Balancing a Large Scale of Responsibility: An Interview with R. Milton Johnson - Brief Article

Healthcare Financial Management, June, 2000

R. Milton Johnson is senior vice president and controller of Columbia/HCA, the largest for-profit healthcare system in the world. Columbia/HCA delivers care through 220 hospitals and other healthcare facilities in 22 U.S. states, England, and Switzerland via a staff of 168,000.

Johnson began his career in health care in 1982 as a tax manager in the research and planning area of Hospital Corporation of America (HCA), a Columbia/HCA predecessor. He later served as director of tax for HealthTrust, a spinoff company of HCA. He returned to Columbia/HCA after the Columbia/HCA Health Trust merger in 1995 as vice president of tax. Since then, he has held the position of vice president and controller and in July of 1999 was promoted to senior vice president and controller.

HFM: Would you describe your responsibilities for Columbia/HCA?

Johnson: I have responsibility for taxes and accounting, financial reporting, risk management, insurance, and financial shared services.

HFM: When you compare the responsibilities of your position with those of your counterparts employed by not-for-profit systems, what are the greatest differences?

Johnson: I think the complexity of the tax issues and SEC reporting are quite a bit different. Also, dealing with Wall Street and shareholders would be a significant difference.

HFM: Does your position have responsibilities that are unique due to the sheer size of Columbia/HCA? If so, what are they, and how do you approach them?

Johnson: I don't think the responsibilities themselves are unique, but the scale of the responsibility is unique. For example, we have a plan to consolidate payroll and accounts payable services for all Columbia/HCA facilities, which has never been done before in an organization of our size in the healthcare industry. Our size can be an advantage if we execute a strategy well, but it is a risk if we don't. I approach the scale of responsibility issue with two priorities: first, I make sure there is a well-thought-out plan in place; second, I identify talented individuals to execute the plan.

HFM: As senior vice president and controller of Columbia/HCA, what initiatives are, or soon will be, your greatest priorities, and why?

Johnson: My greatest priority has been and will continue to be the integrity of the financial statements. But recently Columbia/HCA has decided to replace its financial information system with an enterprise resource planning (ERP) solution and to implement consolidated payroll and accounts payable services for all the many business units that make up Columbia/HCA. Managing this change will also be a top priority

HFM: To what degree is Columbia/HCA an integrated delivery system? Are there plans for changes in that degree of integration?

Johnson: We are highly integrated in terms of purchasing, access to capital, cash management, capital management, and other financial areas. We will continue to integrate certain nonclinical processes. However, with respect to delivery of clinical care, the degree of integration is determined on a market-by-market basis. Generally, however, we see ourselves as a hospital company At the corporate level, we have divested our homecare operations and most other nonhospital assets. We also are not attempting to integrate our hospitals with insurance products.

HFM: What do you perceive as the most significant challenges, from a financial perspective, facing provider organizations, in general, and Columbia/HGA, in particular?

Johnson: The greatest challenges will be Federal and state reimbursement changes, government regulations, and the growing uninsured population. The number of uninsured under age 65 has increased steadily over the past decade.

HFM: How do you see those challenges being resolved?

Johnson: Healthcare providers, both for-profit and not-for-profit, must work together to send a consistent message to Congress regarding the effects of reimbursement cuts and regulations. Elected officials at the state and Federal levels must put the issue of health care for the uninsured at the top of their agendas.

HFM: Does your position involve any responsibility for compliance with Medicare program regulations (or significant interaction with those who do)?

Johnson: I do not have any direct responsibility for Medicare compliance, but I work closely with our reimbursement department to understand the financial impact caused by changes in regulations.

HFM: What initiatives of the Federal government do you see as of greatest concern?

Johnson: In general, I believe the complexity of compliance with government regulations is a serious concern. Outpatient PPS is a good example.

HFM: What might be likely scenarios you see for healthcare provider organizations, in general, and Columbia/HCA, in particular, evolving from government initiatives?

Johnson: Government initiatives will continue to drive healthcare providers to become more efficient in delivering quality care. Technology must be used to cut costs and increase quality.

HFM: From your experience with the mergers, acquisitions, and divestitures at Columbia/HCA, what aspects would you say are most critical to a successful merger or acquisition?