Making the CFO - CMO relationship work

When a partnership between the two executives is formed, the relationship has the potential to become the foundation for moving forward in a challenging environment.

The relationship between a Chief Medical Officer and the Chief Financial Officer can become adversarial in an era when external pressures are calling for change to healthcare’s economic model. But when a partnership between the two executives is formed, the relationship has the potential to become the foundation for moving forward in a challenging environment.

Mark Bogen, CFO at South Nassau Communities Hospital in Oceanside, New York values the partnership he has forged with CMO Linda Efferen.

“I know she has to balance what the hospital has to do in order to improve its quality and its outcomes, as well as to keep financially solvent,” Bogen explained. “I’m always in a hurry to get to the financial component. I tend to be a little more straight-forward in terms of wanting to move the agenda forward very quickly. She’s got to look at it in terms of the various relationships and partnerships we have on the medical staff.  She’s very good at always wanting to make it a learning experience.”

The fact that the two have different styles is a plus, Bogen believes. Opposites attract, as they say.

Both Bogen and Effferen have worked to earn each other’s trust and respect, and both have made special efforts to learn the other’s trade. For his part, Bogen became the technical administrative sponsor of the hospital’s electronic patient record initiative. And Efferen decided to immerse herself in the business side of things by pursing an MBA.

[See also: 5 things CFOs need to communicate to CIOs to prevent overspending.]

“I would say that in the last five years, most of us – the CFO and the CMO – have been forced to really understand what each other’s roles are more than in the past,” Bogen said. “As I talk to other CFOs and CMOs, I can see that there are a lot of discussions going on between the two and more working together than at any other point of time in the history of hospitals.”

The two report as equals to the CEO, and they co-chair many steering committee meetings at the healthcare organization.

“I think overall it has been a very good relationship,” Bogen said. “Obviously it makes no sense for either one to be reporting to the other, and I think the way we have it is fine by me.”

Like any good relationship, both Bogen and Efferen bring different strengths and styles to the arrangement. “I’m looking at everything to equate cost. She is looking at quality and patient outcomes,” Bogen noted. “Hopefully we’re able to merge what each of us does well to help the organization move forward.”

The fact that Bogen and Efferen are both “data geeks” has helped them share a common vision for applying data and analytics.

“Both of us have an interest in proving that quality care reduces cost,” Bogen explained. “That’s where I’m really starting to gather data, working with Linda to demonstrate that fact to the rest of the organization and to the board.”

That effort includes working closely on electronic patient record and clinical documentation improvement. Next on the agenda is to look at issues related to variability of care.

In the last five years, most of us – the CFO and the CMO – have been forced to really understand what each other’s roles are.

In the era of big data and healthcare informatics that shared vision is key.

“Linda is very mindful of the financial realities of today, and I’m very aware of the clinical quality issues that we have to deal with,” Bogen said. “As you start the data gathering – the big data issue – and agree on what the data is telling you, I think that is going to take over our relationship for the next couple of years.”

Relationships built on trust and respect
At the University of Utah Health Care, Chief Medical Officer Thomas Miller, MD, sees a similar trend. Miller spends a lot of his time learning about hospital finances. And his CFO works hard to understand the unique clinical demands placed on the organization by its School of Medicine.

“Academic medical center hospitals play a rather unique role in the assistance of the School of Medicine and clinical departments,” Miller explained. “Roughly 10 percent of our budget goes toward funding the School of Medicine. We’re here to help them achieve their mission.”

Miller says the most important thing he can learn about the financial side of the organization is to understand margins.

[See also: Communication basics for CFOs.]

“What I’ve had to learn over time are checks and balances over funding an academic mission and maintaining our growth on this side of the fence – the hospital – and managing that growth to meet the competition that is out there now,” Miller said. “It’s a much bolder game. To that point we’re always trying to grow in our margins. It’s not nearly that of a larger private healthcare concern, but on the other hand, we’ve been able to work closely with the School of Medicine.”

From his perspective, Miller says “one of the best ways the CFO helps the chief medical officer is bringing forward new regulations, new mandates and new things coming out of the federal or state governments.” For instance:

• How do we manage the ACA (Affordable Care Act) at our level?
• What does that mean to the institution?
• What’s the importance of accepting Medicaid expansion?
• What happens if the state doesn’t?
• What is going to happen to graduate-level education?

“Those are the kinds of things that the CFO can help the CMOs understand so he can then relate them back to the faculty in a meaningful way,” Miller said.