. Every fall and spring and some summers, I teach financial accounting, and then, health care marketing. Okay. And I usually do been teaching the, MHA mark getting class as well. But with some summers off and some, you know, just work in fall and spring, I usually just do undergrad courses now. And then I teach financial management for a lot of universities on the side as an adjunct side hustle as well. Yeah. Very cool. Well, let's put this way. One of those, I know a lot about because I got my starting health care on the marketing business development side. The other one, and and even when I was going through undergrad in my MBA program, I tried to take as little finance as possible. I'm not gonna lie. You know, and and I tell people readily. I mean, finance is probably my weakest area. I finally finally started picking up some of it. I learned how to to add tract, which in health care is pretty, you know, important. But, you know, that that's something that that I find a lot of people in health care yeah, finance tends to be kind of a deficit because, you know, I mean, we're a very relational industry. And and there's so much, you know, If you're not a clinician, you know, you're kind of a relational person. You know, we got that subset of CFOs VP of finance guys that You know, I I my eyes kinda glaze over or used to. But but so so talk to me a little bit about how do you engage you know, because you're kinda left brain, right brain with what you teach. So how do you engage your students in that regard? Absolutely. And I and I do think that's what makes those two courses, really intriguing for me. I enjoy the the mix of the marketing and the and the accounting with the with the students So, and this is one of the main reasons why I wanted to, to do this interview with you, Kevin, because I've seen over all this over a decade of grad and undergrad, that financial accounting, is vital. It's like Spanish one or French one. And then financial management is Spanish or French too. Right? And what we've what we see and you go look at a lot of programs out there is for the master, the graduate level, we say, oh, yeah, go take an accounting class somewhere. It doesn't have to be healthcare I know you said it'd be an accounting pre req, and then you start in financial management. And, what what I'm seeing and what I do a lot of work with is leveling of that financial accounting because if you can't do if you can't speak get through Spanish one, How are you gonna survive in first? Right. Well, and and and let me also preface this by saying, you know, I'm not a complete moron on the finance side. But when I got it, You know, I mean, I'm a complete moron and plenty of things, but finance may not be one of. But but whenever I entered health care because I was in another industry for four years before I got into health care. It, I mean, made no sense. I mean, help your finance just doesn't make any sense because, you know, whenever you start looking at, you know, you your your top payer is your is your top customer And, you know, you start discounting services and all of the stuff. You know, I I try to talk to people who are not in health care who get frustrated with having to deal with us. And I said, well, trust me. There's plenty of frustration inside. So Yeah. If I if I were to pick up my business school, colleagues right now, you know, if if you don't have the money, it ain't gonna happen. Right. You don't get you don't get the widget you're trying to buy or whatever. We are very different in health care. We have a lot of, different types of concessions or write offs that we have and going to the statements, the financial statements. It is it is different. Of course, follow GAAP We, you know, do all the regular accounting stuff, but, it it is gonna look different. Even to where you compare a not for profit organization to a four You know you're looking at a balance sheet, you know, you're looking at a statement of operations, but they're not exact they're not matching apples to apples on a lot of fronts. And What a great example, you know, we saw FASB, kicked out some of the most aggressive changes to the statement of operation or the income statement or whatever you wanna call it. Revenue over expenses in around twenty eighteen. And, of course, COVID stalled a lot of that in implementation and challenges, etcetera, but Now we're looking at these organizations, especially the hospitals that are looking at implicit price concessions. So, of what's hitting somebody's high deductible? What's the estimated based on historical data, uncollectible of high deductibles that's that's owed to the organization. What what is that implicit price concession? And that's another deduction from net revenue. So you've got gross, and you've got your other, you know, you've got your contractual adjustments with managed care. You've got, you know, the, the discount for managed care payer third party. And then you have your explicit price concession, you know, your explicits and in your charity care, that gives you your