The new CFO

The role of the modern hospital CFO has changed considerably in recent years. Not only do they perform a vital strategic role overseeing enterprise planning and performance, by necessity they have become more involved in the clinical aspects of healthcare.

This is not to say that CFOs are taking blood pressure readings or prescribing medications. Rather, in the aftermath of the Affordable Care Act, finance has realized that to improve business outcomes, they must be more involved in enhancing patient outcomes – partnering with physicians in the development of initiatives that attract patients and ensure their experiences are positive.

“The role of the CFO has changed significantly in the last few years and will continue to evolve,” said Mark Bogen, senior vice president and CFO at South Nassau Communities Hospital (SNCH) in Oceanside, N.Y. “In today’s world, you cannot be an effective CFO if you do not have an appreciation of the clinical side of healthcare.”

Bogen is not alone in this assessment. Several other CFOs interviewed for this article agree that more of their time is spent learning from doctors about what they do and why. This was not necessarily the case prior to the ACA, when finance typically focused on procuring what hospitals needed at an affordable cost, while managing the business cycle through up times and down.

“I think many CFOs would agree that we have always felt that improvements in quality would eventually result in reduced cost, but we were more focused on improving quantity (of patients) at the time,” said Warren Forgey, CFO and executive vice president of fiscal services and business development at the Seymour, Ind.-based Schneck Medical Center. “Now we’re doing both –putting our minds to value-based purchasing measures, but also working on patient length of stay, readmission rates and other quality measures. This has required more common ground between clinicians and finance.”

Rx for finance

While CFOs certainly were involved in the clinical aspects of healthcare prior to the ACA, as hospitals move from a volume-to-value reimbursement methodology and begin to accept risk-based contracting, CFOs are becoming what Bogen calls “the Chief Business Officer.”

He explains, “To help advise the organization on the best investments to ensure an appropriate return, the CFO needs to understand the quality, efficiency, patient safety and patient satisfaction initiatives that will help guide this, as well as provide early warning signs when processes are not working effectively.”

To create patient care-focused initiatives that are also more cost efficient, a two-way street is required – clinicians have to be open to a dialogue with the CFO and vice versa. “As CFO, I have to be sure I can help the organization change the business model here from pay-for-service to shared-cost savings,” said Charles Santangelo, CFO at Susquehanna Health, a four-hospital integrated health system based in Williamsport, Pa. “But it requires that I work with physicians to provide the information they need to manage care more efficiently. I need their input to help them.”

Santangelo considers himself fortunate in having physicians who are sharing their perspective constructively and working as a team – a relationship that is bearing out in the Medicare accountable care organization Susquehanna, Pinnacle Health Systems and several smaller providers have formed, he said. The collaboration is a shared-savings arrangement that began in January for the purpose of improving the cost, quality, access and patient experience for central Pennsylvania residents. “Together, we offer high-quality care to more than 37,000 Medicare beneficiaries, while reducing the rate of growth in Medicare expenditures at the same time,” he said.

He said that by focusing more attention on patient health and wellness and providing additional services to beneficiaries with chronic illnesses, the delivery of care will be more coordinated and cost efficient. “For example, our doctors can identify high-risk patients and then hire nurse navigators and other patient advisors to contact these patients to make sure they’re getting the wellness care they need,” Santangelo said.

At Schneck Medical Center, finance and clinicians are joined at the hip in several joint committees that discuss ways to improve population health and patient experience. A recent decision was to form a clinically-integrated network called inSPIRE Health Partners with Columbus Regional Health, another hospital about 25 miles away. “Although we are competing hospitals and will continue to be that, we came to the conclusion that we could come together to improve healthcare in our local communities by combining our resources,” Forgey said. “By having a coordinated approach to healthcare, it is easier for physicians to manage patient needs.”

Increased coordination of healthcare delivery services can help patients with chronic conditions like diabetes become more educated about their conditions, he said. “This is very much a physician-led organization, in which finance played an important role bringing employers to the table and forming the overall structure of the integrated network,” Forgey said.

At SNCH, Bogen also works closely with the hospital’s clinical leadership, as well as senior administrative executives, service line administrators and even the marketing staff. He sees his role as helping to determine the contribution margins of the hospital’s programs and services and reviewing business plans on how to expand market share. “Millions of dollars are being required to retool the delivery system and I am part of that process to advise on how best to do it,” he said. 

At present, he is negotiating a deal with a large academic medical center to return some outpatient oncology services back to the hospital. He’s also in the thick of due diligence on the acquisition of an ambulatory surgery center via a joint venture with some of SNCH’s staff surgeons. And he’s riding herd on an effort to acquire the real property assets of bankrupt Long Beach Medical Center, forced to shutter after Superstorm Sandy. If the deal closes, SNCH will gain a dominant market position in the Long Beach, N.Y. region, and will become eligible for a Federal Emergency Management Agency claim that will bring significant capital dollars back to the hospital to reinvest in Long Beach as well as at the hospital’s Oceanside campus, Bogen said.

Jeff Henderson, CFO at Fortune 500 company Cardinal Health, a Dublin, Ohio-based distributor of pharmaceutical and medical products to more than 60,000 hospital locations, has watched the transformation of his fellow CFOs with interest. “More and more CFOs at hospitals are looking at how to better focus their attention on ways to improve the overall patient experience, which was not specifically part of the job a decade ago,” he said.

“Now they are joining in close collaboration with their clinical peers to do just that, while still providing the financial rigor all organizations expect from their CFOs.”