At first glance, healthcare and railroads don't seem to have much in common. However, both industries are experiencing a massive shift in how business is done.
Healthcare is moving away from a fee-for-service payment environment to one that encourages reimbursement for quality and value. The railroad industry is dealing with a major decline in coal shipments, which is a core part of the business, as new energy initiatives like natural gas arise.
This has forced CFOs in both industries to develop strong risk management plans. For Fredrik Eliasson, executive vice president and CFO of CSX Corp., one of the largest freight rail companies in the country, risk management did not begin when the decline of coal bubbled to the surface. Contingency planning has been a consistent practice.
"During windows of prosperity, it's tempting to divert resources away from risk management. We learned that is, in fact, the best time to build up the business risk management structure to keep the corporate antennae sensitive," Mr. Eliasson wrote in The Wall Street Journal. "BRM can serve the company best if it's an active and strategic process, linking core groups with accountability for keeping an eye on the horizon."
For the CFOs at profitable, thriving hospitals and health systems, rest cannot come at the heels of one healthy balance sheet. CFOs, along with their well-oiled finance teams, must analyze potential risk and communicate that risk to patients and other community stakeholders.
"Even for a 180-year-old company with a solid foundation and a window into economic cycles, shocks happen," Mr. Eliasson wrote. "We learned through experience that realistic planning must be dynamic, that collaboration leads to more innovative decisions and a commitment to transparency all can help organizations successfully manage through seismic shifts in the marketplace."
More Articles on Hospital and Health System CFOs:
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The 3 CFOs Behind HFMA's Financial Communication Best Practices
Getting Involved at Every Level: Q&A With Bayhealth CFO Mike Tretina