Not your grandfather’s CFO — 5 must-have skills to lead operational transformation and how to gain them

2017 introduced threats both virtual and actual, from ransomware to natural disasters, and potential political change brought another type of hazard — uncertainty.

Strong leadership from the C-suite is more critical than ever, and increasingly healthcare CFOs are called upon to shepherd providers into a new age of efficiency and value.

“The CFO like never before has the opportunity to be an integral part of system operations,” Tim Reed, CFO of Yakima, Wa.-based Virginia Mason Memorial, told Becker’s Hospital Review. “This means regular collaboration with leadership in helping assess current operational efficiencies as well as navigating imminent changes to the industry.”

Instead of crunching numbers and focusing on “what’s happened” from a financial standpoint, today’s CFO plays a greater part in defining and determining strategy across the enterprise, from operations and labor to payer contracting and risk management. Although their financial responsibilities remain central, the new role required of CFOs in the shift to value-based medicine necessitates the mastery of new skills.

Becker’s Hospital Review caught up with Mr. Reed and two other hospital CFOs, as well as two healthcare consultants from national consulting firm Prism Healthcare Partners, about CFOs' roles in leading operational transformation and innovation. In addition to Mr. Reed, discussion participants included:

  • Robert Flannery, CPA, senior vice president and CFO for UW Health in Madison, Wis.
  • David Nosacka, CFO of the Southern Illinois region for Hospital Sisters Health System in Springfield, Ill.
  • John Storino, managing director for Prism Healthcare Partners
  • Steve Lothrop, managing director for Prism Healthcare Partners

Not your grandfather’s CFO

CFOs’ roles in hospitals have expanded from financial management to business strategist.

“Unlike a few years ago, now [what is] required is a broad vision of the current landscape, one that marries enterprise-wide strategic initiatives with the financial realities of healthcare, both current and future,” Mr. Reed says.

At many healthcare organizations, becoming more strategic means CFOs are working across departments to familiarize themselves with various aspects of day-to-day operations and identify opportunities for improvement.

“Finance leaders are required to be nimble, moving up and down the management ranks as a collaborating partner on patient throughput and redesign, analytical support for initiatives, and how to solve for the budget gaps that have or may exist from revenue and expense perspectives,” Mr. Nosacka says.

Skills CFOs need to be effective change leaders

Leading large-scale operational transformation is no easy feat, even for seasoned executives. However, CFOs can cultivate and develop certain strengths to prepare for leadership challenges throughout the transformation process.

“The CFO is well-served to be a respected leader in the organization with unquestionable integrity,” Mr. Flannery said. “Multiple strengths are called upon [to lead organizational change] with perseverance at the top of the list. This is difficult work and many will call into question the need to do it, the speed at which it is done and the impact it will have on patient experience and quality.”

A predominant theme to emerge from the discussion was having a well-developed strategic vision. Mr. Storino recommends CFOs understand their performance data, and benchmark their organization against industry standards, to begin devising strategies for improvement.

“Pressure on operating margin is an increasing challenge for today’s CFO,” Mr. Storino said, explaining the challenge of just keeping the lights on at most organizations. “Understanding performance gaps in comparison with the industry, your peers and your goals is the first step in defining the vision for the organization.”

Strong communication and interpersonal skills are also essential for CFOs to forge partnerships between financial and operational management, as well as gain staff buy-in and support.

“Be an expert at boiling complex problems and tasks down into their simplest components so you can communicate to multiple audiences,” Mr. Lothrop says, noting that an effective change leader is able to talk about more than just finances and cost.

“CFOs will be surrounded by clever and creative people who will have innovative ideas to improve revenue. Be the CFO that’s as curious about new services as they are about managing costs,” he adds.

Another key characteristic CFOs discussed was objectivity. Identifying inefficiencies and finding places to cut costs requires leaders to be as objective and unbiased as possible, Mr. Reed says.

“Often we think our organizations are operating at peak performance in many areas,” he says. “More likely there are pockets of high performance — some just need a tune up while others present opportunities for redesign. The CFO should welcome the outside perspective which is key in moving from good to great performance.”

5 tips to develop real-world skills on the job

1. Get your hands dirty — “Immersion in a project is the fastest way to improve skills,” Mr. Lothrop said. “Assign yourself to an industrial project like a major renovation or a new building construction project.”

2. Find a mentor — “Join forces with someone that’s an outstanding operations manager, work a project with them, figure out what skills and habits make them exceptional, and then try to acquire those skills and habits yourself,” Mr. Lothrop said. 

3. Get out of your office — “I spent half my career in operations but it had to be hardwired [into me] to schedule time to round through various parts of the organization,” Mr. Reed says. “Not only will staff appreciate it but you will hear and see things you wouldn’t learn otherwise.” 

4. Connect with your physicians — “Staying connected to ground-level changes in inpatient and ambulatory care is necessary to provide advice to the leadership team on financial impacts of future delivery models,” Mr. Flannery said. 

5. Devote time with your front-line leaders — “I continue to see opportunities [to learn] through meeting with leaders each day. Devoting time with front-line managers has had a substantial impact on my professional development,” Mr. Nosacka says.


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