Charting the course to economic vitality
Healthcare Financial Management
Subject Terms: Chief financial officers
Classification Codes: 9190: United States
8320: Health care industry
9110: Company specific
Geographic Names: United States
Personal Names: Blaszyk, Michael
Company Name: Catholic Healthcare West
Michael Blaszyk, executive vice president and CFO at Catholic Healthcare West
(CHW) in San Francisco, has been in the healthcare industry since he was 18
years old. During that time, he came to understand patient concerns,
particularly those of elderly patients. Although Blaszyk acknowledges that
patient education has greatly improved since then, he also believes that
people always will experience a certain amount of fear as patients. For that
reason, he believes that relating to patients and their families with
compassion and caring is vitally important. Blaszyk attributes the
appreciation he has for patients and the healthcare field and his decision to
pursue a career in health care to this time spent working in the emergency
department. An interview with Blaszyk is presented. Blaszyk says that CHW has
made tremendous gains in financial and operating performance during the past
several years. A great deal of CHW's recent success is the result of its
efforts to streamline decision-making and push it to the hospital level, where
it is most needed. Copyright Healthcare Financial Management Association Oct
Michael Blaszyk, executive vice president and CFO at Catholic Healthcare West
(CHW) in San Francisco, has been in the healthcare industry since he was 18
years old, when he worked as an orderly at William Beaumont Hospital in Royal
Oak, Michigan. During that time, he came to understand patient concerns,
particularly those of elderly patients. "I saw how scared people were because
they did not know how to deal with the healthcare system,"he recalls. Although
Blaszyk acknowledges that patient education has greatly improved since then,
he also believes that people always will experience a certain amount of fear
as patients. For that reason, he believes that relating to patients and their
families with compassion and caring is vitally important.
Blaszyk attributes the appreciation he has for patients and the healthcare
field and his decision to pursue a career in health care to this time spent
working in the emergency department. "I'm a very lucky man to be in the
position that I am," he says.
HFM: What is unique about your job?
Blaszyk: As both executive vice president and CFO, I have broad opportunities
within the organization. My position allows me to draw on my past experience
in operations as well as finance. That is consistent with the view of our CEO,
Lloyd Dean, who believes that executives should have diverse experience and
capabilities. As an example, one thing I'm working on that you typically
wouldn't see a CFO working on is the development of CHW's program on values.
The program is designed to make the organization's values of dignity,
collaboration, justice, stewardship, and excellence more tangible to our
employees, physicians, and patients.
I predict that expanded responsibilities among healthcare finance
professionals will be a growing trend in health care.
HFM: CHW has developed an economic revitalization program. How long has it
been going on and has it been successful?
Blaszyk: The three-year program was launched in January 2001. We're a little
past the midway point, entering what we call Phase 3. The program has been
very successful. To date, it has exceeded both the goals we set for ourselves
and what we told our investors we would accomplish. More importantly, we have
achieved our financial milestones while focusing greater resources at the
hospital level and remaining true to CHW's mission of providing highquality,
affordable health care to the communities we serve.
HFM: What are the particular initiatives of this program?
Blaszyk: One of the key initiatives is the development of an economic
revitalization and community investment program. For short, we call it the
economic blueprint. The program sets forth a number of key initiatives within
CHW that will be part of its turnaround process. Some of the categories are
volume growth, revenue cycle, care management, overhead reductions,
productivity management, risk management, human resource management, supply
chain management, and fund development. We also are considering the alignment
of our portfolio, and by that I mean looking at all our assets to see how they
fit within our corporate objectives. For each of those areas, we have set up a
plan for improvement.
[IMAGE PHOTOGRAPH] Captioned as: Michael Blaszyk, executive vice president and
CFO, Catholic Healthcare West, San Francisco, California.
One key piece is overhead reductions, which is kind of an inaccurate name. We
sought to move to an operating company from a holding company We accomplished
that over the past year and a half. In Phase 1, we went from 10 regions down
to four divisions, and in Phase 2, we went from four divisions to a single
flat operating company. We have substantially reduced our overhead, and every
activity in our corporate offices is focused on creating value for our
hospitals. So the management structure now is very focused, providing for
collaboration and consistency, driving accountability at every level.
HFM: What gains has CHW made in financial and operating performance over the
past several years?
