Guest post by Tom Quinn, a senior partner with the executive search firm Witt/Kieffer.
Editor's note: This is part two of a two-part series. Here's part one.
Healthcare systems in the U.S. are centralizing their financial operations as industry consolidation continues. Understandably, this disruption is prompting some unease among chief financial officers and a very good question:
How can enterprising CFOs at all levels--site, divisional and system--grow along with their organizations?
Several healthcare CFOs recently shared with me their answers to that question. Among their key thoughts:
- New corporate financial liaison roles are becoming typical, especially in large systems.
- It's imperative for site and divisional CFOs to understand system strategy.
- "Soft" skills of collaboration, communication, negotiation and advocacy can be as important as "hard" skills of accounting, financial reporting and data analysis.
Carl Francioli, CFO of Johns Hopkins Bayview Medical Center in Baltimore, embraces his liaison role. "I am a strategic partner for the local leadership team with a strong tie into the corporate services for other functions like cost and general ledger accounting, and patient financial services," he explains. "The entity-level leaders look to me to get support and answers from central finance."
Site and divisional CFOs can and should have responsibilities at both the local and system levels, with the system taking priority. Francioli believes that's a good thing: "We all have entity goals that we need to hit, but it's easier to achieve those goals when they are aligned with the system goals," he says.
Seeing things horizontally
Relationship-building across all areas is very important. When the introduction of goals leads to posturing or infighting, the well-positioned CFO can encourage teamwork and, ultimately, help achieve the goals.
Divisional CFOs can support local leaders in program development and growth initiatives. They play vital roles in conducting due diligence on mergers and acquisitions and typically are involved in joint ventures in their markets. They also must have exposure to other functional areas such as clinical integration, information technology, managed care negotiations, tax, treasury and supply chain. In short, they need to be involved in business development.
Tackling multi-level responsibilities also takes on greater significance because it prepares people for larger roles. “It is an ideal situation if the site CFO has ownership of a particular function that is system-wide, whether it is performance improvement, general ledger, revenue cycle or treasury,” Francioli says.
Just offering support is not enough for CFOs to prove their value. As health systems continue to pursue consolidation strategies (which can lead to further centralization of financial functions), site and divisional CFOs need to become informed participants in strategic discussions. As David Kirshner, CFO of the University of Rochester Medical Center (URMC) in Rochester, New York, puts it: They need to take a “horizontalist” view to see how their sites connect with the divisions and to the system.
Adam Anolik, CFO for Strong Memorial and Highland hospitals of Rochester (and associate vice president of URMC), brings site CFOs into strategy discussions. “I have had to be intentional about getting [them] involved in higher-level meetings so [they] can see the big picture,” he says. “It is important to constantly give people exposure to the system-level financial picture because they have a much better understanding where they fit it in and where they can grow as professionals.”
No substitute for experience
Tom Gibney, CFO of St. Luke’s Cornwall Hospital of Newburgh, New York, agrees. He says there is no substitute for experience when a financial leader becomes system CFO for the first time—that person isno longer rolling up an entity’s financials on a consolidated basis to the system. “The buck stops with you,” he says. “The board is looking to you for answers.”
A well-positioned CFO is trained to highlight the consequences of business moves such as alternative payment schemes at the system level and educate teams on risk amelioration at the local level. System CFOs can assist in this positioning by assigning areas of responsibility that stretch site and divisional CFO skills. They can guide, or coach, but also allow for creativity and debate to get the best outcome.
“You need to understand the issues, test your theories, and subtly verify your assumptions along the way,” says Bob Glenning, CFO of Hackensack University Medical Center in Hackensack, New Jersey. “It takes a while to get that point in one’s development.”
To reach that point, Glenning suggests that aspiring financial leaders use their skills and talents to grow beyond a reflexive reliance on how healthcare business has been done in the past. It is a time of big change--with big decisions and big risks--that requires forward-looking, big-picture understanding.