HFMA's biennial career and compensation guide: featuring results of HFP1A's 2005 Compensation Survey

Healthcare Financial Management, July, 2005

The 2005 HFMA Compensation Survey leaves no doubt that CFOs in health care, along with midlevel financial managers, are doing very well, thank you, with compensation reflecting rising levels of education, experience, and expertise.

Conversations with academics, consultants, and CFOs themselves suggest that performance expectations may be rising fastest of all. What will the job of CFO look like in five years? Where will the CFOs of 2010 come from, and what will they be expected to do for those big bucks ?

Read Part 1 of this supplement first and find out. Then check out the numbers in Part 2, and see if it all adds up.

Part 1

The CFO 2010: Onward and Upward

VISIONARY LEADER SOUGHT: Multihospital system seeks a persuasive, flexible, creative coalition-builder, educator, and strategic thinker with strong communication skills. Must have a broad understanding of all hospital systems, extensive experience working with physicians, and a track record as a successful negotiator. Must be a team player and able to represent the organization to a wide variety of constituencies. Must also be good with numbers.

If you haven't yet seen an ad like this for a CFO, stick around. According to those in the know, this could be the typical healthcare CFO job description in 2010.

Years ago, CFOs were expected to be managers, says Michael Nowicki, EdD, FHFMA, FACHE, professor of health administration at Texas State University-San Marcos. "In the future, they will have to be leaders." As members of the executive management team, they will be expected to play a leading role in areas as diverse as medical staff relations, regulatory compliance, and strategic planning. In some hospitals, they already do.

Nowicki believes the change is one of style as well as substance. "The old way of getting things done was transactional, which essentially means that you exert your authority--you tell people what to do. As organizations get larger and more bureaucratic, CFOs are going to have to become transformational managers; they're going to have to get things done by winning people over."

And there is a lot to get done.

A Common Thread

Academics, consultants, and CFOs themselves pretty much agree on the to-do list:

* Strategic planning. Whereyesterday's CFO spent a lot of time looking backward in the mirror at how the organization did, today's CFO is looking forward: What can we do to advance our mission? Where can we look for opportunity? What are the likely financial results of pushing this or that lever? "You need to be a part of these conversations early on," says Laura Zehm, CFO at Community Hospital of the Monterey Peninsula, Monterey, Calif.

* Physician relations. According to Larry Tyler, FHFMA, president of Tyler & Co., an executive search firm in Atlanta, "The watchword today is 'coopetition'--knowing when and how to compete and cooperate with your medical staff. Most of our clients are looking for CFOs who know how to negotiate joint ventures that are win-win for both sides."

* Business development. Traditionally, says Kyle Sanders, COO at Northwest Texas Healthcare System in Amarillo, "CFOs were just there to cut costs. But they can play a very important role in business development: 'We're doing well here, how can we get more of this business?' 'Here's a good product line for this hospital to be in.' Or on the flip side, 'Here's a product line that's losing money and isn't really vital to our mission; do we want to consider getting out of it?'"

* Case management. Five years from now, says Sanders, the CFO will be much more directly involved in operations--and that means case management, "the No. 1 thing driving operations. With fixed reimbursement, it makes sense not only from a quality standpoint to get the patient to the appropriate level of care, it makes sense financially."

* Regulatory compliance. The regulatory burden may be increasing, but "this is not an area where people like to add staff," says Tony Kovner, PhD, professor of Health Policy and Management at New York University's Wagner Graduate School of Public Service, New York City. "Typically, hospitals have compliance officers, audit officers, and regulatory officers, but the CFO collaborates with all those people."

* Sales. If there's one thing that the current crop of CFOs doesn't have, says Nowicki, "it's the ability to get up in a room full of people and argue for a point of view or champion a proposal--a partnership with medical staff, a new project, a cost reduction plan. Five years from now, these will all be within the CFO's territory."

* Education. "We want our employees to understand enough about healthcare financing so that they can speak for our organization when their neighbors ask them why hospital costs are so high, and so they understand why we have to do things like increase our health premiums," says Zehm. "We want our managers to understand how the hospital operates financially so that they can make effective decisions about resources." Zehm uses simple PowerPoint slides to present financial results to her hospital's management team every month and gives out copies so managers can share them at their staff meetings. "I go beyond the bottom line to talk about what's relevant for that month. For example, if we have a really high government payer mix for a certain month, I might do a couple of extra slides on how that hammers our bottom line."