Across the industry, CFOs are being called on to step into more strategic and more challenging roles. Here’s how to set yourself and your organization up for success.
After years of unprecedented challenges — and the acceleration of digital transformation that came along with them — healthcare CFOs now find themselves navigating significantly murkier waters than they did just a few years ago.
“The pandemic laid bare many of the operational and financial challenges that health systems have to reckon with,” says Andy Waldeck, managing director, strategy and innovation at Huron. “Since then, the role of the CFO has become much more complicated: CFOs have more responsibilities than ever, and the environment they’re operating in has become more complex. And, because they’re at the helm of the organization’s financial performance, they often bear the brunt of economic uncertainty and the financial and workforce impacts that can come along with it.”
However, additional responsibilities also create immense opportunities for CFOs to provide strategic value to their organizations and develop new skills along the way. Here’s how CFOs can set their organizations up for success in the next era of healthcare and what they can do today to forge a path to success.
CFOs today are tasked with driving transformation on multiple axes
For today’s CFOs, success isn’t just about managing the day-to-day financial strength of the health system. It’s about driving dual transformation, a two-pronged approach that fuels sustainable growth:
- Transformation A: Implementing needed changes to maximize the existing care delivery business
- Transformation B: Simultaneously redesigning the system for long-term sustainability and performance
Done well, dual transformation extends the CFO’s reach throughout the organization — whether that’s building financial resilience to navigate economic uncertainty with minimal disruption, freeing up capital to invest in technology that enhances patient outcomes, shifting site of care to deliver services that meet consumers where they are, or addressing cost inefficiencies to allow for greater reinvestment in the health system.
The CFO also plays a critical, yet indirect, role in the organization’s morale and their ability to retain top talent. “Because CFOs are responsible for the financial strength of the health system, they often face employee mistrust when there are layoffs or other difficult decisions that affect their teams,” Waldeck explains. “Creating greater data transparency and consistency helps drive buy-in around difficult decisions. By making informed strategic moves, CFOs can help their organizations rebuild relationships between staff and leadership.”
Strong data management systems are critical to meet this challenge
Stepping into a proactive, strategic role requires CFOs to leverage data to anticipate the organization’s needs. And doing that well relies on strong data management systems, which allow CFOs to access the consolidated insights they need to be a strong business partner.
“As finance shifts from a backward-looking function, validating transactions and enforcing controls, to forward-looking strategy, CFOs need data fluency to succeed,” says Waldeck. “We’re living in an era of dashboards embedded in dashboards. The CFO needs to deeply understand the reliability of their data and know which data are most important for decision-making.”
With the right tools, the CFO can predict whether the health system is likely to meet its targets weeks in advance and proactively identify areas for improvement to help the organization reach its goals. This forward-looking approach also allows CFOs to predict how new challenges, such as cost increases and volume changes, may impact the health system, and create contingency plans accordingly.
The key to success: Combining data fluency with leadership and communication skills
Of course, effective financial leadership isn’t all about the data. It’s also about fostering close collaborative relationships across the organization to elevate decision-making.
Working closely with the COO and chief strategy officer (CSO), in particular, is pivotal to the CFO’s success, says Waldeck. “The line between finance and operations is increasingly blurry, so both leaders need to work together to measure operational efficiency and identify the best next move.”
Data fluency equips CFOs with the skills to identify leading indicators for key business objectives and the ability to communicate trends to the rest of the leadership team. “It’s not just about explaining what happened, it’s also about communicating where the organization is going, and to proactively address challenges before they undermine financial performance, quality of care, or the patient and employee experience.”
Finally, CFOs must aggressively champion investment in technology — and communicate what will happen if the health system’s data strategy doesn’t evolve. “Health systems have faced cost pressures and workforce-related issues for so long, it can be tempting for leaders to keep kicking the can down the road,” Waldeck explains. “Being able to model and explain the long-term costs of these challenges can help get other stakeholders on board to secure critical investments.”
Proactive change starts today
Healthcare is rapidly evolving, and CFOs have an opportunity to step into strategic roles that steer their organizations to success. However, doing this well requires pairing strong data fluency with the leadership skills and infrastructure investments to transform data into action.
“Most CFOs don’t have access to the solutions they need to fully leverage their data today. But being able to make the most of the data you do have can help you demonstrate value, and leverage those wins to champion greater investment in technology,” Waldeck explains. “While these are difficult times in healthcare, there is so much opportunity, and CFOs play a more active role than ever in making better, data-informed decisions to realize the organization’s mission: To enhance patient outcomes with the highest quality of care.”
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Huron helps healthcare systems drive dual transformation, working closely with CFOs and other executives to reimagine what’s possible for their organization, then turn the vision into reality with the right people, processes, and technology. Visit us here to learn more.
