Few industries are undergoing as much sweeping change as healthcare and that is leading to a new role for the chief financial officer.
Sure, a strong grounding in the basics of finance is still in order. But the growing demand at hospitals and healthcare organizations is for a strategic CFO – someone who truly sits at the right hand of the CEO as a strategic partner.
[See also: Wanted: CFO miracle worker.]
There is very high demand now for highly skilled, collaborative and visible finance leaders, and that will continue into 2014, said Paul Esselman, executive vice president and managing principal at Cejka Executive Search.
Esselman has been asked by his clients to present candidates that have a strong healthcare background, a proven track record in leadership, is considered a visionary, and is a “good fit” with the client’s culture.
There are a few factors driving the need for these individuals, Esselman said. First is the enormous uncertainty in the industry around reform. Second is the increased activity of health systems acquiring and integrating physician practices. And third is the changing landscape around payments and reimbursements.
“Hospitals and healthcare organizations are looking for financial leaders that are not only healthcare focused, but who are visionary, and can predict changes in healthcare,” Esselman said. “They must have a strong background in finance in both inpatient and outpatient environments. They must have a strong understanding of reimbursements, revenue cycles, contracts and budgeting, and they must be able to bring all those pieces together.”
That is a tall order, but it reflects the growing amount of responsibility being placed on the CFO. The trend is for hospitals to merge with other types of care providers or groups, to become a larger, soup-to-nuts organization at providing total care.
To be successful, candidates for one of these demanding roles should have strong experience within a healthcare system, an appreciation of integrating post acute care and ambulatory services, and the ability to engage physician groups. They should be proficient at budgeting, forecasting and evaluating new revenue opportunities, Esselman said.
CPA-only types need not apply
Like Esselman’s clients, Joan Elizabeth Gee’s also are seeking a strategic financial leader. Gee is vice president and head of the financial leadership practice at Tyler & Company, a national healthcare executive placement firm headquartered in Atlanta.
“CEOs are looking for a true strategic partner,” Gee said. “They want a candidate that can assist with mergers; who can take the revenue cycle department to the next level; and who is good at assessing values and risks.”
Given all these strategic CFOs are expected to do, it won’t be surprising that they don’t come cheap.
“Compensation depends on a lot of factors,” Gee said, including organization size and geography. Still, a strategic CFO in a good-sized health system can expect to earn a base salary in the high $300,000 range to mid $400,000 range, she said.
The pay rates reflect not only the pressures and challenges they face in the job role, but also the competition for truly skilled visionaries.
Since the role of strategic CFO is a new one, Gee looks to the accomplishments of a candidate in his or her last healthcare setting. She wants to know what the candidate accomplished that was new and innovative, how dynamic he or she was in the role, and how he or she was able to find creative solutions to dwindling reimbursement payments.
For personal traits, Gee said she seeks a candidate that has a level-headed demeanor, has strong communication skills, is detail and results oriented, and is transparent, proactive and good at problem solving.
For professional experiences, Gee said it is helpful if a candidate has experience working with and acquiring physician groups, negotiating physician contracts and with developing outpatient facilities.
While a recent Black Book Rankings survey suggested that the healthcare industry will see more CEOs recruited from outside the industry, it is still quite rare for a CFO to be from another industry, said Esselman and Gee.
[See also: Wanted: hospital CEOs without healthcare industry experience.]
The strategic role is not for every CFO. Many may might find themselves out of their normal comfort zone in a strategic role, said Gee. It is a very high-pressure position, a very political post and the hours are long – usually 60 to 70 hours per week.
This new role is not like anything the CFO has been asked to do in the past and is not for the faint of heart, she said. However, “I think it’s very exciting from the CFO standpoint. The CEO is looking for a partner. They get very energized by that message.”