net. Well, now we're doing even after net, we're doing more deductions based on guestimated write offs, from what's owed to the hospital, but may not be fully collectible because it's hitting a personal balance it's been balance shifted over to the consumer for, especially those high deductible plans, which, you know, a lot of a lot of folks go to those high deductible plans because it gets them the lowest monthly premium. And if you're not if you're not budgeting for that line item on a monthly budget and you need health insurance, you go get the lowest monthly premium, and that's a high deductible. And so when you do enter the system, that there's gonna be a lot of out of pocket that's gonna hit that hospital or health health care organization and MBA to it. And that's where we're seeing now to get that full net realizable value of what's what's gonna probably be collected. You've got that additional implicit price concession, which is really hard to implement. You've got a good data in the past. On who's paid what and from what level of deductible, everything in between. Yeah. Well, you know, I mean, you know, I go back Well, thirty four years of doing this, but early on in my career, you know, was was very, very early day managed care. And, I was over the rehab departments at a very large hospital in Fort Worth, and and we're looking to do some contracting with some managed care organizations. And They said, well, you know, what what what should we charge? And I said, well, what is what does it cost us? Well, I don't know. And and so, seriously. I mean, so I literally am going through, you know, billing statements and trying to pull out cost manually because I'm old enough. We didn't have a lot of computers power back there. It's, you know, we just and help here, you know, it it's a real it's a real issue for us because even to this day, it's difficult to identify cost. We we we are I'll just say it. We are pretty lousy at knowing our costs. Yeah. Our true full cost. If you're gonna get the proportion of the providers, malpractice coverage for that day, for that type of per that acuity level, you know, if you're gonna go square footage of the utilities for that segment of the day for the OR or whatever, if these cost accounting systems have come a long way, your right computer software in the world. We're constantly trying to figure out what that is. And that's the other thing. Your, your charge should be based on your cost. And so that's where we get a lot of trouble. Plus, we are allowed a little cushion for a profit buffer on that. But if you don't know what you're your total cost is for any one procedure. Even at certain acuity levels, that's that's gonna be a challenge. That's what it's gonna be hard to Well, and again, going back to what I said earlier, the frustration that patients have. Yeah. Whenever they get their bill, they see that, they're like, why doesn't aspirin cost me fifty dollars or, yeah, whatever? Yeah, and you start trying to explain to people, hey, you know, yeah, we're a x billion dollar growing concern. But once you take all of our write offs down, you know, we're collecting twenty percent on the dollar. And so then we started looking at our costs and now implicit costs and everything else. And so, you know, just trying to break even. Is is certainly a challenge that that many hospitals and systems are facing right now. And and I mean, that speaks to the number of hospital closures that that we've had over the last decade or so. And we're seeing a lot of that in Texas. Yeah. In the and we we push it one level further here. Is that pay for performance, right, and the, and the recoups for readmits and other things, the the, reduction. So, you know, what Medicare does. And I I we can feel it. It's it's rejuvenating post school. A lot of that was stalled during COVID. Right. We we put the brakes on it. We just get through the pandemic. And then now we're seeing it slowly start ramping up again with a lot of that pay for performance and everything. Well, what Medicare does, everybody else is watching. And so if your commercial payers start catching, you know, the win that, this is this is, a shape, a savings to Medicare. And, apparently, they're getting better outcomes from it or other things. They're getting tired. Commercial payers are getting tired of being cost shifted to because our government payers usually are reimbursing at or historically below cost a lot of times. And that difference is being made up by those commercial payers paying well above cost. And they're getting tired of it. So it'll be interesting to see what happens with it. Yeah. But Christian, you know, I mean, particularly over the last few years with all of the with all the acquisitions by managed care organizations of physician practices, and and I spent a little time in that world before before I got back into the hospital side. You know, that that is I'm just gonna say it gets to be a little a little gray. Because, you know, with a medical loss ratio that that managed care organizations have, you