The role of the healthcare CFO is changing--and growing broader--as regulatory and social pressures force CFOs to think beyond the balance sheet, according to a new study by Ernst & Young announced at the HFMA ANI 2008 conference. The consultants, who held two focus group sessions with 23 CFOs, found that the CFOs are being asked to confront health policy issues in addition to addressing challenging financial management concerns.
The healthcare CFOs agreed that seven key issues were most likely to reshape the industry (and their jobs) over the next few years:
- The growing number of under- and uninsured patients are likely to have a big impact on their bottom line. Most CFOs say that improving workforce productivity may be their last chance to improve margins.
- Restricted access to capital, triggered by a combination of weaker credit and tougher bank lending standards, may slow down the hospital construction explosion of recent years and reduce strategic options. To cope with this, many CFOs are looking at methods for consolidating resources and organizations.
- Tighter physician relationships may prove to be key in getting ahead and surviving regulatory changes. Many believe that it's now important to attempt joint ventures with physician-owned businesses and employ physicians where possible.
- A shortage of key personnel, notably nurses, is driving up the cost of labor substantially.
- Pay-for-performance initiatives have called for costly investments in quality measurement, but haven't necessarily generated quality improvement. CFOs say these efforts won't work unless doctors are involved in hospital leadership and drive quality improvement.
- A new technology arms race is underway, with many CFOs feeling record pressures to invest in new clinical and information systems. To pay for such systems, CFOs believe consolidations of hospitals may be necessary.
- Demands for transparency and proof of community benefit are changing the industry with ongoing demands to disclose patient safety, quality of case, costs and charges. Not-for-profits must go further, explaining policy on bad debt and collections, charitable care and community benefit. CFOs say that adding these compliance demands to their plate will require great effort.
Interestingly, none of the points above address relationships with health insurers or changes in Medicaid. Oddly enough, it could be that right now, health plan reimbursement is the least of their worries.
To get a copy of the report:
- visit Ernst & Young's website