As hospital and health system finance leaders continue to navigate ongoing industry financial pressures, many are sharpening their focus on capital investments, employee benefits and labor, areas where cost discipline and long-term growth intersect.
Becker’s connected with CFOs from Dayton Children’s, Sanford Health and WVU Medicine to discuss how they are balancing cost discipline with long-term growth. From workforce management to employee benefits and capital allocation, leaders stressed that careful stewardship in these areas is essential not only for financial stability, but also to build flexible, sustainable models of care that will serve patients and communities for years to come.
Editor’s note: Responses have been lightly edited for clarity and length.
Question: Which areas of spending are under the greatest scrutiny right now, and how are you balancing cost discipline with long-term growth?
Chris Bergman, CFO, Dayton (Ohio) Children’s: We continue to focus on labor costs as salaries and benefits represent 65% of our costs. But we’re trying to be very specific in this area; looking for inefficiencies, how we staff our clinics, are our staff working to the highest of their license, are we matching labor to the actual acuity of our patients — we have recently deployed the Epic acuity module. We’re trying to be smarter in this area, and not general in terms of using high-level benchmarking to adjust staffing levels. We think if we’re careful about matching labor to the activity, it provides a framework for growth as the model was developed to be flexible with respect to volumes and acuity. Also, we manage the financial aspect over a five-year rolling time frame, so we try to avoid situations where we are not investing in the future, whether that’s acuity, changes in patient care or growth.
Nick Barcellona, CFO, WVU Medicine (Morgantown, W.Va.): Employee benefit costs, in which we’ve experienced double-digit growth over the past few years, remain a key area of focus. We are an integrated delivery network that includes our Peak Health insurance plan, which allows us to focus on addressing this cost problem in a way that delivers better care and improves the health of all our covered lives, including our employees.
We have a multidisciplinary payer-provider integration steering committee that has candid discussions about tough but critically important topics, such as improving access, fully leveraging our integrated electronic medical record, physician compensation models, and eliminating administrative burdens. One of the fundamental rules of the committee is that we always ensure our financial incentives are aligned, regardless of whether you are on the payor or provider side of the table.
The good news is we are already seeing positive results with bending the cost curve on employee benefits and doing it in a way that keeps our employees healthy and happy so they can continue to care for the patients and communities we serve over the long term!
Nick Olson, Executive Vice President, CFO, Sanford Health (Sioux Falls, S.D.): As a 100-plus year-old organization with plans to serve our communities for the next 100 years, we approach cost discipline and growth with a balanced, forward-looking mindset. In today’s environment, spending that does not align with our mission or is tangential to where we can add the most value should receive close scrutiny. We prioritize investments that improve efficiency, enhance affordability for our patients and members and strengthen the sustainability of our care delivery model.
Balancing near-term cost discipline with long-term growth means being disciplined about where every dollar goes. Every dollar we invest is one we can’t deploy somewhere else, so we apply a rigorous review process that ensures alignment with our system strategy and mission. This helps us focus on opportunities that expand access, improve quality and deliver a clear return on investment for the communities we serve — not just this year, but for decades to come.
Q: How do you see capital discipline shaping the CFO role over the next few years?
CB: I think we have to be careful about our capital purchases in the future. Particularly as we continue to decentralize services, we are trying to deploy a holistic approach that considers new services, new technology, new processes, etc. and balance those over a period of time so we don’t spend all our money on the mission without having some balance of positive cash generating projects. That doesn’t mean the negative cash-flowing projects don’t get funded, but rather they are balanced with positive cash-flowing projects, which might mean the negative project is delayed a year or two.
We have a five-year plan that establishes guardrails around resources and investments so we can try and stay in the “corridor of control” for financial resources. The CFO role will need to be disciplined to follow the plan, and if there are surprises that need to be funded — and there always are — then where can that be offset with delaying another project to make room, not only from a spend perspective but also the impact on the operating performance of the organization, as not all capital projects are created equal.
NB: Discipline is one of my favorite words, right up there with cash! We are a relatively young health system that has grown rapidly over the past five years. Combine that with operating margins around 2% to 3%, and we are constantly balancing capital investments in continued growth against maintaining infrastructure, all while delivering consistent operating cash flow performance.
Growth projects are often more exciting, but maintaining infrastructure is key to long-term success. I like to think of it as changing the oil in your car, which admittedly you can get away with not doing for a while. Then your engine blows up, and it costs significantly more than if you would have kept up with regular maintenance all along.
NO: Capital discipline is becoming one of the defining responsibilities of today’s CFO. In an era where resources must be carefully prioritized, the CFO is not only a steward of financial health but also a strategic partner guiding long-term investment decisions. Over the next few years, I see the CFO role evolving to place even greater emphasis on ensuring capital allocation supports both operational efficiency and mission-critical growth.
This means championing a rigorous, systemwide approach to capital decisions — one that weighs return on investment, advances access and drives measurable improvements in quality of care. It also means fostering a culture of accountability across the organization so that spending aligns with where we can have the greatest impact. The CFO will increasingly act as a bridge between cost discipline and innovation, ensuring the organization remains financially strong while continuing to anticipate and invest in the future needs of our communities.
