Workday Podcast: How Finance Transformation Helped Spectrum Health Meet Growth Opportunities

Bruno J. Navarro: It's no secret that healthcare organizations are facing increased margin pressures due to lingering effects of the pandemic. To combat these pressures, many organizations are digitizing their finances for increased visibility and control over their revenue and spend. I'm your host, Bruno Navarro, and today I'm talking to Brittany Kruse, director of finance systems and process innovation at Spectrum Health. Together, we'll explore why healthcare organizations should take their financial processes to the cloud as well as practical steps to actually do it. Welcome, Brittany. Thanks so much for joining us today.

Brittany Kruse: Thanks for having me.

Navarro: Could you please start us off by telling us a bit more about Spectrum Health and your role there?

Kruse: Sure. Spectrum Health is a not-for-profit health system. We're based out of West Michigan. We went live on Workday on 1/1/21, a big bang. So we went live with finance, HCM, and supply chain management, all at the same time. And legacy Spectrum Health has about 13 acute care hospitals and approximately $7 million in revenue, including a large health insurance arm as well. So we have a mixture of both care and coverage revenue. And I say legacy Spectrum Health because we're actually at a time of transition right now. Beaumont Health and Spectrum Health integrated. And so Beaumont is on the east side of the state, and combined we are now the largest employer in the state of Michigan. We have over 64,000 team members, $14 million in revenue, and our size is really astounding now, covering the whole state. And it really was a coming together of equals with a vision to make healthcare more affordable, simple, equitable, and exceptional.

So my role at Spectrum Health has evolved over the years. I started in the corporate accounting department with consolidations. And then when the Workday implementation started, I volunteered to be the finance lead there. And since go-live, my role has transitioned into the director of the core finance systems team, also with process innovation, and so really supporting our back office finance teams with Workday as well as other areas of innovation. And right now my biggest focus is bringing Beaumont onto the Workday system, onto our Spectrum Health instance of Workday.

Navarro: I’d love to learn more about the Spectrum Health story. What was your previous process for handling consolidation and close?

Kruse: Prior to Workday, we actually had three separate ERP systems. One of those included a legacy Workday system, and then we had a consolidation software that sat on top of that to pull all of the information together. We spent quite a bit of our time reconciling between the different ERPs and the consolidation software, and not only did we have disparate systems, but also accounting departments as well. Everybody was working in their own silos. And the process worked, right. We were able to produce consolidated financials timely. But really the focus was more on those reconciliations looking at inter-company balances and finding where those were out of balance, and each department creating their own reports. And it was just a very disjointed process.

Navarro: So that's interesting. You have a perspective of the before and I'm guessing, the after. What ultimately pushed the needle for you and your team to transform how you handled consolidation and close?

Kruse: Well, our ERP software was at end of life. So it was a choice where we were forced to go to the cloud regardless. But in doing so we evaluated many other ERP systems. And personally I fell in love with Workday because of its intuitive user interface. It was just easy to use, easy to find the information. The ability to drill through was great. And Workday now really allows us just to close consistently. I mean, down to the hour we can lock down our different period close groups. It's very controlled. There's no surprise changes in the system, because we have control over that. We can lock it down. And we really have visibility to the different silos that we had before. We are all coming together as one. And really we've been able to consolidate our accounting departments as well. So we've got visibility to what each other is doing. We're driving consistency across the board. And it's allowed us some efficiency in our close process. For example, one person can run allocations for the entire group instead of having three or four different people that were doing that previously.

Navarro: What kind of improvements or impact have you experienced since transforming your process?

Kruse: We really focused, first off, on standardizing reporting. It helps us really just to have one predictable way of running those reports. Everybody can see the same thing. And I'm talking consistency across all divisions, regardless if they're for care or coverage. It does not matter; their monthly P&L reports look the same. They're supported by the same team. We're able to keep a very lean team to support those reports because it's a small set. It's really for that accurate data, to make sure that we've got one standard set of reports. We've also been able to reduce the number of inter-company elimination out-of-balances, which is great for us when you get to the consolidation/close period. It's always a time of high stress and reduced amount of time to close the books. And anywhere that you can reduce those errors is always a benefit. Inter-company elimination balances aren't even an issue any longer for us.

As I mentioned, we were also able to consolidate our accounting teams as well. We were able to decrease the amount of FTEs that we have through attrition. And really, for our staff, it's better support for them on vacations and leaves, because we've got much more cross-training. Everybody's on the same system. They know the process. If an accounting manager is out, for example, another one can hop in and approve journal entries for them. And it's easy. So those standard processes and business flows just make it predictable and much easier to cross-train. And then finally when we get to audit we're all in one system. We're spending less time pulling support for our auditors; having to hunt and peck for it on the network is no longer an issue because you can drill through to that support right within one system.