know, there are limits to their profit, but you know, if you have a provider, there are no limits. And so, you know, you got an organization who who's the payer, but they're also the providers. So guess where they're shifting cost to. And and so and unfortunately now we've seen, you know, post pandemic. We've seen, you know, the the managed care organizations, you know, shifting those those revenues away from hospitals and away from other providers that they don't control. So, you know, it's really frustrating. You know, somebody of my, of our physicians and you know, other hospital operators, friends of mine. Yeah. Everybody's like, well, the people that are doing the work, you know, aren't seeing the funds the funds are going to the people who are pushing the papers. Yeah. I I also and there's two points I I wanna make. And I saw this from, even, you know, decade back or longer. When I was in the field, there's there's two main things, especially practice administrators have to constantly be looking at and do regularly, and that's check your charge master because you need to know and make sure, because those managed care companies are not crazy. They say the allowed amount or the lesser billed charge. Well, you under bill, you bill lower than the allowed amount. They'll pay you what you ask for it. Not crazy. Right? And they're they're ed they're, edits and everything are all programmed to take care of that. A human probably doesn't even see it. Right? And then the other thing is negotiating those contracts every year going in and negotiating those contracts. If you're hot stuff, if you've got good out you know, decent outcomes. You're one of the only specials specialists in that zip code or you're competitive in one way or another geographically. That's a lot of leverage that needs to, you know, needs to be pushed at those meetings, to ensure, because you gotta you do. It goes back to financial accounting. You gotta keep the statements looking good. You gotta keep the lights on a four or not for profit hospital in the community that has to put chains on the doors because they can't keep the lights on. It doesn't help anybody. It doesn't help anybody. And that is that has been happening. We've seen that. That's been happening back when I was running physician groups before jumping to the dark side of teaching. So You gotta keep the lights on. It'd be surprised too. Some of my, for a lot of the professional organizations, I do continuing it for some other things, some sessions I do for my book online. A lot of my attendees participants our clinicians, docs, providers. And it's interesting. You know, they'll I mean, I I could tell all the all these stories of, you know, like the the doc I worked for who thought debit and credit meant exactly what happened to your checking account or your debit card when you got paid, it's a credit, we thought it applied to all the accounts. Right? And so he's like, yeah, I I got I got pretty much exactly half of all the problems in my business. Accounting class wrong. I said, well, you should because that's not correct. That's not how that works. And it's, you know, they they tell me all the time. I go to these meetings. I go board meetings. They pass out the financials. I've I really don't know if this is good or bad, what I'm looking at. I listen to the reports And then we move on and and I'm more interested in the clinical side of things, but they do. They they need to know, and they're more interested these days in knowing what are what is that balance sheet trending, directionality wise. Is this good or is this bad? Some accounts, we don't want to trend up or down. We just want them to hold a stagnant you know, hold the gains. And so, a lot of providers, especially I did this one at, in South Florida back in December, and I literally had a table full of doctors lean over and look at the the CFO's table who was working the case. We're doing a whole workshop all day. And they was just like, thank you. Thank you for what you're doing. We didn't realize how detailed this was You saw you were in your office up, well, you know, your glass tower counting beans all day and your Excel spreadsheet. This is this is amazing. And now that we have a little insight into what you're doing, thank you. And at that point, I was like, I think I pretty much can retire. Yeah. Yeah. You're you're good. Yeah. You're good. And maybe y'all go to go to the surgeries and and, sit in on some of those doc surgeries and learn what they're doing next. Sure. Right? Yeah. Something like that. Well, hey, let's talk a little bit about about your book. Health care financial accounting guide for leaders. Talk a little bit about that. You know, what's you know, some of the some of the primary topics in that. And and I know you're doing a lecture series around that too. Let's let's get into that a little bit. Yeah. Absolutely. So, you know, if you wanna learn to, if we're gonna learn a topic, a subject very well, if you wanna, get very well competent in something, teach it. Because it's a