‘Guiding our financial success’: Q&A with Paul Castillo, C.P.A.

It’s tax season, meaning many of you have likely been focusing on your finances. At Michigan Medicine, there is one group dedicated to the organization’s finances year-round — a team led by Chief Financial Officer Paul Castillo, C.P.A.

Headlines recently caught up with Castillo to discuss how his office operates, the challenges of managing finances in a health care organization and the most rewarding aspects of his job. Here’s what he had to say:

Q: Your office represents a number of entities across U-M, including Michigan Medicine, the Michigan Health Corporation and affiliate entities. Can you give a brief overview of how your office operates?

PC: Michigan Medicine has both a centralized and a decentralized finance organization serving the medical school and health system. I directly oversee the centralized function, with the corporate team located primarily at Michigan House and the revenue cycle team at KMS.

The finance team is led by key individuals responsible for guiding our financial success. The goal of each of our leaders (who work in finance, revenue cycle, health information management and contracting) is to collaborate with operational partners to understand the drivers which position the institution well financially, both now and for many years to come.

We also have external responsibilities, including interactions with Medicare/CMS, insurance companies and rating agencies which require high-quality financial reporting and analysis. Additionally, our team works closely with the finance teams at many of our affiliates, such as Mid-Michigan and Metro Health.

Q: What is the most challenging aspect of serving as the chief financial officer for a health care organization?

PC: We work in an environment where the direct beneficiary of our clinical services is typically not responsible for paying the majority of the cost. Instead, the primary payer is a government body or large insurance company (paying on behalf of employers). The budgetary pressures faced by these payers results in pressure to reduce the average rate of payment we receive. At the same time, we are figuring out how best to invest in our core services and growth initiatives.

The complexity of our industry requires vigilance in understanding economics and a continual attempt to predict the direction we are headed. As Yogi Berra once said, “It’s tough to make predictions — especially about the future.” The future planning component of our role is constantly top of mind.

Q: What is the most satisfying part of your job?

PC: We have the privilege to work in an environment of exceptional and brilliant people committed to excellence in serving Michigan Medicine’s mission. We do so in an academic setting within the university, which magnifies the opportunity to succeed. People coming together to solve difficult problems is professionally and personally rewarding.

Q: What do you think is the biggest misperception about finance and its role within the organization?

PC: Finance is often seen as being too conservative, which at times creates conflict in a growing organization. One of our roles is to serve as the financial conscience of Michigan Medicine. By this, I mean that we guide Michigan Medicine leaders in making fiscally-responsible decisions.

Striving to be stewards today in preparation for our future means that we sometimes have to make unpopular decisions or bring to light suboptimal business decisions. At other times, regulatory restrictions cause finance to say “we can’t do that.” We do this in the spirit of good stewardship and protection of Michigan Medicine, which may be perceived as conservatism.

Q: You have spent many years working in financial positions at various health care organizations, coming to Michigan Medicine in 2011. What sets this organization apart from other places you have worked?

PC: Two things quickly come to mind. The first goes back to the people I interviewed with during my initial campus visits. I was impressed by the number of people I met that went to school here and stayed or came back after beginning their careers elsewhere. Others did not go to school here but have been with Michigan Medicine for substantial portions, if not all, of their career. This suggested the passion and commitment to the university and Michigan Medicine.

The second is the deep integration of Michigan Medicine within the university at large. This gives us advantages that other organizations simply cannot tap into (i.e. coordination of precision medicine initiatives across schools, the ability to leverage scientific study across disciplines etc.). These advantages place us at the forefront of discovery, which ultimately translates into better health care for the communities we serve.