Geopolitical unrest, inflation, the COVID aftermath, skyrocketing gas and oil prices, supply chain challenges, the Great Resignation, and more hallmarks of living in 2022 are disrupting most industries, including healthcare. Chief Financial Officers (CFOs) are playing pivotal roles to help ensure short- and long-term success in the changing economic landscape. Here’s how…
A McKinsey & Company 2021 survey shows over the last five years CFO responsibilities have dramatically expanded to include investor relations, post-merger integration, board engagement, procurement, and digital activities. CFOs in healthcare face additional, unique challenges that are further shaping their roles.
Healthcare CFOs are facing a burnt-out workforce and critical labor shortages (we’re talking nurses, medical assistants, and lab technicians); cannibalization of primary care services thanks to major retail chains’ entry into the market; supply chain disruptions impacting operations (not something you want when it comes to healthcare); and complete realignment of healthcare delivery due to explosive growth in telehealth. That’s in addition to handling and accounting for stimulus money, while managing compliance.
To navigate these challenges, the role of CFO is evolving beyond finance. According to the Healthcare Financial Management Association (HFMA) CFO of the Future survey, respondents indicate they will spend almost 25% of their time on strategy in the next three years to include a variety of actions like:
- Filling gaps and complimenting existing resources by expanding healthcare systems regionally via satellite operations.
- Promoting wellness and addressing the whole person.
- Enhancing the patient experience.
- Evaluating and refining capital investment strategy to ensure investments are in the right business lines, care, and products.
- Enhancing or creating an environmental, social, and governance (ESG) strategy.
- Automating and creating data warehouses to facilitate faster decision-making; eliminate non-value-added work; and upskill the existing workforce to do more strategic work.
- Identifying opportunities for new revenue sources.
- Focusing on cost structure to understand the cost of each step in the care process and increasing profitability through strategic cost reduction.
- Better managing and measuring labor costs and productivity.
- Playing a larger role in shaping recruiting, retention, and rewards strategies and programs (to address the Great Resignation and its aftermath and influence the people side of the business).
- Outsourcing revenue cycle activities to reduce the cost of care and improve efficiency and effectiveness.
- Renewing focus on contract negotiations and value-based contracts.
- Completing transactions like reorganizations, mergers and acquisitions, joint ventures, carve-outs or divestitures, and Special Purpose Acquisition Companies (SPACs).
According to the 2022 BDO Healthcare CFO Outlook Survey, the healthcare industry is “boldly investing in the future, even in a time of uncertainty,” with nearly 70% of organizations expecting to increase profitability. To achieve goals, 59% of respondents say leadership will be the most critical CFO competency for success in the coming years.
If your business is looking for a partner to handle or advise on finances, tax, or auditing matters so your finance people and operations are freed up to focus on more strategic demands, give RBT CPAs a call. We have extensive experience partnering with healthcare organizations in the Hudson Valley and beyond.