For the compliance officer, an effective strategy for navigating the politics of healthcare is to think like a healthcare leader. This is true whether you’re consulting to leaders on a proposed business deal, conducting an investigation, or anything in between.
Last week I talked about thinking like a healthcare CEO and how position compliance to someone in a CEO role. This week we’ll take a look at another leader that the compliance officer has to interact with—the healthcare CFO. We’ll look at CFO’s role and responsibilities, what shapes their point-of-view (POV) and how to position compliance to appeal to a CFO’s POV.
CFO’s Role and Responsibilities
As the highest ranking financial official in the organization, the CFO has the overall responsibility of managing the organization’s finances. A CFO oversees the organization’s financial plans, including budgeting, taxation, and developing strategies for boosting revenue. The CFO also ensures that internal controls are in place to manage the organization’s finances in a cost-effective manner. From a staffing perspective, the CFO is responsible for managing the organization’s financial and accounting department personnel. The CFO also serves as spokesperson to the CEO and board related to the organization’s finances.
Some specific CFO responsibilities include the following:
Financial forecasting and budgeting. CFOs develop and administer operating and capital expenditure budgets as well as manage income and expenses.
Revenue management. CFOs oversee the organization’s revenue, including strategies for increasing cash flow, billing and claims management, and investment.
Financial analysis and performance reporting. CFOs routinely report out on the financial performance of the organization, including any strengths and weaknesses.
Contract negotiation. CFOs help negotiate payment for vendor contracts and reimbursement from contracted payers.
Funding source obligations. CFOs oversee financial obligations to funding sources (e.g., banks, commercial lenders, tax-exempt issued bonds, donors).
Tax filings and financial reporting. Whether for profit or not, CFOs ensure the organization is compliant with all applicable tax filings and other reporting obligations.
Organizational compliance. The CFO must ensure the organization is maintaining compliance with all federal, state, and local laws and regulations as well as supporting a healthy culture of compliance.
In order to carry out these responsibilities, the CFO needs to balance the management of operations against the organization’s finances to ensure it is effectively utilizing resources. As a member of senior management within the organization, the CFO also needs to be adept at communication. Internally, he or she needs to be mindful of what information needs to be shared with others, to whom it needs to be shared, and when it needs to be shared. Externally, the CFO has to manage relationships with several parties such as business partners or competitors, payers, community leaders, government regulators and patients (and their families) to name a few.
A CFO’s POV
Generally speaking, a CFO’s POV will be focused on the organization’s overall financial health. Thinking like a CFO means that you are factoring in financial impact to the organization for any business decision you make. If you’re discussing a compliance matter with a CFO, here are some examples of the types of questions he or she may be thinking of:
How will this business decision impact the organization’s budget?
What steps can be taken to mitigate financial risk?
How does this business decision impact the organization’s contracts with payers?
How does this business decision impact patient accounts (e.g. refunds or adjustments)?
If the organization is tax exempt, does this impact the organization’s IRS 990 filing?
CFO Political Pressures
A CFO’s POV is also going to be shaped by a number of political pressures. While not an all-inclusive list, some of these pressures include:
The CEO/board expecting CFO to develop and administer a budget that allows the organization to drive a competitive strategy.
The CEO/board expecting the CFO to control costs and generate revenue.
Department leaders expecting the CFO to ensure the organization is keeping up with the space, equipment, staffing, and technology of its competitors.
The CEO/board expecting the CFO to meet identified financial performance goals.
The CEO expecting the CFO to negotiate favorable reimbursement rates with payers.
The government and the compliance officer expecting the CFO to ensure the organization remains compliant with all laws and regulations.
Positioning Compliance for a CFO’s POV
When it comes to your work as a compliance officer, be thinking about it from the CFO’s perspective. If you were the CFO and listening to me, the compliance officer, what information would you want to know? For example, if you’re conducting an investigation involving an identified billing error, the CFO is going to be asking questions about the financial component of the investigation. More specifically, how many patient accounts are involved? What payers need to be refunded? Does this billing error impact any cost-sharing amounts paid by the patient that also need to be refunded? Does this matter create a cost-reporting error that also needs to be corrected? And of course, similar to the CEO, the CFO is going to want to know what circumstances led to the error and what steps are being taken to correct it going forward.
Similar to comments I made last week about the CEO, when discussing a compliance matter with a CFO, always be mindful of potential internal reporting obligations. More specifically, if you’re addressing a compliance matter of medium to high risk to the organization, the CFO may be duty-bound to report the matter to the CEO or the board.
Pulling it all Together
Having an awareness of your CFO’s role and responsibilities, POV, and political pressures will help you understand how best to position a compliance matter for success. Similar to the CEO, you will understand why certain decisions are made and recognize why you are getting pushback. You will also develop a skill to anticipate future questions or decisions from your CFO.
As a parting tip, to help gain buy-in to your compliance program, develop a strong business relationship with your CFO. As an individual with oversight of the financial operations of the organization, the CFO can enlist support from his or her staff to assist with investigations or audits (e.g., generate claims reports, accounts receivable or accounts payable information, payer data).
Now, that we’ve climbed into the minds of a healthcare CEO and CFO, next week we’ll take a look at another healthcare leader—the Chief Medical Officer (CMO).