A Day in the Life of a Healthcare CFO

The heated debate over healthcare reform and the mandates and opportunities created by the healthcare provisions contained with the American Reinvestment and Recovery Act (ARRA) have generated an unprecedented level of attention on the inner workings of hospitals and health systems.  But for healthcare CFOs, dealing with any resulting financial and operational changes is just one more addition to a long list of challenges that has reshaped their profession.

“With the advent of prospective payment and similar reimbursement schemes, the CFO is becoming more involved in case management, medical records and clinical outcomes.  Cost-shifting pricing schemes and tighter control of resource management has become a top priority,” said William Kloppe, a consultant specializing in healthcare accounting, finance and reimbursement.

Kloppe, a CPA and former HFMA Fellow, has served as interim CFO for seven hospitals over the past five years, most recently for a 237-bed facility in Louisiana.  In all, he has more than 25 years of healthcare experience, including 10 years as a hospital CFO and stints as director of reimbursement and vice president of finance for hospitals, home health and laboratory companies.

This depth and range of experience has given Kloppe a unique perspective on the changing financial landscape of healthcare – and its impact on the CFO position.  For example, Kloppe notes that a high priority for hospital CFOs nationwide is preparing their facilities for the Centers for Medicare & Medicaid Services’ (CMS) Recovery Audit Contractor (RAC) program, including conducting internal audits of financial and medical records to determine potential exposure to repayment demands on behalf of Medicare due to incorrect payments for services.

He also pointed to shifts in clinical hiring practices as having impacted the CFO position.  In particular, physician relations have reached “critical mass,” requiring top finance officers to engage in the recruitment of quality and cost-conscious physicians.

“Man power resource utilization, staffing metrics and review matrices have become a far greater necessity than ever before,” he adds.

When asked about the primary responsibilities of today’s hospital CFO, Kloppe ticks off a list that makes it clear just how much the role has expanded beyond serving as the keeper of a hospital’s financial resources.  In addition to safe-guarding assets, maximizing cash flow, preparing and reviewing annual operating budgets and monthly operations forecasts, today’s CFOs also oversee sub-contractor financial terms and viability and work with IT staff on financial data reconciliation and standardization of operational reporting and variance analysis.

Along with documenting and providing guidance on a facility’s accounting policies and procedures, CFOs also oversee and investigate care cost trends and tracking initiatives.  They ensure financial compliance with contract reporting guidelines, and meet with internal and external personnel to maintain financial and political awareness.

Another key responsibility is to oversee “development of key medical analytics information, including benchmark data to support business decisions,” said Kloppe.  “This includes the development of reporting tools with support staff that will measure the impact of strategic initiatives, cost findings and regulatory compliance.”

The evolution of the CFO role in hospitals is, in part, a response to the daily challenges healthcare organizations face in an industry dominated by declining reimbursements, heightened regulatory scrutiny and a greater focus on providing high-quality, cost-effective care.

For example, Kloppe notes that today’s CFOs are deeply involved in the push for adoption and maintenance of IT systems.  This includes finding the financial resources to keep systems current and to ensure that they are capable of providing the most accurate and timely information possible to enhance quality and safety.

“The most significant challenge is the continual change in managed care negotiations,” he adds.  “As each payer type comes under more financial scrutiny, contract negotiations are becoming more sophisticated and services are being stratified into ‘tighter’ control segments.”

From these challenges emerge some of what Kloppe considers to be the most satisfying aspects of his role as CFO.  For example, he finds successful case management with corresponding customer or patient satisfaction among the most gratifying aspects of is work.

However, “the area of greatest satisfaction comes from experiencing success in creating ‘win-win’ scenarios,” he said.  “Whether it is physician contracting, third-party rate agreements or the successful reductions in cost, win-win outcomes offer a great deal of satisfaction.”

Also in this month's issue:

Hiring Managers Get Creative for Successful Interview Outcomes

PCAOB Issues Standard to Clarify Engagement Quality Review Requirements