A behavioral health organization like most businesses in America require a CFO. With new trends emerging in the analysis of financial data one thing is a standard – generally accepted accounting principles. However, the financial industry is utilizing financial planning and financial data in creative ways for capital structure, cash flow, and overall financial position.
Filling a C-suite position with a CFO can mean Chief Financial Officer or Chief Future Officer, and many times the CFO is now a combined position.
This article explores how a CFO “Chief Financial Officer or Chief Future Officer” are separate positions and sometimes one position within finance operations of a corporate structure.
The CFO together with the CEO (Chief Executive Officer) create the financial business strategy to insure the organization’s financial health. CFOs are in a unique position to partner with the CEO to influence the future direction of the company.
Shifting Healthcare CFO Functions from Traditional to Future-Oriented
Emerging from COVID in 2022 and 2023 rocked many if not all healthcare organizations. Traditional demand trends went up and down, while recruiting and replacing significant numbers of staff members after “The Great Resignation” left many healthcare organizations including behavioral healthcare companies reeling. Adding to this, increased wage costs, inflation driving up overall expenses, and a shortage of low cost capital is caused health and behavioral health institutions to step back and rethink C-suite roles, particularly that of the CFO. CEOs, Boards and Private Equity Firms are asking, “Can our Corporate Financial Leader help predict, plan for and potentially help ameliorate these system shocks in the future to steady the organization and keep the”growth flight plan” on course?”
Central to this question is a shift in the role function of a Chief Financial Officer (CFO) to more of a Chief Future Officer (CFO). These two roles differ substantially in terms of their primary areas of focus and responsibility within an organization. Depending on the skills of your current CFO and the strengths of the team they have reporting to them, highly skilled and strategic CFOs can combine both roles. Specifically, the traditional CFO’s financial responsibilities move under overall business administration, with a much heavier emphasis on revenue cycle management, thereby freeing up a Chief Future Officer to focus on future financial scenarios and goals.
Interestingly, Forbes is tracking this shift across all industries, not just health and behavioral health, defining a Chief Future Officer as“having the vision and agility to prepare the company for what lies ahead.”Below is a clear delineation of differences in responsibilities between the traditional CFO functions and the emerging new Chief Future Officer role.
Chief Financial Officer (CFO):
- Financial Management: The CFO is primarily responsible for overseeing the financial aspects of an organization. This includes financial planning, budgeting, financial reporting, and ensuring compliance with financial regulations.
- Risk Management: This Chief assesses and manages financial risks, such as market fluctuations, liquidity concerns, and investment decisions.
- Financial Strategy: As an effective financial C-Suite executive, developing financial strategies and making recommendations to improve the organization’s (current and annual) financial performance and profitability are key.
- Financial Decision-Making: The CFO provides financial insights and guidance to support decision-making processes across the organization, collaborating with other executives and departments.
Chief Future Officer (CFO):
- Strategic Planning: The CFO focuses on future-oriented strategic planning and foresight. They analyze trends, emerging technologies, and potential disruptors in the industry to anticipate future challenges and opportunities.
- Innovation and Research: This Chief explores innovative technologies and practices that can enhance the organization’s future viability and competitiveness.
- Scenario Planning: The CFO engages in scenario planning exercises, developing alternative future scenarios and assessing their potential impacts on the organization’s operations and strategic objectives.
- Partnerships and Collaboration: An effective C-Suite executive of the future collaborates with external stakeholders, research institutions, and experts to stay informed about future developments and potential collaborations that can drive the organization’s future growth.
- Future-proofing Initiatives: The Chief Future Officer designs and implements initiatives to ensure the organization remains agile, adaptable, and resilient in the face of future uncertainties and disruptions.
In summary, while both roles contribute to the overall strategic direction of an organization, the Chief Financial Officer focuses more on financial management, risk assessment, and financial decision-making in the present, while the Chief Future Officer looks ahead and strategically plans for the future, identifying trends, opportunities, and potential challenges to ensure the organization’s long-term success.
What is a Chief Future Officer?
The term “Chief Future Officer” incorporates many skills of the traditional Chief Financial Officer; however, they are sharp-witted in financial planning and have the skill set to implement systems to improve cash flow and capital structure to improve a company’s financial operations.
This position is the senior executive responsible to address future-oriented strategic planning, innovation, and foresight in the context of behavioral health services and initiatives.
It’s important to note that job titles and roles can vary across organizations, and the specific responsibilities and scope of a Chief Future Officer in behavioral health may differ depending on the organization’s needs and strategic objectives.
A “Chief Future Officer” CFO in behavioral health advises departments in a variety of areas and would potentially be responsible for:
Developing long-term visions and strategies to guide the organization’s growth and adaptability in the evolving behavioral health landscape. Guiding the financial controller or finance directors regarding the specific finance function to benefit the company’s financial standing.
Innovation and Research:
Identifying emerging trends, business models, digital technologies, human capital management, and evidence-based practices to enhance the delivery of behavioral health services.
Foresight and Trend Analysis:
CFO’s monitor and analyze social, technological, economic, and policy trends that may impact behavioral health outcomes. Explore M&A targets, their complex data and capital structure and design proactive measures to determine financial results.
