The role of healthcare CFO is shifting and expanding with the growth and increased complexity of major nonprofit and investor-owned systems. One critical change is that the CFO in hospitals, health systems, and related organizations is much more of an essential right hand and strategic partner to the CEO.
In a recent feature article for Healthcare Financial Management Association (HFMA), titled “Meet Your New Boss,” writer Jim Romeo looks at the integral role of healthcare CFO as a close and strategic partner to the CEO. He quotes various experts on the trend, including Witt/Kieffer’s Michael Raddatz.
Healthcare CFO’s today are hired with much more awareness of who the CEO is and what her or his vision is, Raddatz noted. “CFO searches will reflect what CEOs want in their leadership teams,” he said, “and the chosen candidates will be people who complement their strengths and compensate for CEOs’ areas of need.”
HFMA senior editor Betty Hintch Raddatz conducted a follow-up interview with Raddatz for its Voices in Healthcare Finance podcast series. The episode, focused on the impact of mergers and acquisitions on healthcare finance leadership, features an interview with Paula Reichle, CFO for Sparrow Health System, followed by the discussion with Raddatz (at the 26:22 mark in the audio).
The following are highlights of Raddatz’s interview with Hintch:
- On the CFO as a strategic partner to the CEO:
Raddatz: We’ve seen so much transition over the past few years in healthcare, with new CEOs and new members of the C-suite across many organizations. Any time you add a person like a new CEO you’re changing the dynamics. That individual is going to have a new vision for the organization . . . you really need to find a complementary skill set for your leadership team. You need to make sure everyone works well together. And that includes the CFO.
What we’re seeing now is the CFO serving as a strategic advisor to the CEO. A CFO in the past often had a reputation of not wanting to spend money and being someone that would say “no”. We’re seeing that change today. The CFO tends to be less risk-averse. They’re more creative. Of course they have a great business sense. They’re an enabler of the business. They have really good ideas and they are that sounding board for the CEO and the rest of the C-suite.
- On the impact of mergers and acquisitions on the healthcare CFO job market:
Raddatz: The impact is that we’re seeing more activity in the job market than ever. For the past 12 months, there have been a lot of CFO opportunities out there. Coincidentally, at the same time we have seen some big CEO opportunities in the market, so one can only guess that organizations were taking time to consider what that new CEO would bring to an organization and how they would like to move forward with their teams, including the CFO.
Some of the CFO activity is due to academic systems becoming more involved in community hospitals, growing and acquiring and partnering. It’s very different to be the CFO of an academic medical center than it is to be the CFO of an academic medical center that also has a number of partner hospitals in communities, so the CFO profile changes. In addition, large not-for-profit health systems are growing in general, and it’s no secret that some of the investor-owned systems as of late have been eliminating roles and transitioning how they look at their markets in their regions. So we’re seeing a lot of new CFO opportunities due to these mergers and acquisitions, and due to the need for organizations to look at efficiencies, making sure that they can stay viable in the future.
- What the active market means for healthcare finance executives and their career opportunities:
Raddatz: I think finance executives can now really take time to figure out what they like to do. Do they really enjoy the investment piece and working with boards? Maybe they should think about being a system CFO and think how they can take steps to get there. If they have a strong financial operations background, maybe it’s that regional CFO position, or maybe it’s that market CFO, where they can really have involvement with the health system, but also work with site CFOs at the hospitals so they get a balance of operations and strategy. Or is it someone that really enjoys the revenue cycle or has a strong accounting background and they want to be a controller at a larger system? So the mergers and acquisitions activity is really changing how financial roles are structured, and it’s creating new and interesting opportunities in the market.
- What health systems are looking for in financial leadership candidates:
Raddatz: Moving forward, considering all these changes, health systems want to look beyond just a resume — at the strategic acumen of CFOs, exposure to different markets, the ability to combine strategy and operations. The CFO market is so dynamic right now that those looking for a new opportunity really have choice, and like I said before, really should think about what do they want to do next and be thoughtful about their approach to that. I’m sure if there’s an interest, there’s an opportunity to match that interest in the market right now.