Health system CIOs and CFOs are accountable for driving forward the CEO's vision and powering strategic priorities. The most effective duos have learned to speak each others' language and respect their partner's expertise.
But a looming issue will pose a challenge for them in the coming months. At the Becker's Health IT + Digital Health + Revenue Cycle Conference in Chicago in early October, a panel of CIOs warned an audience of their peers about the most important areas to watch.
Mike Restuccia, CIO of Penn Medicine in Philadelphia, said introducing new, innovative technologies will be a big challenge in the next few years as expenses move from capital to operational.
"We're not sure of what the price point is or the cost point will be," he said. "I particularly look at the cloud and everyone says it's so much less expensive to go to the cloud and there is a breakpoint where it is less expensive, but then it's more expensive. I don't think CFOs totally understand where that break point is. I don't yet, and it's changing every day because new technology gets introduced and price points go down, or price points go up."
The price point is a moving target and can have negative consequences if leaders don't realize how much the costs are adding up.
"That's going to be a point of contention moving to the cloud," said Mr. Rustuccia.
Nader Mherabi, executive vice president and chief digital and information officer at NYU Langone Health in New York City, agreed. He noted CFOs are sensitive to liquidity as days cash on hand eroded over the last few years, affecting the institution's credit ratings.
"You have to really work collaboratively with the CFO to do projections. The toughest part of our role is to say to the CFO what percentage of your budget is going to shift from CapEx to OpEx and what does that translate to in value of dollars," said Mr. Mherabi. "Because not one-to-one OpEx to CapEx, you can't negotiate that way. There's a lot of smart CFOs and they figure out that that's not balanced."
Hospital margins have improved since last year, but growth is slow and has remained relatively flat at 4.2% since May, according to Kaufman Hall.
"That's going to continue to get contentious given that healthcare margins are so anemic in every market," said Mr. Mherabi.
Daniel Barchi, senior vice president and CIO of Chicago-based CommonSpirit Health, agreed the capital versus operating expenses conversation will challenge CIO and CFO relationships in the near future.
"For all of us to say the exact same thing should be an eye-opener for everyone, whether it's the cloud or software-as-a-service, or endpoint, and thick client versus thin client," he said. "We've got 225,000 devices and when they go from thick to thin, we're putting it out in the internet of things, and in the cloud, and supporting them as a service. OpEx just starts to add up."
Mr. Barchi said it's critical for health system leaders to keep these expenses in the forefront for long-term planning.
"The cliff is coming very quickly for when OpEx is the critical element in our budget, and then from a vendor point of view, you need to be thinking about how you make it possible to ingest this and either offset costs or make it capitalizable in a way that for all of us to say: 'Oh, it's capital. Yeah it's easy.' or 'It's OpEx, I'm sorry, I can't even talk to you'," said Mr. Barchi. "That's fundamentally where we are right now."
One more sticking point for CIOs and CFOs could be cybersecurity. Hospitals and health systems understand the gravity of ransomware attacks and they're spending big in key areas to fortify their defenses, and then have a plan for when a breach occurs.
"Aside from practicing tabletop with leadership on ransomware, we also practice once or twice per year with our finance departments to see what happens," said Mr. Mherabi. "If something major is happening, that might not even be a ransomware attack, it could be just a major outage affecting supply chain or payroll, which are finance-dependent. What do we do? What are the steps we practice? How do we pay people? How do we secure the supply chain."
The exercise helps the CFO appreciate that the CIO is paying attention to the finance leadership's responsibilities and not focused just on the IT perspective.