The healthcare Chief Financial Officerholds the highest financial leadership position and financial managementservice within the sector of senior-level roles. As a member of theorganization’s senior executives and management team, the CFOs are viewed as afinancial gatekeeper, “regulatory compliance, managing financialrelationships, and managing cash flow” (Konstans,2013).
However, the roleof healthcare CFO is not straightforward as it was in the past. The authors ofthe article, Mixing finance and medicine:The evolution of financial practices in healthcare, stated that “newwaves of chief financial officers are being tapped from other industries …such as biotechnology, drug manufacturing, healthcare plans and insurers,diagnostic and medical equipment companies, and hospital and other healthcarefacilities that provide care to patients” (Langabeer, DelliFraine, , 2010).
Additionally, the Affordable Care Act(ACA) that changed the reimbursement process, organizational configuration, andthe ongoing changes in government regulations, considerably affected the roleof the healthcare CFO as the financial safe keeper of the organization. WhetherACA continues in its current form, it shows that federal and state governmentsbecame more active in trying to be in charge of the costs as well as to findnew incentive systems to improve quality. These changes demand CFOs how theycontrol the organizational finance that needs to be put in place to leadfinancial responsibility in the organization given these new realitiesThesis: By respondingto the changes within the healthcare industry such as healthcare reform, theimprovement of patient expectations, and the new medical technologies, the responsibilitiesof a CFO are defined in terms of strategizing, reporting, leading, buildingrelationships, and focusing on values and efficiencies in care delivery.TheCFO as a strategic role. To meet the demands of this changing role,”the CFOs need to be visionaries who can use their financial expertise tocraft projections and develop strategies that will help the organizationsdeliver high-quality, cost-effective care” (Noland, & Madden 2012).
The fact that today the healthcare industry goes through a high volume ofmergers and acquisitions, it is not enough for a CFO “managing accountsreceivable, negotiating reimbursement rates, budgeting, and overseeing debtpolicies” and focusing on the capital available to the healthcareorganization” (Langabeer, DelliFraine, & Helton, 2010). Instead, today,CFOs are forward-thinkers being responsible for a lot more functions other thanthe traditional chief financial controller. The healthcare CFOs have aconsiderably more complex role with the increased responsibilities as a resultof ACA, shifting patient expectations, new value-based reimbursement models,and the rising of healthcare technology drives and digitalized healthcareinnovation as well as “strategic planning and project managementtasks”(Langabeer, DelliFraine, & Helton, 2010).Thus, today’shealthcare CFOs are strategic CFOs that need to fulfill the management rolesand responsibilities that extend in all direction up to the chief executiveofficer CEO, sideways to chief medical officer (CMO), chief quality officer(CQO) as well as board members, and down to particular departments and operation teams (Byrnes & Fifer, 2010). RiskmanagementMoreover, the twenty-first-century healthcare organizations operate inenvironments where force such as globalization, digitalized healthcaretechnology, deregulation, restructuring, mergers, and acquisitions as well aschanging patient expectation create much uncertainty and atypical risks to theorganization. The CFOs’ roles in managing these environments are more strategicroles and their “skills set requirements have increased in the lastdecade, mainly for the following reasons: increased in risk management (94percent), increased regulation such as Sarbanes-Oxley (91 percent), andglobalization of the economy (92 percent)” (Konstans, 2013).
According tothese percentages, managing risk appears to be one of the CFO’s primaryresponsibilities. Consequently, it seems that they need to find a win-winsituation by protecting the organization’s fiscal interests when makingfinancial decisions, without so risking reluctant that organization fallsbehind others in using innovative means to generate revenue and control cost ormaking decisions that are strictly based on numbers.New reimbursement landscape Additionally, whenhealthcare organizations continue to experience enormous changes “whetherit is value-based purchasing, bundled payments, reimbursement for ‘episodes ofcare’, accountability for quality performance, or the ‘value equation’, itbecomes clear that the ‘value equation’, combining high quality with low cost,will be the secret to future success” (Byrnes & Fifer, 2010). In thepast, “CFOs developed teams with expertise solely in finance..
.howevertoday’s CFOs create teams whose members possess diverse skills sets andknowledge such as clinicians, analysts, and care coordinator” to assistthem with “service-line operations, or regulatory or risk managementissues” (Noland, K., & Madden, M.
, 2012, January). Hence, withincreasing pressure on healthcare organizations to enhance quality and lowerexpenses when reimbursement for care is reduced, it is essential for healthcareorganizations to have qualified CFOs who are able to navigate the complexitiesand challenges of the healthcare (Rochester, 2014). RevenueriskBecause of the enormous changes are happening in the healthcare industry suchas hospital mergers and acquisitions which these transactions bring sets ofrisks to the organization, the qualifications for the CFO have changed as well.Now the CFO, chief medical officer (CMO), and chief quality officer (CQO) needto show a strong relationship that can drive improvements in quality and costat the same time. The days when the CFO’s role was managing the healthcareorganization’s finance are now in past.
“The new understanding of is thatfinancial success, whether define as revenue margin, market share, or reputation,is explicitly tied to quality” (Byrnes, & Fifer, 2010). Thus, thechallenges improving efficiency in the face of increasing costs and decreasingrevenues require CFOs “to partner with clinical and operation leaders toalign care delivery decisions with reimbursement expectations to reduce thepotential of loss of revenue to the organization”(Rochester, 2014).