How Richmond University Medical Center Learned from Its Past to Grow for Its Future

CFO Joe Saporito on the financial renewal of Richmond University Health Center

Joe Saporito was restless. He retired as a partner with the accounting and consulting firm KPMG in 2009. Then, he retired from NYU Langone Medical Center after completing five years as the vice president of finance and assisting the organization in improving its financial performance and credit rating from below investment grade to an A, all while withstanding the impact of Hurricane Sandy. Still, he needed a new challenge.

Saporito began teaching in the MBA program at Baruch College and fielded a handful of CFO offers, ultimately landing at Richmond University Medical Center (RUMC) after being recommended by the previous CFO. He interviewed with CEO Dan Messina and discovered that the professional chemistry was there, and the organization’s position was complex and demanding enough to pique his interest.

“RUMC was—and is—undergoing a major transformation. The facility had basically reached the point of breaking even after substantial losses in its past and a number of significant initiatives were underway,” he says. “Those are the things I’m helping the hospital achieve.”

Joe Saporito Richmond University Medical Center
Joe Saporito, Richmond University Medical Center

Richmond University Medical Center operates one of two hospital systems on Staten Island. It is one of the only stand-alone community hospitals in the area, and it needs to compete against many larger systems, including the largest healthcare system in New York City. RUMC had emerged from bankruptcy in 2007, and by 2015, when Saporito started, had begun breaking even and producing small margins. The first thing Saporito had to do was to create a multiyear plan to invest in the development of an ambulatory care network, population health management, and build a new emergency department while maintaining profitability. Saporito worked with the senior management team to implement initiatives which helped to reduce costs, improve care, and prepare the facility for the future.

The natural assumption might be that reducing costs would result in cutting services or negatively impacting the quality of services, but Saporito’s approach was much more nuanced. Through careful collection and use of data, Richmond has been able to achieve better and more consistent outcomes at a lower cost. One example was in orthopedic surgery.

“We looked at a variety of orthopedic surgeons and specific cases. We looked at low-cost versus higher-cost providers of the same services and what drove the higher cost,” Saporito says. In some cases, the cost was driven by a less-standardized approach—for instance, using multiple suppliers for certain types of orthopedic implants when one supplier produced outcomes that are just as good at half the cost. “The cost sometimes had an inverse relationship to outcomes, rather than a direct correlation,” Saporito explains. “By eliminating variation and reducing the number of suppliers of different types of equipment, we were able to reduce costs and improve care.”

One key element of the medical center’s success has been the strategic and engaged use of third-party outsourcing for critical support services. By effectively utilizing outsourcing, RUMC has been able to access the leverage, bandwidth, and expertise of a much larger system at a much lower cost.

On the expense management side, RUMC utilizes Nexera Inc., a subsidiary of GNYHA, which provides purchasing and supply chain management services to help the medical center achieve supply cost metrics that rank in the first quartile when compared to industry benchmarks.

“It really provides benefits to society as a whole if we can reduce per-capita costs in healthcare.”

On the revenue cycle side, vendor nThrive Revenue Systems LLC provides revenue cycle outsourcing services. They handle billing on behalf of the medical center while financial leadership oversees the relationship and monitors performance. Because the revenue cycle of a hospital is so complex and vital, Richmond’s partnership with nThrive needs to be extremely sound. Saporito calls it Richmond’s largest and most successful outsourcing project so far.

“That organization basically does all of our inpatient and outpatient billing on behalf of the hospital. Our days in accounts-receivable are about forty-five; our cost-to-collect exceeds most benchmarks,” he says. “One of the things that makes it a success is that we really treat them as though they are employees of Richmond. They need to know that you’re watching them; you need to have performance metrics in place and you need to monitor on a daily basis.”

While those measures have had vital impacts across the hospital’s financial health, community support has also been indispensable. Part of Saporito’s role—and part of each RUMC leader’s role—has been to communicate the hospital’s financial needs and impacts to stakeholders. Strong messaging and healthy relationships have led to growing grant funding from the city, the state, and private institutions.

“Getting the word out and making sure officials understand how important the hospital is, how many lives we touch, and what our financial needs are, is an important element of getting that public support,” he says. “We all wear a lot of hats. Under the leadership of board chair Kate Rooney and CEO Dan Messina, we’ve been very successful in growing community support.”

But more broadly, Saporito recognizes that this is a turning point for the way that Americans give, receive, and pay for healthcare. The transformation of payment models from paying for volume to paying for value is underway, part of a serious push for cost efficiency across the country.

“It’s important to control the growth in costs; it’s also important that we take advantage of the advances in healthcare delivery, like greater efficiency and the benefits of preventive care,” he says. “It really provides benefits to society as a whole if we can reduce per-capita costs in healthcare.”

“As a consultant I’ve been selling this change for many years. Fifteen or twenty years ago, we were projecting that the things happening today would happen,” Saporito adds. “One of the reasons I’m here is that I want to be on the front lines of that change. I wanted to experience it firsthand and have an impact.”

“Joe Saporito is a board member of the Staten Island Performing Provider System. As a start-up, having a seasoned expert in finance with Joe’s expertise is invaluable. The SI PPS congratulates Joe Saporito on being recognized by American Healthcare Leader for his contributions to the field.” —Joseph G. Conte, Ph.D, CPHQ Executive Director, Staten Island PPS