Blaszyk: Quite bluntly, CHW has made tremendous gains in financial and
operating performance during the past several years. This is an organization
that lost $1 billion between 1999 and 2001 and has completely turned its
financial picture around through a back-to-basics economic revitalization
program. Between 2000 and 2002 alone, we have taken $270 million off the
bottom-line losses. As we enter our 2003 fiscal year, we are at breakeven,
moving into operations profitability. Our people have made remarkable
achievements through their own wit and will. In fact, I like to call them the
"We Consulting Group." HFM: Have CHW's strategic focuses shifted? If so, how?
Blaszyk: A great deal of CHW's recent success is the result of our efforts to
streamline decision-making and push it to the hospital level, where it is most
needed. What we've done is moved from a cumbersome, over-- complex holding
company with 27 different boards of directors to an operating company with a
single governance structure. We don't have a middle management structure. And
to a large degree, we've empowered our hospital presidents to make decisions
that are best for their markets, their patients, and their employees.
We are moving toward careful growth. We are building hospitals in markets we
want to be in. We have focused on standardization and are emphasizing care
management. We have consolidated the approval process for capital allocation.
Now projects have to have strict returns on investment, and hospitals are
rewarded and receive capital on the basis of their performance.
Another strong focus is on managerial development. We worry about the core
competencies and the development of all of our people. For example, in the
financial area, we would expect the CFO at each of our hospitals to exhibit
certain competencies, attitudes, and behaviors.
HFM: How does your management of CHW's finances support these strategic
Blaszyk: The economic blueprint was developed among a team of finance members.
The CEO asked if we would develop a template of strategies for getting the
organization's balance sheet repaired. We sought input from a number of
stakeholders, developed a straw model, and reviewed it among our executive
management team. After fine-tuning, the template was adopted and implemented.
In the financial areas, for example, we're organized to support the economic
blueprint by having a vice president of revenue services who focuses only on
our hospitals' revenue cycle. Each of the different initiatives that we put in
place is backed by tactical plans with specific objectives and people
responsible for meeting those objectives.
HFM: Is CHW working to develop new sources of revenue? If so, what are they?
Blaszyk: We're very much looking at new sources of revenue, focusing on
measured growth, same-store sales, and new opportunities.
In addition, we're focusing on revenue-cycle management. I strongly believe
that if we don't collect what we are entitled to for the care we deliver, then
we have made our caregivers' jobs more difficult.
The final area is focusing on reasonable payment in our managed care
HFM: Hiring and maintaining a wellqualified workforce is an issue in many
healthcare organizations. What is your philosophy regarding workforce issues?
Blaszyk: My philosophy is that we need to develop the best possible talent
that we can find-people whose passion is health care and who want to work in a
mission-driven, values-oriented system. In every case, you should seek people
who are better than you. Our preference is to develop talent from within and
to search outside the organization only when we need a special kind of
When I came to CHW, many people thought that I was going to restructure the
whole management team. I believe it's a mistake for people going into
leadership roles to think that the talent does not exist within the
organization. We need to assess the people already in an organization and
identify that talent. Then we need to give them the tools to be able to excel
and provide them with a high-quality work environment and the ability to
I am put off when an individual going into a leadership role starts off by
terminating the people who were there or moving them to the side and then
going outside the organization to replace them. That's not honoring the people
and their commitment to the organization. It also fails to realize that talent
exists within the organization and that often it just needs to be given the
freedom to develop and grow.
HFM: What are your goals with regard to development of CHW's workforce?
Blaszyk: We want to develop very strong people who can operate in any
environment. So we've developed the CHW Learning Institute, which functions
like an internal college. We're working on a corporate curriculum that will
cover a number of areas. It will have a consistent approach, which we think of
as "The CHW Way." For example, we're currently in discussions with HFMA to be
our educational partner for financial functions.
The Learning Institute is designed for everyone from very senior executives to
departmental managers. When the curriculum is completed, the programs will be
applicable for everyone in our organization.
The Learning Institute is in the process of being rolled out. It's a huge part
of our focus and culture as we go forward, and it will take on an even larger
role as time goes on.
HFM: How are you addressing the nursing shortage?
Blaszyk: We have a variety of programs, many of which are being executed at a
local level. We entered into a partnership with Holy Name College and Blue
Cross of California to offer learning programs for registered nurses,
including tuition support. We have a team dedicated to getting these types of
programs off the ground.
