The future for health payers is fraught with uncertainty. Business models are rapidly evolving and there is an urgent need to adopt digital technology. The roles and responsibilities of chief financial officers (CFOs) at payers are also evolving, and those keeping up with these changes are beating their plans.
As business models rapidly evolve, payer CFOs need to see far beyond the bottom line, and that presents an emerging world of opportunity for finance. Eighty-three percent of those able to produce insights around patient outcomes are exceeding revenue expectations. And more than 90 percent of payers exceeding revenue targets had a finance function with strong capabilities in understanding, measuring and managing value across their ecosystems, including members, providers, pharmacy benefit managers, life sciences companies and technology companies.
The payer CFO’s new role
Payer CFOs are increasingly guiding strategic decisions, determining where to invest and guiding the business—whether toward digital tools, the right talent or partnerships (see Figure 1). Nearly half of CFOs (47 percent) are being asked to target opportunities to capture value across the organization and 88 percent are asked to help shape new business and care models.
In this new role, new skills are required. The most sought-after skills for payer CFOs are long-term strategic thinking and problem solving. Payer CFOs should have a deeper understanding of products, lines of business and go to market decisions, and be able to help the business to recalibrate or change its approach when piloting new capabilities and pursuing innovative investments.
New role. New responsibilities.
Payers now have a dual function—evaluating the market in the near term while having a broader view of where the business should go for the long term. The finance organization must evaluate the market with a deeper understanding of the industry and a strong analytics capability to identify future value. In fact, 82 percent of payers see finance as much better at forecasting the long-term value of technology.
One of the top three reasons payer organizations go to finance for analytics is for horizon scanning (see Figure 2). They also request market insights to help with cost reduction and compliance. This requires new data structures and tools as well as talent. The merging of operational, financial and external data with market, analytic and core finance skills is the new finance formula.
Becoming the new payer CFO
Finance is not moving fast enough to meet the business’ demand to identify value. Less than one in five finance teams at payers say they are moving at the right speed to identify and unlock value from beyond the organization. Many payer survey respondents (82 percent) agree that finance skills will continue to move away from core finance to advanced digital, statistics, operational and collaborative talent.
Finance organizations unable to keep up with new roles and responsibilities must retool. Change will involve creating new capacity within teams, investing in the right areas and using technology to help identify new sources of value.