The Bumpy Rise of the Tech-Savvy CFO in Healthcare Organizations

The Bumpy Rise of the Tech-Savvy CFO in Healthcare Organizations

The good news? The working relationship between technology leadership and financial officers in health systems organizations is improving. The bad news? Chasms between finance and IT remain, and they are common throughout health systems providers.

Market Research firm Black Book Research recently found, in its “2019 Black Book CFO & Financial Leadership Survey,” that chief financial officers (CFOs) are no longer prioritizing cost-cutting and are becoming more aggressive in their technology spending. Interestingly, 52% of CFOs reported that they are shifting their priorities to financial technology investments, such as the implementation of advanced analytics, as well as 44% who cited increased spending on broader distributed ledger technologies.

This is a dramatic change over previous years, where financial technology in many healthcare organizations witnessed negligence and budget cuts. “Ninety-one percent of CFOs surveyed agreed that their past organizational CIO and senior IT management did not support a culture where financial technology upgrades and acquisitions were prioritized as initiatives that impacted enterprise health system strategy,” the report found.

The survey found that 90% of financial leaders and management strongly agreed that CIOs and IT management undervalued the needs of financial digital transformation and their financial tools. Technology leaders instead prioritized and convinced their boards that their electronic health record vendor-related offerings were the best investment going forward.

The result? When it comes to finance technology in healthcare organizations, the world has become quite bifurcated. Consider this: Ninety-four percent of marginally performing hospital CFOs nationally claimed that they are not prepared to handle new healthcare delivery and payment models with their current financial software. Comparatively, 89% of the top financially performing hospitals in the country report having the organizational technology tools to address modified payment strategies.

There’s also no rest for the weary financial officer, the survey found. While senior financial officers struggled with the pressures of smaller operating incomes, rising labor and supply costs, shrinking volumes, reduced reimbursements, declining patient volumes and changing healthcare delivery models, 83% report that in the past fiscal year that they received add-on responsibilities that included organizational productivity, strategic technology and innovation growth initiatives.

“In a noticeable shift since the acquisition of enterprisewide EHR systems led by CIOs, CFOs have become the executive charged with digital transformations to improve competitive advantages, strategic growth and innovation across all customer touch points, while measuring the technologies’ ROI,” said Doug Brown, president of Black Book.

Indeed, there has been a huge shift in CFO involvement in recent years. In fact, 88% of CFOs report having increased involvement in their health system IT agenda since the implementation of their enterprise EHR, as compared to 14% in 2015.

But this dramatic rise hasn’t been without friction:

  • 85% of all respondents stated that their current organizational structure prevents enhanced CIO-CFO collaboration. Eighty-nine percent of CEOs interviewed disagree with this statement.
  • 82% of CFOs stated that they have an insufficient understanding of IT issues as the barrier to them not being included in technology selections and approvals prior to 2014.
  • 84% of CIOs surveyed in Q4 2018 claimed the processes and tools in finance are incomparable to IT functions and remain a significant barrier to mutual understanding.
  • 90% of all respondents agree that the absence of key performance indicators that link IT agendas to financial performance greatly limits their success.
  • 98% of respondents strongly agree that it’s the healthcare CFO’s job to ensure their organization fully realize the benefits of technology investments, not the CIO’s job, in 2019.

While the CFO’s role in technology has grown, largely due to the substantial impact of EHR adoption—and this has caused significant stress between the CFO and CIO in many health services organizations—the working relationship is showing signs of becoming stronger and more collaborative. The report found that the continuing lack in understanding on both parties to converge on strategies, investment mindsets, healthcare customer experience, business models and agendas continue to keep the barriers high for many.

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