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The Finance Side of Academics – An Opportunity for Your Health System [PODCAST]

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In this episode, we’re pleased to welcome John Ballentine, Executive Director for Academics Finance Administration at Prisma Health, to discuss the finance side of academics and what the opportunities are for your health system.

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Highlights of this episode include:

  • Who is John Ballentine and how he landed in the world of academic finance
  • Background on Prisma Health
  • Revenue sources that exist to offset the expenses related to academic programs
  • Benefits of having an academic program at an organization
  • Challenges that face this environment
  • Summary

Kelly Wisness: Hi, this is Kelly Wisness. Welcome back to the award-winning Hospital Finance Podcast. We’re pleased to welcome John Ballentine. John is the Executive Director for Academics Finance Administration at Prisma Health in South Carolina. Since joining Prisma Health over 8 years ago, John has been a key figure in steering the financial strategies within Graduate Medical Education, or GME, and broader academic finance. With more than 16 years of cumulative experience in various finance functions, John has established himself as an expert in fiscal management and strategic financial planning. His education includes a Bachelor of Arts in political science along with an MBA from the Moore School of Business at the University of South Carolina. His experience, coupled with his academic achievements, positions him as a respected and accomplished leader in the field of finance and academia and as a multifaceted professional who integrates business acumen with a passion for the educational journey. In this episode, we’re discussing The Finance Side of Academics – An Opportunity for Your Health System? Thank you for joining us today, John.

John Ballentine: Thank you, Kelly. It’s wonderful to be here.

Kelly: Well, let’s go ahead and jump in. So can you tell us a little bit more about your background and how you landed in the world of academic finance?

John: Absolutely. First, I just need to say that the information that I share is my own opinion and does not represent the views or opinions of Prisma Health and that I also have no conflicts of interest to disclose. So now that’s taken care of. My career has not been a straight pathway. Some careers, you get the benefit of just moving straight up a channel. My career has not gone that way. It’s been an unusual path. As mentioned in the intro, I have a Bachelor of Arts in political science. And I got that with every intention of going to law school. That did not come to pass. So, I pursued my MBA later in my career, and that truly launched me to where I am today. The experience that I have is very helpful. The 13 years of academic finance experience, in both the 4-year university and in the healthcare setting, have sparked in me a love for the concept of the business side of education. I absolutely love it. And it’s easy to get behind the mission when you are educating and helping to take care of people. So those two items, when they converge, I can get up every day and get behind that mission, and that becomes very easy. So, it’s very exciting to talk about.

Kelly: Oh, I bet. And can you tell us a little bit more about Prisma Health?

John: Absolutely. Prisma Health is in South Carolina. And currently, the national health rating for South Carolina is at 38th for 2023, which moved from 41st in 2022, which is progress. However, that’s still a lot of work to do if we’re sitting at 38th. So that’s why we believe our academics is a big part of getting there. We have two major regions in South Carolina, the Midlands and the Upstate, and we have 18 hospitals that cover those regions. And that includes two academic health centers that serve approximately 25% of South Carolina residents. We have just under 30,000 team members, and we employ over 700 residents and fellows across more than 60 accredited fellowships and residency programs, accredited and non-accredited programs. Total number of learners that we have are over 8,000 learners that come through our system every year.

Kelly: Wow, that’s impressive. What are some of the components of academic finance at your organization?

John: Some of the components– I’ll go through a number of the components. One of the major components is the GME or the Graduate Medical Education. This is our residents and fellows. These are the lifeblood of our future workforce. We retain a desired percentage of the residents and fellows. You don’t retain everybody, and you don’t have place for everybody. So, we retain a desired percentage. This shortens the time lost in recruiting providers, which not only provides better access to care but also increases revenue that is normally lost during the recruiting process. Hiring residents and fellows also means that we have a provider that becomes fully productive quicker since they are already familiar with all the systems and processes at our healthcare system. Another component, our medical students. We work with two associated medical schools. We have third- and fourth-year medical students that rotate through our clinical learning environment. The advantage of this is that we get to recruit these medical students into our residency programs. And here’s one interesting fact. One study showed that if a student goes to medical school and completes their residency in the same state, they are 80% more likely to stay in that state to practice than another physician. This is likely, obviously, due to– they put down roots in the area, they get comfortable in the area, and they also get comfortable with the system in which they’re training. So that’s a big, big way to make sure you’re recruiting your own physicians.

