Hospital and healthcare CFOs are going through some of the most turbulent financial times the sector has seen in a long time, but looking to successful corporate CFOs in other industries could help those who need a little guidance.
The Wall Street Journal recently compiled its list of “Best CFOs” using quantitative and qualitative measures, such as the company’s standing in the different markets and how peers and competitors regard the CFO’s work.
Here are five key points hospital CFOs can take away from the WSJ‘s list.
1. Be an opportunistic acquirer. Mark Loughridge, CFO of IBM, has made more than 100 deals in the past decade. He has helped grow IBM for investors, and his combination of financial know-how and acquisition strategies “defines the modern CFO,” said Peter McLean, chairman of the Financial Officers Center of Expertise at Korn/Ferry International, in the report.
Similarly, hospital CFOs have to be open to the idea of acquiring — or being acquired — as the healthcare sector continues to consolidate.
2. Spend money in the right areas. When Carol Tomé became CFO of Home Depot, she felt the company was spending too much money on expansion and not enough on what it already had. Previously, Home Depot opened one new store in the United States almost every 48 hours, and now it only opens one or two new stores per year, according to the report. Instead, the home improvement store is spending roughly $1 billion per year from its cash flow on technology and employee training.
“Carol has been committed to not overgrowing the store base and is diligent about returning cash to shareholders through buybacks and dividends,” Laura Champine, an analyst with Canaccord Genuity Securities, said in the report.
The hospital sector sometimes falls into the trap of wanting to expand services, departments and buildings, but that may not always be in the organization’s best interest. Hospital CFOs have to look into the right health IT investments, such as the right electronic health record system, and make sure their medical staff has the right training to focus on payors’ increased focus on quality and efficiency.
3. Have an undying commitment to the organization. Department store chain Macy’s could have lost out to major online retailers and other boutique fashion stores, but CFO Karen Hoguet dedicated herself to the company and helped Macy’s grow.
She has acquired major brands, such as May Department Stories and Marshall Field & Co., which has helped Macy’s profit double over the past three years. Macy’s CEO Terry Lundgren said in the report that Ms. Hoguet is also very accessible, sometimes answering emails at midnight within minutes of receipt.
Hospital CFOs have to be committed to the organization and its goals, and if needed, they should make themselves available for other members of the executive team.
4. Be more than just the “finance” person. CFOs are usually pegged as calculator hounds and balance sheet lovers, but today’s CFO goes beyond that mold. Intel CFO Stacy Smith joined the company in 1988, but he did not limit his experiences to only finance. He has also spent time as Intel’s chief information officer and the general manager of Intel’s Europe, Middle East and Asia operations.
“A long career in finance is what makes [Mr. Smith] technically qualified for the job,” Intel CEO Paul Otellini said in the report. “And the number of positions he’s held outside of finance have allowed him to learn [about] our company in intimate detail.”
5. Keep a level head. Drug manufacturer Biogen Idec and hedge fund businessman Carl Icahn have been at odds over the years, as Mr. Icahn, who is a major investor in Biogen, and other Biogen stakeholders have not seen eye-to-eye on the company’s direction. When Paul Clancy became CFO of Biogen, investors noted he handled all tense business situations with an “underlying calm” and a “sense of precision about analyzing what is happening and what to do next,” according to the report.
Hospital CFOs similarly may find themselves in difficult conditions because of a hospital’s importance within a community. If tensions arise or if financial outcomes do not meet expectations, executives must keep a sense of cool and effectively communicate with the public. That job isn’t only for public relations.
About Morgan Hunter HealthSearch
Morgan Hunter HealthSearch (MHHS) provides Executive Search and Interim Leadership solutions for hospitals and health systems throughout the United States. Our services include executive healthcare recruiting, retained healthcare executive search, healthcare interim management, executive placement for hospitals.