Navarro: It sounds like you have a better handle of data overall in the larger organization. Has this process impacted the broader organization?

Kruse: Yeah, certainly, the standard reporting packages that I mentioned, it means that all of our end users, our cost center managers, directors, VPs, they all receive the same P&L package and it's predictable. And they can run it at any time that they need. They're able to drill down to analyze those results immediately when they're in the system, where previously they had to pick up the phone, call an analyst, have somebody run that report for them, and now really the ability to self-serve when they need it is-- it's empowering to those end users that can make decisions as they need.

Navarro: Earlier you mentioned integrating Beaumont Health into Workday. Can you tell us a little bit more about that experience?

Kruse: It's been a whirlwind. We are in the middle of the implementation currently. So we are able to consolidate Beaumont into Workday, topside only; we pull in their consolidated information into a shell company, if you will. So we're able to pull consolidated financials out of the Workday system even though they are not live yet on Workday. But we do plan to pull them on as soon as possible. Our goal is July of 2023 so we can start to harvest those savings and some of their legacy systems. And once we're on a single ERP system, really that's the trigger, the domino, if you will, to start to consolidate our shared services. And so really that's where we hope to harvest those savings soon. But really as I mentioned, we can't consolidate teams until we're on a single platform. So we're very anxious to do so.

Navarro: And what are some of the challenges you're facing, and how are you solving for them?

Kruse: Well, right now it's a messy middle for Beaumont, pulling them into Workday and consolidating at the topside. The nice thing is that the Workday system really allows us flexibility to adapt to this. We load in their topside-consolidated-level detail, so we're able to pull reports out of the system the same as we did previously. But we're able to then take our time, do our full general ledger conversion, and once we have that information available we can back out that topside-level data and then load in that rich worktag-level detail. And that way we'll be able to pull historical reports for Beaumont once they are live on the system. And it's nice that the system is flexible to do so. As the back office accounting team, we were told that the integration would happen on February 1. So that gives you 28 days to produce consolidated financials. And initially we thought it might be a bit of a scramble to try to get them into Workday. But as I mentioned, we were able to do that right in the system, and it really was not as big of an issue as what we thought previously. It's nice to have that flexibility.

Navarro: That flexibility definitely, I would imagine, pays dividends. Why is it so important for healthcare organizations, specifically, to digitize their core financial processes?

Kruse: Well, I think it's about time, right. Finance always seems to be the last to get the brand-new software systems. So we were just thrilled to be able to focus on putting this brand-new, cutting-edge software in place. And that way we can focus on what matters. Instead of those non-value-added reconciliations, we can really take more time to focus on the analysis at month end. And it allows for more visibility and transparency across our divisions. Additionally we were able to reduce overhead but still provide all of that necessary information to our operations to allow them to move the needle. And it's been a tough few years in healthcare, and there's really not a whole lot of relief in sight. We're going to continue to have to do more with less. I mean, we're unable to, to hire more staff, and we can't increase our prices. So we really need to focus on where we can find these efficiencies. And we're excited about how Workday does that. I mean, even outside of close and consolidations there's machine learning that's been pushed out to us; specifically in the finance space, we're excited about journal entry insights and providing those anomalies mid/month-end. We're able to find where we might potentially have errors before we close the books and correct them. And it's just exciting that that is pushed to us without investments needing to be made. We do our best to keep up with Workday and those upcoming releases. And it's tough. There's a whole lot that Workday pushes out to us, which is very exciting and we need to keep up.

Navarro: I've enjoyed hearing about your digital transformation journey. Do you have any advice for other healthcare organizations as they look toward moving their financial management, supply chain management, and HCM systems to the cloud?

Kruse: I would say take it as an opportunity. Don't lift and shift your current processes and try to put them into Workday. This is the one time that you've really got the attention of the organization. And you don't need to stick with the status quo, so make sure that you're reviewing best practices, and rebuild your processes. And in order to do that you really need a tone at the top that it's OK to make those changes and it's OK to test and it's OK to fail but really to push the envelope and make sure that you're reducing friction wherever you can. Wherever you can simplify a business process or reduce the amount of red tape that it takes to get something through the system, now's the time to do it. Our legacy systems were also very difficult and cumbersome to navigate through. So many of the users assume the same with this new system. And so you'll have to make sure that there's some change management there to help them through and to allow them to know that Workday's very intuitive, to jump in and just give it a try and they can't break anything in the process.

Navarro: Brittany, thank you so much for speaking with me today.

Kruse: Thanks so much for having me.

Navarro: We’ve been talking about how healthcare organizations can transform their finance processes. Don't forget to follow us wherever you listen to your favorite podcasts. And remember, you can find our entire catalog at Workday.com/podcasts. I'm your host, Bruno Navarro, and I hope you have a great workday.