force you, to learn the insides and outs. Now I've obviously survived several accounting and finance courses in school, but in teaching it, at the grad and undergrad level, it's different. You get all the good questions and, you know, and so I did that. And, basically, what I did was I took a lot of difficult content, a lot of challenges that I had and I dumped it down to my level. And so that book is kind of my tips, tricks of the trade. For financial accounting. So we're talking about today backwards, right? So the financial statements backwards. No decision making in counting. We're just basically documenting the history of the organization, the using a dollar sign backwards. And tying it all tying all the statements together because they do talk to each other. And a lot of a lot of individuals don't realize a lot of leaders don't realize that you know, what happens on the balance sheet affects the statement of operations, affects the statement of net assets, and they're all talking. And so if you change one thing, it's gonna affect something else down the road. And that may be good. It may be bad. We're we're doing a lot of exercises in these workshops. I gotta project growth rate exercise, because we're doing that now in the field where we've got a lot of areas of hospitals, HR, payroll, others that are that are really struggling. Crisis with staffing and other where are we gonna make this up? Right? All traveling nurses That's not something we've always budgeted for. So this extra expense, where is that coming from? Do we? Are we pulling on increasing liabilities? Are we tapping into equity? Where where is this coming from and and what's that gonna do to us? So, a lot of those current day challenges is what we do when we plug it into workshops. And on, on my, you know, my traveling roadshow, I like to call it, I actually ask the organization for their whatever most recent financials they can provide me. And if they're not for profit, I'll just go get it off the internet. And I'll actually build the case around their financial statements. So I'll do a hypothetical, like, you know, payroll problems or, you know, shortfall in one area or another. And then we've gotta do that growth rate exercise to make up for any gaps or shortfalls. And where is that gonna come from and and what is it gonna do? And it's interesting. You'll you'll see different departments, because, you know, everybody clutters all together with who they know at the workshop. And you'll see them say, woah, wait. That's gonna Now you're in my world. Now you're affecting my box. Tell me on a second. And so it's it's a really fun, exercise, and it gets them get some moving and, we've had really great success with it. Yeah. Well, I mean, you you touched upon something that we we deal with every day. And, and, of course, the the contract labor issue. As you said, it's something that, you know, we didn't budget for, you know, a few years ago. And so how do you make that up? And so That's when, you know, we're looking at, you know, we're we're we kind of cross over into your other realm in the marketing and business development. Alright. What you know, what in our market makes sense. You know, where are there gaps, in services that we can go and and maybe fill? You know, and then, okay, you start looking at that. Well, then we've gotta start possibly recruiting new, physicians. Well, we're gonna have to recruit new nurse. And and it's Yeah. And you're right. Everything is so intertwined, and and sometimes clinicians, particularly physicians don't see how their request for one, piece of equipment totally affects everything. Oh, yeah. And not just that too, but it's it's kind of I like to call it group therapy when we start hearing the the violins playing at the workshops and stuff. It's not just big capital purchases. It's supplies. I like to talk about and use band aids. You know, when you have a physician group that's been acquired, by a large hospital system, but people in hospitals here. Where these are these are our entrepreneurs running a proprietary, the business owner, now an employee. And, they need a Band Aid because they're out. And you hand them a form and say, or fill this out. And your Band Aid will be here in ninety days or whatever. That's not gonna work. These are folks who are used to running down to the drugstore and getting what they need immediately with the practice credit card or whatever. Like, make it happen. Right? And so, obviously, it's hypothetical there. But, that's where a lot of these challenges come in and and where are we gonna do? I just did a paper on, nursing burnout that's gonna hit the press pretty soon as well. Unfortunately, we didn't find anything new, new variables kinda contributing to the nurse burnout situation, but, they are very similar to what we had pre COVID enduring COVID as well. So it just goes to show, like, we've had the same situation. I think it's just been exacerbated, you know, with, with all that's been going on, with everything. So that is a challenge. And, you know, somebody