Speaker 1 (00:05):
Welcome to 340B Insight from 340B Health.

Myles Goldman (00:12):
Hello from Washington DC and welcome back to 340B Insight. The podcast about the 340B drug pricing program. I'm Myles Goldman with 340B Health filling in for David Glendinning. Our guest today is Tim Maurice, the chief financial officer for UC Davis Health based in Sacramento, California. Tim is an experienced health system leader, and we were eager to hear his perspective as CFO on the importance of 340B and the program's role in the changing state of hospital finances. He also shares important advice on how hospital pharmacies and other departments can work together with the CFO's office to expand access to vital healthcare services for patients. Before we go to that interview, let's take a minute to cover some of the latest news about 340B.

Myles Goldman (01:13):
Global drug manufacturer, Merck, announced recently that it will withhold 340B drug discounts to safety net hospitals on drugs dispensed at community pharmacies starting September one if hospitals do not hand over millions of patient drug claims to the company. If it follows through on this threat, Merck will become the eighth drug manufacturer to restrict 340B community pharmacy arrangements despite government warnings that such actions violate the law. Merck is one of the world's largest drug manufacturers with $6 billion in profits according to its end of 2020 financial report, the company is a leading manufacturer of cancer and diabetes medications.

Myles Goldman (01:57):
Merck's announcement comes after the company started requesting data submissions last year on a voluntary basis. Currently Merck is exempting community health centers, clinics, and other 340B eligible grantees, but indicates that it could reconsider those exemptions in the future. Merck's announcement defies the department of health and human services which told six drug companies in letters sent in may to restore discounts and repay overcharges to hospitals, health centers, and clinics.

Myles Goldman (02:29):
All six of the companies that received those letters have gone to federal courts to challenge the government's ability to enforce the 340B Statute. The cases are pending in 340B Health and a group of allied organizations representing hospitals and pharmacists filed a brief recently in one of those cases arguing in favor of government action. You can learn more about the latest community pharmacy developments in the show notes.

Myles Goldman (03:05):
And now for our feature interview with Tim Maurice, chief financial officer at UC Davis Health. UC Davis provides the Northern California community with its only academic medical center and is the region's only National Cancer Institute designated comprehensive cancer center. Tim is not only a leader at UC Davis, but also is a leader in the health system community. He serves on the 340B Health board of directors, as well as the California association of public hospitals and health systems board, and is an active leader for America's essential hospitals. Before taking time off, David Glendinning recently sat down with Tim to discuss the CFO perspective on 340B here's that conversation.

David (03:50):
Thank you, Myles. I'm joined today by Tim Maurice, chief financial officer at UC Davis health. Tim, I'm glad we're getting the chance to talk to you about your perspectives on the 340B program as a health system CFO so thank you for taking the time to be with us and welcome to 340B Insight.

Tim Maurice (04:09):
Hi, David, glad to be here.

David (04:11):
Please start by telling us a bit about the UC Davis health system.

Tim Maurice (04:16):
Well, UC Davis Health has been in operation since 1970. We assumed responsibility of Sacramento county hospital in Sacramento, California, and began our mission as a multi-specialty academic medical center. We serve a region of 33 Northern California counties that cover the territory about the size of Pennsylvania and are the region's only level one adult and pediatric trauma center as well as the region's only NCI designated comprehensive cancer center.

Tim Maurice (04:46):
We have a single hospital of 646 beds do about 70,000 ED visits, about an 800,000 clinic visits across the Sacramento region. We have 82 child sites within 340B and 216 contract pharmacy relationships.

David (05:05):
So for the benefit of our listeners who don't work in a health system's finance department, what do you think they should know about CFOs and their staff?

Tim Maurice (05:16):
I think the first thing they should understand is that we are not just finance professionals, but we also are very dedicated to the health mission of our organizations and really put the patient first. But we also put the people who serve the patient as our key customer in providing financial services so that they can perform their work.

David (05:39):
And in your CFO role, how have you seen health system finances change over the years?

Tim Maurice (05:47):
Well, they've certainly become a lot more complicated. Healthcare is becoming much more extensive than what you find inside the four walls of a hospital. We have a large ambulatory network with over 800,000 clinic visits. We're now seeing, especially with COVID, the expansion of telehealth. We're exploring hospital at home and other care delivery models including partnerships with other health systems that makes healthcare finances much more complicated.

David (06:17):
Tell us more specifically about some of the financial challenges that COVID-19 has created for health systems.

Tim Maurice (06:24):
Initially, the major challenge with COVID was just identifying what were the resources that the clinical teams needed right away to serve the patient in the midst of the pandemic and that involved moving quickly on the supply chain to ensure that we had personal protective equipment and physical barriers, masks to support our caregivers and our patients and keep them healthy, we also worked very feverishly to secure additional funding.

