The role of the CFO has expanded exponentially, and there were seven key considerations driving their complex decision-making in 2023.
Hospital and health system CFOs no longer sit back and just crunch the numbers. More than ever, CFOs are looked at as strategic decision makers working hand-in-hand with the CEO.
These CFOs now find themselves at the intersection of various critical drivers that shape the financial outlook and strategic direction of their healthcare organizations.
So, what were the main threads propelling their decision making this year? According to Deloitte, there were seven drivers that encapsulated the key considerations for CFOs across all industries in 2023. Let’s dive into these seven drivers and how each applied to CFOs in the healthcare sector:
Healthcare orginizations must focus on building value not only for shareholders but also for stakeholders, including patients, staff, and the community.
Initiatives that enhance patient outcomes, improve operational efficiency, and contribute to the overall well-being of the community align with the imperative of value creation.
In 2023, more CFOs were working to implement patient-centered care models that improve the patient experience and outcomes, thereby enhancing the hospital's value proposition.
For example, Stacey Malakoff, the CFO of New York-based Hospital for Special Surgery (HSS), told HealthLeaders that more so than ever, it was imperative that HSS invested the appropriate resources to ensure the highest quality patient experience and to support planned expansion and growth in 2024.
As a strategic thought partner to the CEO, business units, and the board, CFOs now play a crucial role in aligning financial strategies with the broader organizational objectives.
Strategic financial planning involves anticipating market trends, healthcare reforms, and technological advancements.
Developing financial strategies to adapt to emerging healthcare trends such as revenue cycle technology, telehealth adoption, or value-based care models was top of mind for healthcare CFOs.
Talent and leadership
Guiding the healthcare workforce amid industry changes and innovation is a vital responsibility for hospital CFOs. Talent management strategies that attract, retain, and develop skilled professionals contribute to organizational resilience.
Implementing training programs and incentives to upskill staff while also recruiting on a budget was key for hospital and health system CFOs this year.
Data and technology
The digital transformation of healthcare requires CFOs to leverage data and technology to turn information into actionable insights. Data-driven decision-making and investments in technology infrastructure are integral to financial success.
CFOs worked hard this year to streamline data management, new technology, and enhance the accuracy of financial reporting.
In terms of leveraging data, Dave Mazurkiewicz, EVP and CFO of McLaren Health Care, recently told HealthLeaders the organization will focus on streamlining its data warehouse in 2024, which Mazurkiewicz says is “our single source of truth.”
“As an example, we now know our margin for each MS-DRG—whether it takes place on the inpatient or outpatient side—by hospital, by physician, and by patient. This is critically important when evaluating the financial impact of our decisions, on which our growth depends.”
Enterprise risk and regulation
Managing risks is crucial to preserving shareholder value and ensuring organizational resilience. Hospital CFOs must navigate the complex regulatory landscape, from compliance with healthcare regulations to mitigating financial risks.
For healthcare CFOs, this meant establishing robust compliance protocols to adhere to healthcare regulations and minimize the risk of financial penalties.
Climate and sustainability
Hospitals are increasingly expected to address the challenges of climate change. CFOs and CEOs play a role in navigating sustainability initiatives that align with environmental responsibility while optimizing financial performance.
For example, UPMC announced it will reduce its greenhouse gas emissions by 50% across the Pittsburgh-based mega-system over the next eight years as part of its commitment to the Health Care Sector Climate Pledge.
Last year, 61 of the nation's largest health systems, including UPMC, signed the Biden administration initiative to cut greenhouse emissions in half.
In addition to UPMC, WellSpan President and CEO Roxanna Gapstur, also shared details about the organization's sustainability strategy, which includes creating sustainable clinical operations and reducing water, waste, and chemical use.
Agility and resilience
Anticipating and adapting to unexpected events are essential for success in the healthcare sector. CFOs must ensure financial strategies are agile enough to withstand unforeseen challenges and disruptions.
In 2023, CFOs spent time developing contingency financial plans to respond to unexpected events such as public health crises or natural disasters—all while still trying to financially recover from the COVID-19 pandemic.
Amanda Norris is the Associate Content Manager of Finance, Payer, Revenue Cycle, and Strategy for HealthLeaders.
There were seven main threads propelling CFOs' decision making in 2023.
From value creation to enterprise risk and regulation, CFOs had a lot on their plates.