In the second part of a two-part series, he discusses his most difficult financial decisions and what the future holds for tomorrow's healthcare CFOs.
Q: What was your most difficult decision during your professional career?
Blaine J. O'Connell: I have always felt that the most difficult decisions are those that affect people. Over the past 30 years in four hospitals and systems I have been involved in several restructurings in the finance areas. I've participated in restructuring a hospital-wide leadership platform, downsizing the leadership team. I have participated in outsourcing certain functions, seeking operational and cost efficiencies. Most recently, at Froedtert, we had to freeze salaries and promotions as a result of our faltering economy. None of those decisions have been easy and each has involved numerous hours of debate and planning on the part of the executive teams. Those are the decisions that always remain with me.
Q: What advice do you have for those considering going into healthcare finance who have aspirations to become the CFO of a hospital or system?
BO: This is a great question to ask me right now because, obviously, with my pending retirement and the resulting question of who comes next and what characteristics should the individual have, I have given a great deal of thought to this issue.
I think it is very important that all future leaders in healthcare understand that they are, in fact, operating a business. I don't intend that statement only for executives. I intend it for department directors and cost center leaders as well. Each individual is running a business within the broader scope of the whole hospital business. I have tried for years to make people understand that I really do get it when they say that the patient comes first. I hope that my actions have borne that out. But the rules of business and finance apply in the non-profit world just like they do in the for-profit world and, if we can't operate accordingly, we will soon be out of business. And that ultimately will have a very negative impact on the communities that we serve and on our individual patients. To that end, it is critical that each of our managers and leaders have appropriate training in basic business management.
For those who specifically aspire to become a CFO of a hospital or system, I would suggest four things:
1. First, become as well rounded and knowledgeable as you possibly can on the traditional phases of the CFO's responsibilities. Understand the concepts and theories behind finance and accounting rather than simply what the reporting requirements are. Understand the revenue cycle. Understand managed care contracting. Understand budgeting and capital finance. Don't become narrowly focused.
2. Second, broaden out beyond pure financial matters and become directly involved (in a meaningful way) in the strategic planning efforts of the organization. Find ways to become involved and to become a truly valued contributor to the process.
3. Third, remember that you don't want to become known as always representing the negative viewpoint. But at the same time, don't be afraid to ask the difficult and probing questions. Remember, while I encourage that all operational leaders need to be well versed in the principles of managing a business, the finance leader still is expected to be even more well grounded in those concepts and it is your responsibility to help others to consider all aspects before a decision is made.
4. Finally, always surround yourself with good people. Don't be afraid of the challenge of excellent co-workers and subordinates. That is the test. That challenge has very positive results for those who are cut out for the CFO role. If the results aren't so positive, perhaps one should recognize and understand his or her own limitations.
Q: What do you think the years ahead will hold for hospitals' financial situations? And how should they equip themselves to prepare for the future?
BO: Tough times lie ahead. We have heard the words so many times that they may sound trite but they have never been truer. "We have to learn to do more with less." That clearly is the case today. But that doesn't simply translate into cost-cutting projects. We're too far along in the scenario of rising healthcare costs for that. (That has been true for quite a while but I don't think people have recognized it.) As I said earlier, the industry needs to change the way healthcare is provided and become more efficient. I have no idea what that means or how it will be done. And, as a soon-to-be-retired person, that unknown scares the heck out of me but I believe it. We need to bring together our physicians, our operational leaders and our financial leaders to figure out different ways to provide care. We really need to stop simply reacting to governmental price cuts and freezes and managed care price constrictions and get ahead of this thing. Otherwise, we'll be strangled by the combined forces of the lack of funding from the government along with the loss of ability to cost shift.
Q: Any regrets about your career in healthcare finance? If there was something else you could go back and do, what would it be?
BO: Oh, I'm sure there have been decisions that I'd like to take back, but nothing jumps out as really significant. I've been fortunate to have had a broad range of rewarding experiences. I have worked with many great leaders in great facilities. I've spent considerable time in both community hospitals and in academic medical centers. I've experienced small community hospitals and large AMCs. I've been involved in healthcare in rural communities and in metropolitan areas. I've worked in a government-owned facility and in private facilities. I've worked where I struggled to meet payroll and I've been fortunate enough to make that a distant memory. So, why would I ever go back and change something? The challenges have been great and most rewarding.
Click here to read the first installment of Mr. O'Connell's interview and his thoughts on why being a hospital CFO is a fulfilling and evolving profession. Learn more about Froedtert & Community Health.