Tim Maurice (06:54):
As we discontinued non-essential services, we went directly to the CARES Act for provider relief funds as well as to FEMA and other agencies to secure additional funding to handle what we knew would be a significant financial downturn to the organization. Fortunately, we were able to ramp up quickly after the initial effect of the pandemic and were able to preserve strong finances through that challenge.

David (07:21):
And we've certainly heard from numerous hospitals and health systems that the 340B program is what helped them remain financially stable during this challenging time. What has 340B meant for UC Davis?

Tim Maurice (07:37):
340B has been very important to us over the years. And the pandemic, it made it all the more clear that without 340B, we would really struggle to serve our safety net mission. Over 40% of the patient center hospital funded by Medicaid are unfunded and without those savings on 340B drugs, we would not be able to maintain that mission of serving that large underserved population.

Tim Maurice (08:04):
So we depend tremendously on 340B and yet at the same time, it's quite a complicated program and needs a lot of support to ensure that we're running it compliantly and meeting all the intent of the program.

David (08:20):
Well, that's certainly in line with what we've heard from, from other systems as well. At their heart, health systems focus on improving access to care and quality of care for their patients, so what part can a finance department play in furthering that mission?

Tim Maurice (08:38):
Well, number one, we work with all of our clinical leadership to develop budgets that provide the resources that they need to serve the patient. With COVID, we saw a dramatic increase in both labor and supply cost of 12% increase in labor cost, 20% increase in supply cost and that additional spending was critical for us to meet the needs of our patient and to provide access to care at a high level of quality.

Tim Maurice (09:05):
We also ramped up our telehealth program, which has been around for many years, but has served maybe 1% of our population and grew that over 50% during the initial phase of the pandemic, and that required a substantial investment in IT and policies, procedures, electronic health record to be able to provide care in a virtual way to our patients and that's continued since the height of the pandemic. So the finance department plays a critical role in ensuring that there are adequate resources available to our clinicians and in securing reimbursement from our health plans and government payers, as well as from our pharmaceutical manufacturers to achieve those savings to provide those resources.

David (09:47):
A lot to juggle there. We often discuss on this show and elsewhere challenges and threats to the 340B program. From your perspective, what is the biggest 340B challenge affecting your system today?

Tim Maurice (10:02):
From my perspective, the biggest challenge is the fact that we not only serve a high percentage of safety net populations within the Sacramento region, but we also serve this large geographic area across Northern and central California. And so the ability to deliver high quality care and access to care to people living in those communities without forcing them to drive all the way to Sacramento for their care and for their access to pharmaceuticals is really important to us.

Tim Maurice (10:32):
So the distribution of care, the distribution of medications, the ongoing communication between the clinician and the patient to ensure that patients are staying up to date on their medications, can afford their medications and are taking them is just critical to our success. I see the biggest challenge is this idea that hospitals are the center of patient care when in fact the patient's home is the center for patient care and we should be directing all our resources there.

David (11:02):
That's very interesting hearing. You talk about meeting patients more in their home. Can you talk a little bit more about that?

Tim Maurice (11:10):
The fact is that healthcare used to be centered around the four walls of a hospital. In particular, Disproportionate Share Hospitals were seen as serving their local service area. That might be a 10 to 15 mile radius around that hospital. But for many years, that has not been the case and in recent years, it's just not even close to being the case. And in the history of UC Davis, it's never been the case. So we've invested in a large network of community clinics, some of which your child's sites, some of which are not. We've invested in bringing our specialists out to the community, as opposed to requiring patients to come all the way to Sacramento for their specialty care. We've had a home health nursing division, but this is taking it to a much higher level, much more complex care to the patient's home or to their local community.

Tim Maurice (12:03):
This requires a substantial financial investment. And I do believe that safety net hospitals need to be able to have the resources including the savings from 340B to make those investments to expand beyond the four walls of the hospital and serve that broader community, and also provide care closer to where patients live. That will keep patients healthier, it'll keep them more productive so that they don't have to travel so much to get their care, and it will keep the clinical team, including the physician, more connected to the patient to ensure that the patient's receiving the right treatment to get the right care to address their needs.

David (12:40):
And how has some of the recent drug company actions on community-based pharmacies impacted your ability to find success in that mission?

Tim Maurice (12:51):
Well, we certainly have been affected by some of the unilateral actions by manufacturers to terminate the use of contract pharmacies for certain drugs for our patients which are life-saving drugs and are necessary for their treatment. So we're seeking alternatives that would provide the same level of quality and access to care that we had before these manufacturer actions. But frankly, we need relief. We may have one hospital and we have 16 clinics around the Sacramento region, but again, we serve patients that live 100, 200, 300 miles away.

Tim Maurice (13:27):
We need to have a network of pharmacies in order to provide access to those medications and yet there's significant challenges by the pharmaceutical manufacturers that these contract pharmacies shouldn't be a part of our network. And as a result, we either have to create a substitute which would be extremely expensive and difficult to administer, or we have to find a solution to take advantage of these network pharmacies.