Another component would be research, which is clinical trials and grants from various sponsors. A robust research environment contributes to many areas of academics and can attract some key personnel that help to raise the awareness and reputation of the health system. Another component is our allied health and pipeline programs. This is just as important as with the graduate medical education. These are programs for everyone, from high school students to aspiring medical students and then everybody in between that. They’re critical to the future workforce by minimizing recruiting efforts and helping to reduce the use of travelers in those areas, which is a big deal for just about every health system. Simulation is another component. There’s tremendous value in simulation, everything from workplace violence drills to code drills on a unit. Our two simulation centers also instruct the medical students from our two affiliated schools of medicine. And finally, they do private training events for community partners, that provide a fee-for-service situation because those community partners, in a lot of cases, do pay a fee for that service. Our student affairs area has oversight over all learners, except for the residents and fellows, that enter the system. This can be anything from those coming to just shadow a provider to a radiology technician student on a needed rotation. And again, they provide services to over 8,000 learners per year. And finally, one last component is our academic partnerships. We have partnerships with the University of South Carolina, Clemson, and Furman, to name a few, including our local technical colleges and other universities.

Kelly: Very interesting. What revenue sources exist to offset the expenses related to academic programs?

John: Great question. A big revenue source is the CMS dollars. Of course, this has been covered on other podcasts, so I’m not going to rehash that. The largest support in this area is direct medical education/indirect medical education dollars associated with the residencies and the fellowships. One note is that our two main academic health centers are over their caps. And just to help define the term, the cap is a limit that’s set by CMS on the number of FTEs that we can claim reimbursement for, back to 1996 limits. There have been some adjustments along the way, but they don’t have huge impacts on those limits. So, we still are limited to those caps. And basically, operating over the cap signifies an investment on the part of the hospital system into graduate medical education. Another source of revenue is state dollars. This is very specific to location, so there’s not a lot to add to this. South Carolina has some funds that help offset education expenses in different areas. But again, that’s very specific to each state, so that’s not really possible to cover. But there are state dollars available in every state under any situation.

Cost mitigation is kind of a revenue source, but it’s a cost mitigation. Educating individuals can offset the cost either right away by providing extra hands for patient care or it can do so later in offsetting costs of future FTEs. One example of that is, in one of our academic programs, they are working to train a duly certified position so that we’ll not have to hire two separate individuals to do what this one individual will be able to do. So that is a strong cost mitigation. Another source is academic partnerships, as I mentioned before, the different colleges and university partnerships that we have. We have shared positions, and funds flow back and forth to support these shared positions that we have with each of our partners. And then lastly, there are fees that can be assessed to access the clinical learning environment. This can be a revenue generator or cost offset because we are providing access to a resource that is needed for the learners. That access can somewhat disrupt our normal operations and potentially slow down some providers. It’s also a scarce resource that we must monitor closely so as not to allow it to overflow with learners and impact patient care.

Kelly: That makes a lot of sense, John. And what are the benefits of having an academic program at an organization?

John: Yeah, there are definitely a couple of benefits to it. Direct revenue opportunities is one. While the actual gain or loss totals depend on the mix of programs and what is considered revenue or cost savings and what is considered expense, having academic programs does create new streams of revenue. Another is the pipeline. Training your own future workforce can create incredible value for a health system. The cost of recruiting, lost clinical revenue due to the time a position is unfilled, and then startup time are all addressed by training and ultimately hiring your own trainees. This can produce a tremendous competitive advantage for a health system. You have coverage at lower costs. With residents and fellows, you can have service coverage at a much lower cost than paying regular attendings or even outside community doctors. For example, nighttime coverage could cost $1,500 or more, but an upper-level resident would cost you just a fraction of that amount. You have more current thought processes and ideas. For example, residents and fellows that enter a clinical learning environment bring within the cutting edge of knowledge and a certain energy to explain and explore areas that others may not know about. And this can add a culture of inquiry to a patient care environment, which really can impact patient care. And that leads into the last point about prestige. It is my belief that a health system that has a reputation for training high-quality providers at all levels carries a special weight in the mind of patients. When a patient faces a unique issue, when possible, they will typically search for a system that is on the cutting edge of healthcare. And that is usually an academic health system. So, there is a big prestige thing that comes into play.

