How the hospital CFO’s role is changing

National Harbor, Md. - The role of the chief financial officer in a hospital system is changing significantly.

At the Healthcare FInancial Management Association conference in National Harbor, Maryland earlier this month, chief financial officers say the position has evolved as the healthcare industry grows more complex and the industry is changing rapidly.

Healthcare finance leaders say the role of the CFO is going to become even more important as hospitals and health systems expect to face more challenges in the coming years, especially with projected drops in Medicaid funding and an aging population needing more care.

James Lee, executive vice president of population-based care and chief financial officer of the Multicare system in Washington state, says the position involves more than measuring revenue and expenses. Multicare operates 13 hospitals and 300 other care sites in the Pacific Northwest.

“It used to be that in the old days, a CFO was about reporting financial results and financial planning and being responsible for the capital budget,” Lee told Chief Healthcare Executive® in an interview at the HFMA conference.

“And now the CFO is an integral partner with the CEO in charting the course for the healthcare organization, so we spend far more time and strategy development and strategy alignment across the enterprise, and far less time on nuts and financial issues,” Lee says.

Strategy and execution

In his relationship with Multicare CEO William G. Robertson, he says conversations regularly focus on strategy and execution, and meeting financial challenges while still maintaining the health system’s mission. He says strategies for population health emerge from those conversations.

“It’'s a different type of relationship, it's a different type of input that we're providing, much more front end and less reactive now,” Lee says. “We still have things that can happen and new laws that come our way, and we have to adjust to that, but it's more about charting the course together, as opposed to just providing here the numbers or, ‘Here are the economics of this.’

Melinda Hancock, chief financial officer of Sentara Health, offered a similar assessment. Sentara operates 12 hospitals and 400 healthcare sites in Virginia and North Carolina. Hancock has served as the system’s chief financial officer for 18 months. In an interview at the HFMA conference, she says she appreciates that she can have frank conversations with Dennis Matheis, Sentara’s president and CEO.

“Even though I've been only the CFO for a year and a half, I feel he and I have settled into a really good relationship,” Hancock says. “Because he knows I'm going to tell him what I see and how I see it, even sometimes when it's not the best news, and I think he expects that.”

“I feel very fortunate, and I hope that most CFO-CEOs relationships are like that. So, I think it's incredibly important. We have hard decisions to make, and in some cases we don't have a lot of time to make, and so you do the best with the information that you have, but you’ve got to be forthright.”

Saurabh Tripathi, the chief financial officer of the Ascension health system, says much of the role of the CFO involves explaining the rationale behind recommendations.

He talked about answering questions and talking with the board before Ascension ultimately decided to acquire AMSURG and its network of ambulatory care centers, marking a bigger shift to providing care outside the hospital.

“Frankly, this is the burden that rests on the shoulders of CFOs, because we are closer to the data, so we have to convince the board,” Tripathi said during a session at the HFMA conference.

Understanding the ‘why’

In a conversation on the main stage of the HFMA conference, Tina Freese Decker, president and CEO of Corewell Health, and Matt Cox, Corewell’s CFO, stressed the need for candor and honesty between the two leaders.

“I want the truth,” Freese Decker said. “He has to be completely honest with me, very candid, come in with scenarios, not just complaints, and help us figure out what the path forward is as we move forward.”

Cox, who just began his term as the HFMA’s chairman, said he appreciates her desire for blunt assessments and the ability to disagree. He joked that on a couple of occasions he’s worried that his blunt assessments may lead to his ouster, but he says he values Freese Decker’s desire for straight answers.

“The CEO doesn't want to hear what they want to hear, they want to hear the truth,” Cox said.

Cox also said that top finance leaders also need to help those outside of finance to “understand the why.” He says that he spends time trying to help persuade and influence others rather than simply making decisions.

“It's table stakes to make decisions, being a CFO. We all have to do it well. We have to have competency. But I think what really can set CFOS and finance leaders apart is by really leaning in and helping others via influence,” Cox said.

Lee advises other CFOs to stay focused on the mission of the organization, even in trying times.

“There are a lot of challenges in healthcare, and it is easy to get frustrated or lose enthusiasm in the work,” Lee says. ‘But if you think about why we exist, which is to care for the communities we serve, it's very rewarding work that we have, and we have a privilege to do so. Being grounded in our mission is always important.”

• Read more: Corewell Health CEO Tina Freese Decker on making a merger successful