David (13:51):
We've heard from numerous guests like you, who are concerned about how that contract pharmacy problem will affect their ability to maintain health services or expand them where they're needed. In a similar vein, when another health system department, let's say pharmacy, wants to start offering a new health program, what is the system CFO looking for when the department pitches that idea to management?

Tim Maurice (14:17):
Well, number one, David, what we're looking for is a business plan that considers all the potential opportunities as well as potential threats to the new program so that we can develop a robust plan of engagement to evaluate the business case, to develop a strategy around creating a new program, and to ensure that it would be sustainable into the future. For example, we're considering right now the formation of a home infusion program sponsored by UC Davis Health that would require a very large investment as well as a large staffing of caregivers, pharmacists, and nurses to provide infusion in the patient's home.

Tim Maurice (15:00):
This is where healthcare is moving, but it requires significant investment in infrastructure to be successful and to provide safe care in the patient's home as opposed to in a clinical setting. So we work closely with pharmacy, with strategy, with quality and with operations to ensure that we understand what we're getting into, have the right investment resources to make that investment, and then execute successfully.

David (15:29):
We know that many of our listeners are more involved in the day-to-day operations of 340B, so how can 340B program coordinators and managers and the like work to involve their health system leadership more in the issues that they work on day-to-day the 340B issues?

Tim Maurice (15:48):
I think the first thing is just ensuring that we connect the dots as we build new locations of care, build new programs and involve our 340B coordinators, as well as our finance and government reimbursement folks to ensure that when we create a new location or we create a new program, that we've thought through how this affects the 340B program and 340B program compliance.

Tim Maurice (16:12):
Sometimes operations will go out ahead of us and create a new clinic location without always informing us and we have to play catch up to make sure that we have the 340 coordinators on board and involved that we have the Medicare cost report updated and our financial reporting aligned. And so the more we can get in front of that, the better, and the more we can really ensure that hospital leadership is getting the resources and support that they need to be successful.

David (16:42):
I think that's some great advice for collaboration there. I know you're in several leadership roles that intersect with 340B. In addition to serving on 340B Health's board of directors, you're also on the board of the California Association of Public Hospitals and an active leader for America's Essential Hospitals or AEH. What would you say to 340B professionals about engaging with such associations?

Tim Maurice (17:10):
I think it's very important that we continue to advocate for the role of safety net hospitals whether they be public hospitals or private hospitals in serving the underserved community. I joined healthcare financial management in 1976 and I did so as a career decision but also as a vocation to serve people who are underserved. I recall as a young boy, my parents struggled to get access to healthcare and I really wanted to be a part of the solution in working in healthcare as a financial executive to help bring healthcare to everyone, because we all know that if we don't all have access to healthcare, then none of us is safe. And we have an obligation to serve those who don't have access, who have limited access to healthcare, and ensure that they can be provided the same level of healthcare that you and I can benefit from.

Tim Maurice (18:11):
And so by being on the board of the California Association of Public Hospitals, by being a member of the committees for the America's Essential Hospitals, I'm doing my part, not only to serve my local community, but help advocate for support from governmental agencies, from key stakeholders and key community leaders across the state and across the nation to ensure that safety net hospitals can continue to thrive and support these very needy people. And without us, I can only imagine how difficult life would be and throughout my career, whether it be in public hospitals or in private hospitals or physician groups, I really feel that the organizations that I've aligned with throughout my career are dedicated towards serving all patients, and I really feel that that is an important part of our mission.

David (19:05):
Well, I know for sure that the 340B Health board is glad to have that perspective and your expertise and insight on all these issues we discussed. Tim, I very much appreciate you making room in your busy schedule. Thank you for joining us today.

Tim Maurice (19:20):
My pleasure, David,

Myles Goldman (19:21):
Our thanks again to Tim Maurice for helping us learn more about the work CFOs do to support hospital 340B programs. What questions do you still have about the role hospital finance departments play in supporting 340B? Please share those questions or any episode ideas or feedback with us by emailing podcast@340bhealth.org.

Myles Goldman (19:45):
Finally 340B Health is starting its fall season of webinars over the next couple of weeks. These include a new edition of updates from the field on September one. Then on September nine, we will hold a webinar on policies impacting 340B at the state level. You can learn more and register for these at the link in the show notes, we will be back in September. As always, thanks for listening and be well.

Speaker 1 (20:15):
Thanks for listening to 340B Insight. Subscribe and rate us on Apple Podcasts, Google Play, Spotify, or wherever you listen to podcasts. For more information, visit our website at 340bpodcast.org. You can also follow us on twitter @340BHealth and submit a question or idea to the show by emailing us at podcast@340bhealth.org.