CFOs in healthcare enterprises, especially those in the highest-growth payer and provider organizations, are taking on more strategic roles. This is one of the key themes that emerged from our latest research on the healthcare industry in the United States, detailed in the report "The New Healthcare CFO."
As healthcare CFOs lean into more strategic responsibilities, they are playing a stronger role in setting direction for the enterprise. In particular, as healthcare businesses consider their market position and evaluate the pros and cons of new care and business models, CFOs—enabled by data and analytic capabilities—are ideally positioned to provide the insight that determines the direction of the business.
In terms of potential directions, CFOs will look to drive higher revenues and enable new value, especially as the trend for personalized healthcare services grows. They will identify areas where existing revenue streams can be optimized and where new revenue streams can be created. At the same time, core financial functions will continue to play an important role, including implementing strategic and new approaches to cost reduction.
Toward new models
Our report captures several key themes. As healthcare organizations increasingly offer personalized services, and as they face growing demand for value-based care models, almost nine in 10 CFOs in the United States (86 percent) believe they will be involved in decision making around new business and care model development in the next three years.
The move toward personalization represents a transformational opportunity for the healthcare sector, but it also means transitioning to much more complex business models, potentially impacting a range of business drivers from reimbursement to the patient experience. In today’s industry, the challenge is to design and deliver this complexity without allowing cost to spiral out of control.
While the most commonly repeated ambition of CFOs is to achieve strategic cost reduction, in three years’ time they believe sustainable, business-wide operational transformation will be their most important focus—representing a shift from tactical efficiencies to systemic transformation. They also expect to be significantly more focused on margin improvement through pricing optimization.
According to the research findings, 75 percent of healthcare CFOs say they are actively engaged in identifying and targeting areas of new value across the enterprise. Much of the investment made in advanced analytics solutions by the finance function, moreover, is aimed at facilitating innovation.
Addressing internal challenges
Evolving to a new state of operations will require addressing several challenges within the organization.
CFOs will need to consider their transformation aspirations in the context of the competing interests that may exist throughout the rest of the organization. Our research revealed almost three-quarters of CFOs (74 percent) are concerned that the speed at which they are identifying and targeting new areas of value across the ecosystem is perceived as too rapid by other functions—just 18 percent think they are moving at the right pace for their partners across the business, for example.
Moving to new models will also involve greater cross-function collaboration, something many groups within payer and provider organizations are unaccustomed to. Many CFOs point to the difficulty they have in achieving cross-functional cooperation with other teams; sometimes this is because their organization is not set up to support such collaboration, but in other cases CFOs face actual resistance.
Data and analytics technologies may help facilitate systemic collaboration. Armed with better intelligence, predictive scenarios and visualization tools, CFOs will be in a better position to present potential initiatives for new value creation that will involve different functions coming together.
Shaping future opportunities
Today’s competitive landscape is driving every business to continually seek new sources of value. This is especially true in healthcare with organizations operating in more complex and difficult environments. CFOs will need to increasingly become more informed and empowered with better data and insights to create a new strategic lens through which to see future growth opportunities.