What is the role of a healthcare CFO? It’s a simple question, but in hospitals and hospital systems across the country, the answer is changing rapidly.
As the industry changes and hospital consolidation becomes increasingly common, CFOs have become more involved with organizational strategies of all kinds. A CFO today is not just an executive focused on managing a healthy financial position but a key driver of success across the broader organization.
As the CFO role changes, so does the finding and recruiting of a successful CFO. At Kirby Bates Associates, in our 30 years of experience building high-functioning executive teams, including placing CFOs, we’ve witnessed the changes to this role firsthand. We can help your organization determine what type of CFO is a strong fit and help you find the talent to take your organization forward.
Keep reading to learn more about finding the right CFO for your organization.
The Role of a CFO of a Hospital System or Independent Hospital
The recent changes that the healthcare industry is facing are incredibly visible in the role of a CFO for a hospital system or independent hospital. When your organization is seeking to fill this senior leadership position, it’s essential to understand the rapidly changing responsibilities of a healthcare CFO in this role.
System CFOs have Treasury Responsibility
CFOs of hospital systems or independent hospitals are responsible for handling the organization’s long-term debt and investments, as well as managing the complete revenue cycle.
Across the country, many health systems use dedicated treasury models and have a treasurer who manages liquidity, non-operating expenses, and liabilities. Alternatively, other organizations will distribute these treasury functions across the executive suite.
According to Treasury Strategies, five areas account for the best opportunity for efficiency and savings. Those include:
- Collection and disbursement optimization
- Banking service improvements
- Technology enhancements
- Short-term investment management
- Policy improvements
Some of these opportunities, like improvements to banking services and reducing time in accounts receivable, clearly fit into the traditional role of a CFO. However, these opportunities also reveal the trend of a CFO’s role encompassing much more than that of a traditional CFO. Today, the CFO of a system may be the person leading the adoption of new technologies that will save the organization money or mitigate digital risks and vulnerabilities.
System CFOs are a Critical Part of the Executive Leadership Team
A CFO has to consider the holistic financial implications of each decision they make. The financial strategy of a health system or independent hospital both drives and reacts to the organization’s success.
Therefore, the CFO’s ability to make intelligent decisions that positively impact the organization depends on a deeply nuanced understanding of the overall operation. As their influence over the organization grows, CFOs are increasingly seen as a partner to the CEO.
System CFOs Must Educate and Persuade
Given how integral they are to system-wide success and change, CFOs must tap their broad understanding of the system in their care to identify unique opportunities and risks and advocate for the appropriate actions.
While CFOs are involved in driving changes, they must also understand the implications of initiatives and the impact on every team in the organization. Initiatives like technology enhancements, policy improvements, and collection optimizations can have a significant effect on staff at all levels of the care continuum.
For example, sweeping changes made without regard to nursing staff might benefit an organization’s financial health temporarily. But if it eventually leads to a staffing crisis, it’s far from effective. CFOs need to recognize the impact their decisions have and use their influence to earn buy-in at all levels.
The Role of a CFO of a Hospital Within a System (Site CFOs)
The responsibilities of a site CFO differ from those of a system CFO. If your organization is filling this role, you may be looking for different qualities in a healthcare CFO.
Site CFOs Have a Narrower Focus
The responsibilities of site CFOs are much more specialized when compared to their system-level counterparts.
The majority of a site CFO’s work focuses on:
- Budgets
- Controlling expenses
- Variance management
- Revenue enhancement
- Risk management
- Supporting service and program assessments
However, to say that their focus is more specialized and less strategic is not to say it’s unimportant. Indeed, the work of a site CFO is instrumental in meeting audit requirements. Without this work, hospitals risk losing their ability to bill payors like CMS, which would be financially devastating for most systems.
Site CFOs Must Understand The System’s Strategy
Despite their specialization, site CFOs need to understand the system’s total strategy and their role within it. They should be involved with the system CFO’s strategic discussions and actively share what they’re encountering regarding the system’s goals.
Additionally, site CFOs should take what they learn from their collaborations with system CFOs and work to implement it in their hospitals, therefore supporting the organization’s overarching goals.
Site CFOs Must be Team Players
The role of a site CFO is deeply complex. They’re often responsible for managing the expectations of administrators and practitioners in their hospital, as well as executives such as the system CFO. When the system’s initiatives conflict with the hospital’s goals, culture, or operations, it’s the site CFO’s responsibility to negotiate and achieve synergy with key stakeholders like the CNO.
While there’s a time for site CFOs to push back and negotiate upwards about the unintended consequences of system-wide initiatives, they must understand their role in the system and their responsibility for successfully implementing new strategies that support the system’s growth and health.
What Every CFO Needs
Regardless of the CFO position your organization is recruiting for, a candidate should have two key traits for success.
First, they must be collaborative. System CFOs need to help set sites up for success, and site CFOs need to support the system’s goals. They must be willing to throw out any us-versus-them mentalities and adopt a unified mindset. When CFOs at either level do this, both systems and hospitals thrive.
Secondly, they need to be strategic thinkers. As we said earlier, a CFO is not just a CFO. At the system level, CFOs are becoming more strategic as their work encompasses every part of the organization that impacts success. At the hospital level, CFOs must understand and be engaged in the system’s strategy. Adopting that mindset enables site CFOs to improve operations and become a part of the succession plan for the system CFO.
To Find the Right CFO, Turn to Kirby Bates Associates
Finding the right CFO depends on whether you’re filling a site or system CFO position or a CFO for a hospital within a system or an independent hospital. Today, a CFO is much more than a CFO. CFOs are strategic leaders who can guide your organization to financial sustainability and efficiency.
To identify the people who will take your organization forward, turn to Kirby Bates Associates. By leveraging our nationwide network and reputation for excellence in executive search, Kirby Bates Associates has helped clients find exceptional leaders for key positions like CFO for more than three decades.
To learn more about finding the talent your organization needs, contact Kirby Bates Associates today.