Donald Lorton stays focused on mission as Carilion changes

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By Donna C. Gregory

With a $1 billion operating budget, it would be easy for Carilion Clinic CFO Donald Lorton to get lost in a jumble of spreadsheets and number crunching. But for Lorton, those numbers aren’t just dollars and cents. They represent how well Carilion is meeting its mission.

“The one thing that’s always intrigued me about nonprofit health care is that all of our employees understand that profits are important, but there’s a bigger goal. If we have a process failure, literally people’s lives hang in the balance. I’ve always felt like I’ve got an accountability to a much more important vision than making money,” says Lorton.

He began his career in health-care finance in 1969 and joined Carilion in 1972. “When I came here, it was a single hospital that probably employed 2,000 people,” says Lorton. “Today, we are seven hospitals, 450 physicians, over 11,000 employees, covering a geography that runs from Galax to Strasburg.”

Although health care has made rapid advancements during the past 40 years, there are some challenges that haven’t changed. “A lot of the issues we’re facing have been around almost as long as I’ve been in this business: Medicare … how to deal with the uninsured … the constant shortage of nurses, physicians and technicians — those things all go back to when I got into this business.”

As a nonprofit, however, Carilion hasn’t remained static. Two years ago, the organization began converting from a traditional hospital system to a physician-led clinic model.

“The current payment systems [in the health-care field] foster all the wrong incentives. No one is rewarded financially for looking after a person’s health or well-being. We’re only paid if we fix something that’s already broken. That’s just wrong,” says Lorton.

The Carilion Clinic is taking a different approach, focusing on what’s best for the patient, not profit margins. It’s also streamlining the assembly line of health care, bringing physician, laboratory and other services under one system. “We’re attempting to put all of that in one enterprise that operates off one balance sheet,” said Lorton.
Lorton’s guidance has been pivotal as Carilion has grown and changed. During his tenure, he’s led Carilion through five hospital buyouts and the acquisition of a physician practice that’s now the foundation of the clinic. Through his investment acumen, Carilion’s investment portfolio has grown from $88 million in 1993 to over $722 million today. Assets are up from $292 million in 1990 to $1.7 billion last year.

“Don is unique in that he has a laser-like focus on financial data, a quality certainly shared by other CFOs,” said Alexander Boone, director and member of the executive committee of Carilion Clinic. “The difference is that Don does not get lost in the financial data. Instead, he uses it to analyze and apply it to help make outstanding ‘big picture’ decisions.”


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