Within today’s evolving healthcare landscape, healthcare executives’ responsibilities also are undergoing a dramatic evolution. A new, dynamic environment, marked by industry disruptors and a challenging regulatory and reimbursement climate, requires healthcare finance leaders to have a more complex skill set than perhaps ever before.
A hospital CFO’s role could look substantially different 10 or even five years from now. Here are several ways the role can be expected to change, plus some advice for current and aspiring CFOs for navigating the road ahead.
Changing job responsibilities
With an abundance of change being one of the only certainties in the industry today, healthcare financial leaders’ day-to-day job responsibilities will no doubt change as well. CFOs of the future will be much more involved in certain executive areas than they have been in the past.
One such area is cost management. When it comes to profit margins, healthcare finance leaders traditionally have focused on revenue, while healthcare chief operating officers primarily have focused on costs or expenses. Heading into the future, it is reasonable to expect the healthcare CFO will be much more involved in the entire margin equation, focusing equally on both revenue and expenses.
With margins continuing to tighten in most of today’s healthcare provider organizations, the CFO of the future also will need to focus on providing financial services in the most economical ways possible. They will need to guide their finance departments in working more efficiently and cost-effectively.
In addition, healthcare CFOs of the future will need to think more strategically on the job. Today’s healthcare marketplace is no longer hospital-centric; the proliferation of ancillary businesses means managing the financial performance of future healthcare systems will involve more of a “portfolio” approach.
The balance sheets of many health systems in the future still will include hospitals, but they also will include entities such as physician groups, insurance companies, subacute and ambulatory care sites, and even portfolio products such as solutions or businesses that complement the continuum of care (for example, medical devices, health information technology tools, or wellness centers). All of these additional entities will conglomerate into a much bigger, more complicated balance sheet for CFOs to manage. Delivering exceptional care and winning market share no longer will be based solely on successful inpatient performance but, rather, will be based on all these pieces of the larger system working together. Managing this complexity will require CFOs to think in a much more nonlinear manner.
Embracing a visionary mindset
In addition to adapting to changing job responsibilities, CFOs of the future will be charged with establishing the vision for their organizations and setting the pace at which their organizations embrace the newest industry technologies. To succeed under these circumstances, finance leaders will need to understand the emerging opportunities and structure relationships (for example, ownership, integration, and investment) that work best for their health systems. They also will need to look at what is on the horizon for the industry and make smart decisions to pull or push their organizations toward what is most promising – rather than waiting for change to happen to their organizations.
Traditionally in healthcare, finance leaders have been concerned with hindsight-related information: year-end financials, month-end closing. Leaders with a more visionary outlook are concerned with foresight. These leaders consider where their organizations are now, where they will be in the months or years ahead, and what their organizations need to do now to be successful in the future. In addition to adopting a more forward-thinking viewpoint, effective CFOs of the future will need to will consider how modern technologies such as artificial intelligence, blockchain, and robotic process automation can be used as tools to help the organization predict future performance.
However, the CFO of the future will have to balance being a visionary with making margin-positive decisions. For example, it seems inevitable that robots will be more and more present in healthcare revenue cycle operations. But CFOs will need to think about how implementing a new technology and automation will make their organizations more efficient while maintaining positive margins. Artificial intelligence (the brain) and “bots” (the hands) can improve consistency and efficiency – if the CFO can determine the appropriate application within his or her organization.
Setting the pace and thinking more diverselyFor current and aspiring CFOs to thrive in an evolving industry, they will need to adopt the skill sets already discussed. They also will need to pace themselves and begin to think more diversely.
As ideas for where the industry is headed continue to emerge, deciding which pathway to follow can be overwhelming. It may be helpful to think of these emerging concepts as a set of stairs. As leaders plot out how they want to take their organization from point A to point Z, it can be helpful to pause and reflect at each “step.” Leaders should ask: What is the path from here to there? Is the organization in line with the market? Step, don’t sprint, when making these decisions.hey man, I don't mean to be a nuisance but how close are we on the page for Sohena's final review?Finally, future finance leaders will need to think more diversely. With so many different businesses consolidated within health systems today, CFOs will need to become progressively more familiar with all the different businesses and how they unite to make margin.
For example, today’s long-term care entities may not bring in a lot of revenue, but when CFOs consider that these facilities reduce lengths of stay and use of costlier inpatient care, they emerge as a wise investment. Successful finance leaders in the future also may be more likely to think about investing in nonclinical revenue streams such as healthcare-related startups.
Preparing for the future
Tomorrow’s healthcare finance leaders will require new skills and a different mindset to thrive in a constantly changing marketplace that is rife with industry disruptors. As the future unfolds, the nimblest healthcare finance leaders may just be the most successful.