On a broader scale, we have become very active in nursing advocacy. For
example, we're looking for ways to fund additional training programs,
reestablish a number of twoyear programs that have ceased, and make sure we're
providing a work-life quality program at CHW so that we are the preferred
place to work.
We are competing, like everyone else, for nurses. We're adjusting wage scales.
We're working on making sure nurses are empowered, and we're bringing in
technology that will support them.
HFM: Have these programs been successful?
Blaszyk: It's early still. However, this problem won't be solved in a matter
of months or a year. We need to train and educate more nurses. This
process is going to take three to five years before we see meaningful results.
HFM: What one message do you believe is most important for your organization's
employees to understand?
Blaszyk: That each and every person is an integral member of the care team,
whether or not they are directly involved in patient care, and the strength of
the team can be only as good as the contributions of each member.
HFM: What challenges do your hospitals in the California market face?
Blaszyk: Where should I start? There's nothing like the California market.
First, our MediCal payments are, depending on how you measure it, the 49th or
50th worst in the country. The problem of the uninsured or underinsured is
most acute in California because of the diversity of the population and the
number of immigration issues we face. Each population has different cultural
beliefs, ethics, and views about health care, so we're challenged to meet
different needs for each of the populations we serve.
It's also a highly regulated state, with challenging issues that other states
do not face, such as needing to comply with nurse/staffing ratios and the
seismic requirements for earthquake-proofing buildings.
Maintaining a sufficient supply of physicians also is very difficult here
because California is so economically unattractive. Managed care has been so
forceful that physician payments are far lower in California than in the rest
of the country. Finally, housing prices are so expensive and the overall cost
of living is so great that it's not affordable for the majority of caregivers.
HFM: What are the greatest challenges facing your organization in the next
Blaszyk: Rebuilding our balance sheet, workforce recruitment and retention,
and complying with the seismic requirements.
HFM: Have you or a family member been on the receiving end of the healthcare
system? What did it teach you?
Blaszyk: I was hospitalized several months ago. As I was lying in the
intensive care unit, I was reminded that everything revolves around the
relationship of the caregiver
and the patient. It is a relationship based upon faith and trust. And we must
do everything we can to provide the caregivers with the tools they need in the
way of technology, competencies, and empowerment to do their jobs.
"In every case, you should seek people who are better than you."
"We have substantially reduced our overhead, and every activity in our
corporate offices is focused on creating value for our hospitals. "
Insights on Michael Blaszyk
Name: Michael David Blaszyk
Position: Executive Vice President and CFO
organization: Catholic Healthcare West (CHW), San Francisco, California
organization profile: CHW is a Catholic-sponsored health system that operates
42 acute care hospitals in California, Arizona, and Nevada. The system has
7,088 acute care beds, 1,175 skilled nursing beds, 36,000 fulltime equivalent
employees, and 6,500 physicians. In FY99, the system expenditures on community
benefits and care of the poor amounted to $434 million.
Years in position: 2
Years with organization: 2
Years in industry: 30
Education and certifications: Completed undergraduate studies at Wayne State
University; Masters of Science, School of Business Administration, University
Academic appointments or speaking engagements: Adjunct Professor, Boston
University; lecturer, Case Western Reserve University; member of the finance
committee, Ascension Health System.
HFMA member since: 1975
Current HFMA chapter: Northern California Chapter Professional strengths:
Values, balance, creativity
One-year goal: Return CHW to financial strength.
Five-year goal: Develop strongest team in the industry.
Personal role models or heroes: Mother Teresa and Martin Luther King, Jr.
Favorite personal quote: "We have to do the best we can. This is our sacred
human responsibility."-Albert Einstein
Books I would recommend: King Leopold's Ghost, by Adam Hochschild, and The
Professor and The Madman by Simon Winchester
Words my CFO would use to describe me: Strong leadership, insight, and focus.
How I relax: Time with my wife, cooking, working out, reading, and golfing.
Dream vacation: Trip to Thailand and Laos.
Most stressful part of my job: Managing competing interests.
Most satisfying part of my job: Watching the team develop and excel.
"Talent exists within the organization and often it just needs to be given the
freedom to develop and grow."
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