As healthcare continues to change and shift to value-based reimbursement, the role of the hospital CFO has become more strategic and multi-faceted.
Therefore, the job requires a new set of skills. The individual must communicate with various departments and of the organization and explain finance in a way that those outside of his or her team can understand.
Suzanne Anderson, executive vice president, CFO, and CIO of Virginia Mason Health System in Seattle, and Tom Quinn, a senior partner with executive search firm Witt/Kieffer, weighed in on best practices for CFOs.
Here are traits a CFO should possess, according to Ms. Anderson and Mr. Quinn:
1. An understanding of the business they're in.
"I think some CFOs might lead by analysis or looking at the numbers, but I think what's really important is to understand clinical programs and operations and what the frontline care team is doing," Ms. Anderson says. She says she believes that as healthcare becomes more difficult to manage, it's necessary to have baseline knowledge of the industry.
2. Good working relationships with co-leaders.
"It's really 'How can we work together to come up with strategies on how to improve the business?'" Ms. Anderson says. She says CFOs of today need to be more people-oriented, as developing working relationships is crucial.
Mr. Quinn, in Witt/Kieffer's Boston office, says the firm will look for CFOs who can partner with senior team members within their organization, especially clinical leaders, to help position the organization in the marketplace. Clinical integration is all the more important as hospitals are moving toward value-based reimbursement. And for organizations that don't employ a network of physicians, it's important to think about other ways that they can partner with such a network, says Mr. Quinn.
3. An understanding of clinical quality measures and how a hospital's operational areas can affect those measures.
Ms. Anderson says CFOs need to have expertise on quality measures, such as patient safety, preventive health measures or measures related to chronic conditions, so they can work with physicians to lower costs. Ms. Anderson says CFOs also should be aware of the hospital's risk-adjusted financial performance.
Mr. Quinn says as organizations move into more risk arrangements, Witt/Kieffer will look for CFOs who can budget and reserve for risk so organizations are a little ahead of the curve.
4. A solid ability to communicate in nonfinancial terms.
Ms. Anderson says a CFO today shares more information with frontline staff and must be able to illustrate to them what challenges the hospital faces. At her hospital, staff members are able to gain experience in different parts of the organization through the Virginia Mason Production System, the organization's management methodology "for identifying and eliminating 'waste'; and for improving care quality, improving patient safety and operational efficiency."
She says the system focuses on the hospital's processes and how to manage and implement them. For instance, she referenced an employee who has worked in various areas of the organization, including the finance office and managing an outpatient cardiology clinic. Now that employee is working with payer contracting. "I think a good CFO needs to encourage those kinds of experiences to create more skills and depth in the finance team," Ms. Anderson says.
Additionally, Witt/Kieffer will look for people who are fairly articulate and can present the case for quality to the payers, Mr. Quinn says.
"As an example, if a health system can demonstrate they have great outcomes (low infections and other complications) for total joint replacement, then the payers may give providers incentives for other procedures that have good quality outcomes as well," he says.
5. Well-versed in acquisition work, although that skill requires experience.
Mr. Quinn says a high value is placed on mergers and acquisition experience, but it doesn't become a skill set until a CFO has taken an organization through one. "Every merger and acquisition is going to be different, and the skills one learns are invaluable. In this era of consolidation, it's very valuable to have a CFO well-versed in acquisition work. However, you don’t want to alienate those without that experience since it's not a process you can train for," he says.
Mr. Quinn says overall, at Witt/Kieffer, he sees intellectual bandwidth valued over experience. Also, it's good to see someone with a demonstrated track record of building revenue up outside of the traditional patient care aspect.
"We're hearing that CFOs are a catalyst and change agent now more than in the past," he says. "Working shoulder-to-shoulder with physicians and clinical leaders (and) providing usable and factual financial information so people can do their jobs in real time is very important."