The Big Impact of Stephen Ramey’s Financial Strategy

Stephen Ramey stabilizes finances for Cookeville Regional Medical Center as leadership looks to expand the system

Stephen Ramey’s career has taken something of a serpentine, decades-long tour through the South. He began in his home state of Alabama, but now finds himself in Cookeville, Tennessee, where he heads finance for Cookeville Regional Medical Center (CRMC), a regional referral hospital in the Upper Cumberland region.

After graduating from Auburn University with an accounting degree, Ramey worked as staff accountant for a hospital in Baton Rouge, Louisiana. That was followed by a stint as a financial analyst in New Orleans, and then his first CFO job for a hospital in Carthage, Tennessee. Given absolute responsibility, that’s where he really cut his teeth.

“The CEO at the time was brought in for his political skills, not his healthcare skills,” Ramey says. “I had total freedom and trust. I did my job well and was left alone to do it.”

He did that job for fourteen years, until the company was sold, and then he found work in Virginia. The hospital there eventually ran into some trouble due to local economic issues, and Ramey started thinking about another move. A connection from his Carthage days told him about the opening at CRMC and personally handed his resume to the CEO. Once the two met, the decision didn’t take long: Ramey ended up being the only person the company interviewed for the position, his first at a nonprofit hospital.

Although the CEO at CRMC is significantly more hands-on than the CEO at Carthage, Ramey says that he is given a great amount of responsibility and room to really have an influence.

“A CFO is there to control costs, but he can have a big impact on the net revenue side without changing the volume,” he says. “My job is to advise the CEO and, if I see something that doesn’t look right, to raise my hand and let him know.” Ramey says that the CEO’s attitude is, “If I’m going down a rabbit hole I don’t need to go down, tell me.”

In his year and a half on the job, Ramey has embraced the lean manufacturing process born at Toyota, which he says has improved cash flow tremendously. By taking high-dollar items off the pharmacy formulary, CRMC will save $900,000 in a year’s time, he says. The company reduced the use of traveling nurses to save more. And, CRMC was able to acquire a hospital in Celina, Tennessee, that is designated as a critical access hospital, opening cash flow further.

“We’re moving to a patient-centric model. It’s slow—kind of like turning a tugboat around in the Mississippi­—but it can be done.”

“The lean process is very new to us here,” he says. “I’ve known about it for a long time, but in my past positions, there was no corporate support or resources to get it done. Here, we have the support of the CEO and the board.”

This past summer, the company hired a lean director who trained in the process and then led the first overview class. The company is now in the process of training its first advanced class. Along with Ramey, the class has three administrative team members and three doctors. Every CRMC department director will also be trained on the lean process, and advanced classes will be ongoing at the company.

“We got buy-in from the top, which you have to have,” he says. “It will ultimately be up to the administrative team. It’s on our back to make it work because if administration isn’t on board, a team can do a great project; then someone will say no and kill it, and it will never work again. So, we have the COO and myself, along with our VP of quality improvement, as the primary administrative people who are advocates. “

As is true across the industry, CRMC has taken a hit from declining Medicare reimbursements, which he says represents a million lost dollars a year. Moving to
value-based purchasing, the system is working to improve quality numbers: HCAHPS scores, cleanliness, quietness, and patient measures.

“Because we’re a stand-alone not-for-profit, we don’t have the resources of a big corporate office with specialized staff to handle that,” Ramey says. “We’ve been bringing in a few specialists to work on a contingency basis to make sure we’re billing right. We could be losing a lot of revenue we don’t know about. If I can improve revenue by getting charges right, that will be a huge gain for us.”

As Ramey works on the numbers, the hospital is not standing still: it is adding a third linear accelerator for cancer treatment, building two new operating rooms, and making some high-dollar replacements. There is also a major project on the horizon in the next several years, but CRMC is in a holding pattern on that as it seeks to stabilize earnings and cash reserves.

As far as the day-to-day, Ramey has seven departments that report directly to him: accounting, patient financial services, registration, medical records, case management, materials management, and information systems. Everything that has a cost associated with it comes through Ramey’s office. Every day, he manually approves invoices, and at the end of every month, he reviews financials. If he detects volume is down in any area, he checks with department heads to make sure they’re monitoring costs appropriately.

A big part of the CFO’s reining in of costs is honing an ability to say no. Ramey has instituted a policy where anybody who falls below 95 percent productivity has to come to a meeting, which is a classic—and effective—disincentive.

“We have been very physician-centric for the last fifteen years,” Ramey says. “If a physician wanted something, they got it. Now, we’re moving to a patient-centric model. It’s slow—kind of like turning a tugboat around in the Mississippi—but it can be done.”