Sentara Health CFO Melinda Hancock on embracing long-term planning

National Harbor, Md. - With Medicaid cuts looming and millions of Americans projected to lose coverage, Melinda Hancock sees an advantage in a difficult situation.

At least there’s time to plan. And she’s aiming to make the most of it.

Hancock serves as the chief financial officer of Sentara Health, which operates 12 hospitals, 400 care sites, and a health plan division serving almost 1 million people.

In an interview at the Healthcare Financial Management Association conference, Hancock says she’s extended Sentara’s financial planning horizon to 2032, when the HR1 federal tax package and its reductions in Medicaid are expected to be in effect.

“Yes, it's very difficult to predict all the things that are going to happen by 2032,” Hancock says. “But if you don't have a starting point, you then can't adapt and react when things do change, and things will change.”

“When things do change and maybe a headwind comes earlier than expected or gets extended, we have the opportunity to adapt and adjust and be able to bring all of our leaders into this conversation as well,” Hancock says.

Preparing for headwinds

With Medicaid projected to see a reduction of about $1 trillion over the next decade, some analysts have projected that many health systems will be reducing services and potentially even closing some hospitals or clinics.

Sentara Health doesn’t expect to shut down any facilities, but some care may be shifted in the future.

“We don't see closing anything,” Hancock says. “We do see potentially redistributing.

“We made some hard decisions in the last couple of years of closing services in one area, opening them in another, or expanding them in another.”

Hancock contrasted the current situation with the redetermination of Medicaid eligibility that took place a couple of years ago after the COVID-19 pandemic, which resulted in some people no longer having coverage. In that situation, health systems had less time to prepare.

“We have these large numerous headwinds hitting care delivery that we actually get the chance to plan for, so let's learn from what we've done,” Hancock says.

Hancock says the long-range planning helps the system adjust its capital expenditures and long-range forecast. She says looking years ahead gives Sentara the ability to be more nimble.

“We can prioritize and make sure to still deliver on our important strategies,” Hancock says.

Sentara is also aiming to use its health plan to reach out and engage with patients to help them stay on top of screenings and manage chronic conditions on an outpatient basis, so they don’t end up in the hospital.

In addition to changes in Medicaid, Hancock is also looking to plan for the impact of other changes in federal policy that could have an impact.

President Trump’s administration and lawmakers in Congress have signaled interest in revamping the federal 340B Drug Discount Program, which enables hospitals to buy some outpatient drugs at lower costs. Health systems say the program helps provide essential services in vulnerable communities, but critics have said the program has grown far beyond its intended purpose of aiding safety-net hospitals.

Hancock also says the system is preparing for possible changes in Medicare reimbursement for some outpatient procedures, such as proposals that would offer similar payment for services in a hospital as an ambulatory clinic or a physicians’ office. Supporters say such a shift to “site-neutral payments” would help Medicare save billions, while health systems say the move would deliver another blow to hospitals.

Part of the planning to deal with other shifts in federal policy involves educating Sentara’s board members about what’s happening.

“We are educating our leaders, our boards, on all of it,” she says.

Using more digital tools

While the health system is bracing for more financial pressures, Hancock says she’s increasingly optimistic about the use of AI and other technology to help reduce costs and improve services.

Sentara has rolled out virtual nursing across the health system. The system uses nurses in a virtual unit to answer patient questions, prepare patients for discharge, and mentor some of the system’s less experienced nurses.

Sentara’s doctors and nurses are using AI-powered documentation tools to reduce their workload.

Hancock also points to using AI to redesign revenue cycle management. She says the system is moving toward a goal of offering patients a “touchless” experience from scheduling an appointment all the way through seeing a clinician. She’s hoping AI can make it easier for patients to set up and pay for services.

At the same time, Hancock says some patients may prefer to give their credit card to a person instead of an AI agent.

“You'll be able to opt out and get a live person, but if you are comfortable, you're going to be able to do a lot of things faster,” she says.

Hancock says it’s going to be important to continue to look at AI and opportunities for automation across the entire integrated delivery network. She says Sentara has developed strong governance procedures for the appropriate use of AI.

“There's an opportunity to appropriately apply AI and automation, which also brings people more joy in their work, because they're actually doing the things they were trained to do,” she says.

Hancock says she appreciates the opportunity to work to transform the system, even in difficult circumstances.

“It's very challenging what’s forcing it, but in some cases, we're past due in some of these areas,” Hancock says.