Kelly: That’s very cool. Thank you for sharing those benefits with us. What challenges face this environment?

John: So, there are challenges. One is cost control. Like any other health system, there is constant pressure on healthcare to control cost. Therefore, academics is not immune to this. We’re always looking for places to reduce costs because there’s always pressure to add expenses. It comes down to a mindset of, “What am I going to do in order to do what I want to do?” Because there’s always new expense issues coming up, so you’re always looking to control expenses. There’s pressure to find new sources of revenue, and each entity we interact with is also looking for ways to control costs. Therefore, there’s a threat to our revenue sources. The best way around this is, constantly be on the lookout for new sources of revenue. Accreditors’ requirements are huge. Accreditor’s requirements are an added layer of control. As I’m sure most listeners are aware of, accreditation can be a source of frustration. An accreditor can issue what I like to call unfunded mandates. They can issue a requirement that may require more resources without providing the means to meet those requirements. So, this can happen in education, as it does in the wider healthcare landscape, very easily. And then getting appropriate credit. Sometimes an academic umbrella doesn’t get full credit for revenue brought into the system due to its existence unless a comprehensive review is done, whether it’s due to the systems that the healthcare system uses for tracking revenues and expenses where the revenues and expenses don’t align in that system and can occur and can cause the academic activities to look like they’re more of an expense than they truly are. So, there’s multiple reasons there, but getting appropriate credit for the revenue being brought in is an important thing.

Kelly: Thank you for sharing those challenges. Can you give us just a quick summary of what we reviewed this episode?

John: Yeah, absolutely. First, I covered the components of the academic finance at Prisma Health, detailing that we have graduate medical education, medical student programs, research initiatives, allied health and pipeline programs, simulation, and academic partnerships. Then I outlined the revenue sources, exploring funds from CMS dollars, state dollars, cost mitigation strategies, academic partnerships, and fees for [assessing?] the clinical learning environment. Next, I covered the benefits of having academic programs, including direct revenue opportunities, the creation of talent pipeline, which is a big one, cost-effective coverage with residents and fellows, infusion of current thought processes, and the prestige associated with being an academic system. And then finally, I concluded by addressing the challenges, such as cost control, pressure to find new revenue sources, accreditor requirements, and the need for appropriate credit recognition for the revenue generated by academic activities. I would like to say that, regardless of the challenges, I hope that I’ve underscored the strategic importance of academics in shaping the institution’s future workforce and enhancing its competitive position in the healthcare landscape.

Kelly: Yes. Thank you for sharing that great summary with us and all the great information today. We really appreciate you joining us, John, and for sharing your insights on The Finance Side of Academics – An Opportunity for Your Health System? Thanks again, John.

John: Absolutely. Thank you very much.

Kelly: And if a listener wants to learn more or contact you to discuss this topic further, how best can they do that?

John: The best way to reach me is my email address. And it’s John, J-O-H-N, dot Ballentine – and that’s B as in boy, A, and then L-L-E-N-T-I-N-E – at I can also be reached at my LinkedIn profile, which is jkballentine. And that’s another great way to reach me. Those are the two best ways to reach me.

Kelly: Awesome. Thank you for providing that for us. And thank you all for joining us for this episode of The Hospital Finance Podcast. Until next time…

[music] This concludes today’s episode of the Hospital Finance Podcast. For show notes and additional resources to help you protect and enhance revenue at your hospital, visit The Hospital Finance Podcast is a production of BESLER | SMART ABOUT REVENUE, TENACIOUS ABOUT RESULTS.


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