Aon, a risk management and human resources consulting firm, drastically changed its business model in the mid-2000s.
After divesting its insurance underwriting sector, which was one-third of its business, Aon bought two other firms to double down on its risk and HR focus. In addition, the company moved its corporate headquarters from Chicago to London. Aon CFO Christa Davies recently told The Wall Street Journal those decisions and others being made today stem from various financial pressures — many of which hospital and health system CFOs can relate.
Ms. Davies said Aon sold its underwriting division because executives realized the return on investment wasn't there anymore. "It was that return on capital analysis that drove the portfolio shift," she said.
Obtaining the best return has been the mantra behind the company's other strategic plans. Pensions, healthcare coverage and free cash flow are three of the other main challenges Ms. Davies said Aon is dealing with right now, and executives have used rigorous data analysis to determine how each area should be handled.
Ms. Davies said other CFOs must analyze four key areas right now to ensure their organizations are best-positioned for the future:
• Risk. How are you managing enterprise risk management and cybersecurity?
• Capital allocation. How do you invest capital to maximize return? For hospitals, what types of facilities should the community invest in?
• Optimizing the capital markets. With interest rates still very low, how are you structuring your debt?
• Growth. What markets will lead to further growth? What service lines will enhance the bottom line?
More Articles on CFO Issues:
Healthcare CFO Lessons: The Overhaul of a Consumer Printer Company
Healthcare CFO Lessons: How Should Hospitals Treat Low-Margin Services?
Healthcare CFO Lessons: The Importance of Risk Management