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A Quick Look at the Role of the Healthcare CFO’s World

A Quick Look at the Role of the Healthcare CFO’s World

By Ibby Smith Stofer

Read any job solicitation for a healthcare CFO, and you may be surprised where the traditional backroom accounting functions fall in the list of required skills, experience, and responsibilities. As healthcare facilities have faced ever-changing reimbursement, consumerism, and shift towards performance-based pay, the CFO role has become more complex. Today’s CFO is now the manager of traditional functions while being an integral member of the leadership team and ally to the CEO.

Today's healthcare CFO position goes well beyond merely managing the ins and outs of money and being the guardian of the system's financial health and future. They are the go-to people responsible for ensuring the organization's decisions align with and support the strategy of the hospital. They are still responsible for the traditional accounting functions, but their daily reach often goes far beyond. Now the CFO manages the process and flow of funds, works with patients, insurers, and other internal leaders to align the strategy and mission of the healthcare system. The thought of managing millions of dollars of equipment and resources, being an influential team member, and directing multiple projects and people can either be appealing or daunting depending on the individual.

The CFO position in a hospital has a very challenging work environment. The ever-changing regulations, payer mix, and movement toward population health all contribute to their complex job duties. They must manage and advise on a wide range of projects that may include the following capital investment decisions:

  • Replacing or updating aging facilities
  • Merging hospitals or other provider groups
  • Acquiring physician groups
  • Integrating and managing non-acute care services and facilities
  • Purchasing new technology or upgrading old technology
  • Approving various IT projects

These type of capital requests are not expected to diminish in the coming years. As patient use of the traditional hospitals continues to shift to outpatient settings, the list of considerations, projects, and priorities also change. Inpatient revenues decline, reimbursement changes, and regulatory compliance and patient and community expectations all impact what capital is available and how it will be allocated.

They now must frequently consider questions such as: should we buy newer technology, invest in home-care through strategic partnerships, or purchase or merge with another facility in the same or nearby community? Capital planning and control during times of reduced revenues, margins and increased costs is critical to the organization’s financial health.

Researching Medical Equipment Capital Lease

Making decisions on how to manage capital has changed dramatically in recent years. An article in the Summer 2016 edition of Strategic Financial Planning can provide a great understanding of how hospitals plan for capital projects. A link is provided below.

If you are selling products or services to healthcare providers, reviewing the linked article may be useful in understanding both the process and CFO’s role. There is limited capital and many requests that must be evaluated, decided, and managed.