Becker's CEO + CFO Roundtable 2019: 4 Questions with Doug Watson, Chief Financial Officer for Dignity Health - Arizona

Doug Watson serves as Chief Financial Officer for Dignity Health - Arizona. 

On November 12th, Doug will serve on the panel "Leadership, Mergers and Acquisitions: What We’ve Learned so Far" at Becker's 8th Annual CEO + CFO Roundtable. As part of an ongoing series, Becker's is talking to healthcare leaders who plan to speak at the conference, which will take place November 11-13, 2019 in Chicago.

To learn more about the conference and Doug's session, click here.

Question: What is the single most important thing you need to do in your role? (Ie: What do you have to be great at?)

Doug Watson: As a Healthcare CFO, I believe it is critical to be deeply involved in the strategy and operations of the organization. The finance executive needs to be both the financial conscience of the organization as well as the visionary that can figure out “the how”, when you have worked with the strategy team or the clinicians to figure out “the what” that we need to do. As a CFO, you also often fill a role the movie industry has glamorized as “the fixer”. The CFO has to go in and restructure the deal that isn’t working or figure out why some aspect of the revenue cycle has gone off track. You have to look at each of those things as opportunities and not focus too much on how we got here (Other than to understand the lesson so you can help the organization not make the same mistake again).

Q: If you acquired $10 million dollars with no strings attached today, how would you invest or spend it?

DW: Housing is one of the most important underpinnings for good health and as a society, we are creating more housing instability than we have seen in quite a long time. In Phoenix, the cost of renting has escalated rapidly as the economy has boomed and many formerly affordable areas have been redeveloped into higher cost housing or commercial space. Linda Hunt, our CEO in Arizona and I are working with local government, business leaders and other not for profit organizations to put together a major affordable housing initiative that would provide new options in the community. The vision is to create affordable housing that has on site medical and behavioral health resources as well as healthy food and living resources. A $10 million gift would assist us in accelerating this vision. Through our Medicaid health plan, Mercy Care, we recently completed a detailed scientifically prepared study that shows what stable supportive housing can do to improve the health of the SMI (Seriously Mentally Ill) population while reducing the cost of traditional healthcare for these individuals. We know that stable supportive housing interventions can save and improve lives, it would be great to be able to accelerate this effort.

Q: There is a lot to improve upon in healthcare. Of the many issues that hold your attention, what is the one you consider exceptionally imperative and urgent?

DW: There is so much discussion about the cost of healthcare and the current disparity of access that occurs due to our current fee for a service-based system. I think as finance leaders, we need to be working with our elected representatives and within our own organizations to figure out how we can work to create a more affordable model and educate on the true economics at play. To do that we need to look at this extremely complex and highly regulated industry and think differently. The general public doesn’t understand how uncompensated care drives costs for everyone or that the way commercial health insurance and Medicare/Medicaid are structured means that commercially insured members subsidize the Federal Government allowing them to pay far less than cost for Medicaid services and close to or below cost for Medicare Services that the Federal Government purchases. Add to that the significant cost of well-meaning regulation and you create an environment where it costs a lot of money to provide care and health systems struggle to make the 2% net operating margins that even notoriously low margin businesses like grocery stores can achieve. The idea of Medicare for All or the Bernie proposal of “cancel all medical debt” is naïve in terms of the major economic restructurings that they would take. As finance leaders, we need to lean into this debate and find ways to improve the situation while preserving what works.

Q: Healthcare leaders today need skills and talents that span beyond those emphasized during formal training and higher education. What is one specific competency that you learned or sharpened in real life? Or: What one specific competency do you believe up-and-coming healthcare leaders would benefit from strengthening outside the classroom?

DW: Healthcare is a relationship business and most technical training, whether it is Medical School, Nursing School or the road to your CPA, does not prepare you with the skills to be a great relationship person. To have influence, you have to be able to put the facts, issues, and solutions into terms that the other decision-makers can understand. I recently had the opportunity to be a consumer of healthcare and it is striking how some physicians and nurses come across as caring and connect with you as a patient and others simply do not. Whether it is the patient interaction or interaction between physicians and hospitals or between hospitals and payers, so much of creating a great experience is defined by the skills of relationship and compassion. We are working with our Creighton School of Medicine colleagues to create a medical school curriculum based on the Dignity Health HumanKindness approach which will emphasize some of these soft skills in addition to world-class technical medical training. I was fortunate to have had a family environment that emphasized the importance of relationship and communication skills and then through my career have had opportunities in consulting as well as finance that allowed me to grow and use those skills. For so many emerging leaders, the transition from what has made you successful, which early in your career is primarily your technical skill, to what will make you a successful leader later, which is your ability to manage, inspire and lead people is a difficult one.