CFO leaders focus on relationship building

Healthcare Financial Management, Sept, 1997 by Kathleen M. Ballein

Organization mergers and affiliations - in particular, the development of integrated delivery systems (IDSs) - have placed new demands on healthcare CFOs to act as leaders. Relationship-building skills are essential components of the CFO's leadership style today.

Three CFOs involved in developing IDSs described how they were challenged to evolve and grow as leaders. They all seem to have been energized by the process.

James F. Doyle, FHFMA, vice president, finance, Elmhurst Memorial Health System, Elmhurst, Illinois, said a key leadership challenge for CFOs today is to project confidence and poise. His organization recently investigated affiliation with another facility, causing organizationwide concerns.

"Continual communication is necessary to alleviate the uncertainty and anxiety felt by the CFO's direct reports - accounting, billing, information systems - everyone in finance with 'combinable' departments," Doyle said. "Potential changes could affect them, but they don't know how or how much. The CFO should not project personal uncertainty in the face of change.

"The two most important leadership tasks for CFOs at this time are to project control and to communicate to staff everything that can be known. Staff members should know that what is under consideration could lead to loss of jobs - maybe theirs, maybe even yours. You can't reassure them, but you can encourage them to make the most of change. Along with the risk comes real opportunity," Doyle said.

He pointed out that a crisis is not the time to begin communicating with people; rather, it is the time to tap into the trust and credibility that have been established. When staff can rely on accurate information and fair leadership, they are more likely to work through the transition.

Although the proposed affiliation did not occur, Doyle said, "We all learned to be more realistic. You can get through the tough times, and you're better prepared for what may be coming next, at least on an emotional level. The CFO has to lead others through the process."

John W. Ellis, CFO, St. Joseph Medical Center, Towson, Maryland, provided vital leadership during the process of creating and implementing an IDS. Communication with physicians was and remains his key leadership challenge. Ellis observed that when the organization showed its support for physician partners by turning down some managed care contracts that would have had negative consequences for the physicians, their trust in the organization deepened.

"Aligning incentives of physician partners and the hospital depends on trust. Trust was scarce in healthcare organizations in the past; threats and demands were far more common. By demonstrating that we understood and valued the interests of our physician partners, we were able to create a climate of trust - and out of that, a new business venture, the Heart Institute," said Ellis.

"The Heart Institute is a powerful symbol of this trust relationship. It focuses on an already established strength of the hospital, allowing us to attract new physicians and enhance our bonds with large cardiology groups.

"All of us - physicians and administrators alike - had to give up our old ways of doing business. As chairman of the committee that developed the deal and now reviews and negotiates managed care contracts, I am able to build on trust every day. It is essential to communicate with and teach our physicians new strategies that will benefit us all," Ellis said.

Jeff S. Badger, CPA, senior vice president and CFO, Luther/Midelfort - A Mayo Health System, Eau Claire, Wisconsin, said change-agent leadership was needed to combine the hospital and a local 140-physician group practice with the Mayo Clinic, which acquired both entities in 1992.

"Our organizational cultures - our ways of working, our management styles, the competition for what each perceived as 'our' patients, our goals and missions - all were different," Badger recalled. Likening the new organizational arrangement to mixing colors, he said, "You know you'll get something new, but you can't control it entirely. You must have patience."

A managed care/insurance component was introduced with the merger, creating new challenges, especially for the finance department. "We learned that though everyone's job changed, people will learn adaptive behaviors if they see them being modeled. The finance department has taken a leadership role by working within its circle of influence. We see the finance function as being not about the power to say 'no' but about consulting, offering meaningful advice on options as decisions are made," Badger said.

The merger with the physician group is going well, he added. "People will support what they have helped to create. We have been able to avoid being seen as 'taking away.' Instead, the physicians see we are adding to their capabilities as we involve them more. And, frankly, they seem to like being more involved."

As new entities are formed from traditionally structured organizations, the spotlight is clearly on the CFO as a vital leader whose ability to respond confidently to changing situations will inspire others.