December 17, 2003
Perhaps the one thing CFOs can count on in the coming year is more change. To help navigate the relentless flow of obstacles and opportunities you are sure to face in 2004, hfm asked speakers at HFMA's upcoming Healthcare Finance Executive Summit (Feb. 29 to March 2 in New York) for their top CFO tips. Here's a selection of resolutions you might want to make:
Put people first
Is your finance department as committed to creating a culture of service excellence as they are to reducing days in A/R? This is key, because admissions and registration provide an important first impression of your hospital to patients...just as the bill provides their last impression of your organization, explains Karen Cook of the Studer Group, who coaches senior leadership teams on how to create a culture of service and operational excellence. "Gold standard" activities for the CFO of a supportive finance department include:
- Attend staff meetings
- Make daily rounds with employees
- Create ownership in front-line managers
- Revise compensation packages to attract and retain the best people
- Write thank-you notes weekly to achievers
- Participate in events that recognize staff
Focus your energies
"Often people ask for assistance in 'fixing the revenue cycle,'" notes Jeremy Miller, vice president of customer programs for GE Healthcare Financial Services. "To me, this is like saying 'Let's cure cancer.'" Instead, drill down to address the specific parts of the revenue cycle -- whether they are on the front end, in core processes, or billing -- that will offer the biggest impact on the organization's ability to increase revenue and achieve specific long-term objectives.
Make informed capital decisions
Because capabilities and predispositions vary among commercial and investment banking firms, explore all the options so you are confident that the issuance and pricing of bonds and derivative structures are competitive in the market, from an all-in cost of capital perspective.
"For example, given compound interest, for every 5 basis points (0.05 percent) differential in market pricing, credit support fees, and/or annual remarketing fees on a $50 million capital structure, nearly $0.5 million of excess costs would be paid over a 30-year lifetime," explains Andrew Majka of Kaufman Hall & Associates. "This is cash flow that could have otherwise gone to strategic capital investment or improving liquidity."
Get to a legal "yes!"
"The CFO who plans with counsel at the inception of a new service, venture, contract, or hire will position the organization in good legal standing and spend less on legal services," predicts Joanne Judge, CPA, Esq., of Stevens & Lee, PC.
For example, if your organization plans to merge or affiliate with a competitor, ensure that an antitrust analysis is completed before time and money are invested in a transaction that will be challenged by regulatory agencies. Likewise, a tax-exempt healthcare organization that adheres to the IRS rules for executive compensation will be less likely to face a charge of excess compensation.
Imagine yourself as your own investor
If you were investing in someone else's bonds, what would you want to know? "You'd want the whole pie," suggests Martin Arrick, director of public finance ratings for Standard & Poors. Therefore, "be forthcoming in your disclosure practices with your own bond holders. Recognize that they are an important constituent."
To deliver the whole pie, Arrick suggests:
- Offer timely and accurate reporting on a quarterly basis,
- Provide frequent reports of financial results for the system (versus just the obligated group),
- Provide exception reporting, and
- Ensure there are no year-end surprises -- inform investors of positive or negative events and give them access to key people they can call with questions.
SOURCE:
"Ten New Year's Tips for Finance Leaders," by Christina Roman, to be published in the January 2004 hfm.
Additional Resources
- HFMA Resource Center Leadership Focus Area
- CFO Forum (available to CFO Forum members only)
- Executive Insights newsletter (discount available for HFMA members)
- American College of Healthcare Executives Booklist (HFMA Alliance)
If you have questions or comments about HFMA Wants You to Know, contact editor Laura Noble.
HFMA Wants You to Know ISSN: 1540-0697. Volume II, Issue 26. Copyright 2003, Healthcare Financial Management Association. All rights reserved.