has to pay for all this and where is it gonna come from? So that's why we're seeing a lot of the a lot of the challenges right now and and other things. Yeah. Absolutely. No. You're exactly right. So because I know before the pandemic, I was speaking with nurse leaders then, and they were telling me we're about to have a mass exodus from the industry. And, you know, COVID COVID in the beginning kinda held it off. Because of loyalty of nurses and other clinicians. But, you know, afterwards, they're like, Zeta, we're done. And and that's what the, you know, that's the situations we're facing now. Well, we've talked a lot about finance and numbers and my head's hurting. So So let's talk about something else we share. Let's talk about the American College of Healthcare executives. Sure. Absolutely. How'd I what? How did you get involved and win? Oh, you know, it was funny. I was, I was at Fort Carson, and I got a, you know, we didn't have a lot of email back then. That's, that's dating myself, but I got a middle of folder in the inner office mail, and it was from, captain Noel PACE, who is an attorney now and well known on, on LinkedIn. And, he, had just wrote my name in on the application, and I think it's back when you got a free t shirt. If you referred somebody. And so he wanted that free t shirt. And, I said, oh, check it out. So I just started checking it out on the website and really got into it. And, I joined then and stayed in, ever since. That's kind of my first look at it. My first real meetings and everything were when I moved to Texas here in central Texas and went to the central Texas chapter some, some health care landscape, some South Texas, stuff going on down there too, really got much more invested in it because this was where I was gonna live. Right? So, wanted to kind of drop the anchor and and make those networking connections and everything that went with that. It's been a a great decision. It's it's it still is. I'll tell you. There are times where you need to fall back on that network of leaders and colleagues and ACHG has been there for me. And I'm even referring to the national, team in Chicago and the the staff and everybody over there, it really is a great organization. And, it's it's I'm honored to work for them now. I'm honored to do a lot of their choice programs and other things. Yeah. That's tremendous, you know. And and thanks again for all the work that you do as a regent. I I know how how difficult that can be. I've been on a few regional advisory committees. I'm on yours. Thank you for keeping me around. But, yeah, we'll we'll be we'll be talking Friday. Thanks for keeping me around in that. But, yeah, I like you. You know, it's been I've been a member for, gosh, twenty seven years, I think, now. Fella from twenty two. And, It has. It's been it's been a great experience for me from a network from an education standpoint. It, you know, just helps me stay current. And and now at in my advanced age, it helps me, helps me, network with some of the young up and comers, and that's a lot of fun too. So So -- Yeah. -- question. Any any final final words about your book or your lecture series or some closing comments? Well, you know, I, I just would love to cap with, we've, we've got a lot of great leaders coming up through the ranks right now. And so I'm, I'm really there's a promising, fulfillment, post COVID of leadership out there, and they know what they want. And I think they know what they know and need to know. And so a lot of folks I'm seeing are, from all all levels, of course, of, well, you know, I I have an MBA. Didn't really get this out of my finance course or accounting course or whatever. And so, all of the online training, all the webinars, they're they're thirsty for it, and there's a lot out there to do it. ACHE's one avenue for education, and then there's always Cresty old professors like us willing to to educate as as we can. I'm in it for the networking and the adult learning. My PhD is in education, and so I really enjoy working with adult learners, of all levels. And so, yeah, I would I would leave it to, the promising future of our leadership coming up through these ranks. And where and where we're gonna go from there. That sounds great. Okay, Christian. I'm gonna impose upon you. Do you mind playing me out as a, you know. I knew you were gonna do that. Okay. Okay. Here we go. Yeah. Alright. Let's do it. This is a first four. I don't care. Gonna have a little bit of walk out music. So go ahead, Christian, and I'll I'll close this out. Well, folks, it's been another great day. I feel kinda, you know, kinda laid back. I need to be in a rocking chair. Folks, it's been another great episode of I don't care with doctor Kevin Stevenson. Doctor Christian Lonic from Texas State University, my good friend. You know, we we talked about a subject that sometimes makes my head hurt, you know, finance, but I I think we made it through. So, again, thank you so much for joining us. And we will see you next week. Take care. Thank you, Kevin. Good to see you.