When James Hackett led office furniture manufacturer Steelcase, he formulated a simple framework for leadership that encompasses the now, the near, and the far. Imagine a target with “now” in the center, “near” in the next circle, and “far” in the outer ring. He challenged his staff to consider how much of their time was being spent in each ring and whether that mix was correct.
As hospitals and health systems brace against the buffeting winds created by the ongoing COVID-19 pandemic and general economic uncertainty, these same concepts apply to the CFO and Finance staff. Managing to the now, near, and far requires a firm grasp on current financial metrics and an understanding of where an organization excels and where it can improve. It also requires the right reporting and analytical tools at each step to leverage organizational data and inform decision-making.
To manage for the “now,” CFOs need to understand current market trends, financial position, and overall financial health. In the “near” term, they need to model scenarios for the next several months or quarters to gauge how business and financial plans react to multiple scenarios. Both of these activities feed into the “far,” evaluating how strategies and capital needs align with a sustainable financial plan.
Three pandemic lessons learned for CFOs
When viewed through the lens of a global pandemic, you may think most of your time should be spent managing to the “now,” but financial stability and long-term institutional health require time in each dimension.
The CFO’s role definitely has changed and become clearer since March when the pandemic first gained a significant foothold. Here are three lessons we’ve learned:
- Increasingly, Finance plays the role of data steward and data guru within an organization, transforming market data and comparative data into timely and actionable intelligence that empowers informed decision-making. Data collection and aggregation should be automated to allow ample time for value-added analysis. Think about your processes and how much time your team spends collecting and collating information. How can you become more efficient?
- Finance also serves as the organization’s strategic adviser, helping to clearly quantify the impact of financial, clinical, and operational data as it relates to short-term and long-term planning. Modern software systems include artificial intelligence (AI) and data science components that can correlate hospital data into strategic plans.
- The CFO and team are partnering with operational and clinical leaders. Cross-transformation continues to be the No. 1 priority in Finance. How do we leverage comparative data to partner with operational clinical leaders to really understand performance improvement opportunities? How do we quantify that? And how do we integrate that effectively into the plans that we need to develop with those leaders as well?
Applying what we’ve learned in healthcare
Survey data from more than 900 hospitals compiled by Axiom™ Comparative Analytics shows significant volume drops across service lines, including cardiology, endocrinology, and oncology and reductions in such screenings as colonoscopies, mammograms, and stress tests. The data compares September 2019 data against year-to-date 2020 figures.
Obviously, such volume reductions must be understood in the now, but there are downstream impacts on both the near and the far. Lack of screenings could impact value-based reimbursement contracts, and big drops in utilization likely will bring furloughs and/or layoffs. Understanding the bigger picture impacts to patients’ overall health will help leaders make better decisions for the near and far terms.
Organizations must also understand market data in their geographic areas. COVID-19 infection rates remain highly regional, and determining the historic and expected rates in your area can help you create accurate scenarios based on market conditions. For example, creating scenarios for low, moderate, and severe infection rates can help the C-suite or Board see how each possibility would impact hospital operations.
While the Finance team has always played a critical role in hospital operations, the pandemic has elevated the role of CFO and the Finance team as data stewards and trusted advisers who partner throughout the organization to bring data-driven decision-making to every department and service line.
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