Partnerships and Collaboration:
Engaging with external stakeholders, such as researchers, policymakers, technology providers, and community organizations, to foster collaboration and stay abreast of advancements in the field.
Implementing initiatives to ensure the organization remains flexible, responsive, and sustainable in the face of future challenges and opportunities. Possess leadership skills that can create and align a strategic partner to improve the company’s financial health.
10 Best Practices for Hiring a Forward-Thinking CFO
WWhen hiring a Chief Financial or Chief Future Officer (CFO) for a healthcare or behavioral healthcare organization, not only does this individual need to have a wide breadth of knowledge across professional financial and accounting systems and methods in the healthcare space, but they also need to have an in-depth understanding of contracting, reimbursement and regulatory issues across all payer types for diseases treated by the organization. In addition, behavioral healthcare CFOs of the future possess a specific skill set that enable them to anticipate impending micro and macro trends, drive technological innovation, and effectively navigate the evolving financial landscape. Here are several best practices to consider, ensuring you find the right candidate who can effectively lead your healthcare organization’s financial future.
These are 10 best practices and essential skills and attributes for a forward-thinking health and behavioral health Chief Future Officer:
One – Clearly Define the Role:
Begin by clearly defining the responsibilities, expectations, and strategic goals of this changing role within your organization. This includes identifying the key areas the Chief Future Officer will be responsible for, such as financial business strategy, risk management, financial reporting, and budgeting.
Two – Determine Required Qualifications:
Identify the necessary qualifications, leadership skills, and experience needed for the CFO position. This may include a combination of an advanced business degree, financial expertise, technological training and experience, leadership abilities, industry knowledge, and relevant certifications (e.g., Certified Public Accountant, Chartered Financial Analyst).
Three – Conduct a Comprehensive Search:
Utilize various channels to attract a diverse pool of qualified candidates. This may involve posting the job opening on relevant websites, utilizing executive search firms such as JDi Healthcare Consultants and Recruiters, leveraging professional networks, and seeking referrals from trusted sources.
Four – Thoroughly Evaluate Candidates:
Develop a rigorous evaluation process that includes quantitative and qualitative criteria as highly screened candidates move through multiple stages of the interview process.
Five – Assess Financial Acumen:
To evaluate candidates’ financial acumen, financial analysis skills and technical skills, consider having the top pick candidates present case studies and/or complete financial modeling exercises, or request that candidates to present blinded summaries of financial strategy documents or initiatives they led which helped redirect their former organizations’ direction or success. Additionally, verify their track record of regulatory compliance, the ability to demonstrate acquiring equity funding and successfully managing financial operations and improving business performance with driving results.
Six – Evaluate Leadership and Communication Abilities:
A CFO of the future possesses exceptional leadership and communication skills. Get in-depth reference checks on selected candidates’ abilities to effectively communicate financial information, collaborate with cross-functional teams, and lead strategic and financial efforts as an exemplary team player. Consider their experience in managing teams, influencing stakeholders, and driving organizational change.
Seven – Cultural Fit and Alignment:
Assess whether the candidate aligns with the organization’s values, culture, and long-term vision. Consider their adaptability to behavioral health, the company’s growth trajectory, and any specific challenges or opportunities your organization faces.
Eight – Reference Checks and Background Screening:
Conduct thorough reference checks to verify the candidate’s qualifications, experience, performance and personality. Additionally, consider using some professional assessment tools such as CliftonStrengths Assessment for leaders or The PI to further verify the candidate’s suitability for this role.
Nine – Involve Key Stakeholders:
As you come close to choosing the successful applicant, engage relevant internal stakeholders such as organizational peers and direct reports. Their input and perspectives can help pave the way for successful onboarding.
Ten – Onboarding and Integration:
Once you have selected the CFO, ensure a comprehensive onboarding process to facilitate their smooth integration into the organization and tight finance operation.
By following these best practices, you can increase the likelihood of finding a qualified healthcare or behavioral healthcare CFO who possesses the necessary proficiencies, experience, and strong leadership skills and abilities to effectively manage your organization’s financial operations and contribute to its long-term success.
A forward-thinking CFO should possess a specific skill set that enables them to anticipate future trends, drive innovation, and effectively navigate the evolving financial landscape and regulatory compliance of the behavioral or healthcare industry.
Strategic thinking is a must. A progressive Chief Future Officer demonstrates a strategic mindset and the ability to envision the future of the organization’s financial landscape. Along with the senior executive team, they are skilled at identifying opportunities, anticipating potential risks, and working with the CEO to develop strategies to optimize financial performance and drive sustainable growth.
Technological fluency in today’s digital age requires an avant garde CFO to be knowledgeable about emerging technologies impacting the financial sector. They should understand how technologies like artificial intelligence, data analytics, and automation can be leveraged to enhance financial processes, improve decision-making, and drive efficiency.
Effective communication and influencing skills are key for a forward-thinking behavioral health CFO. They masterfully and clearly articulate financial concepts to non-financial stakeholders, influencing decision-making at the executive level, and building collaborative relationships with cross-functional teams.
Lastly, risk management. An enlightened CFO should have a strong understanding of risk management principles and be able to proactively identify and mitigate financial threats. They should have the ability to balance risk and reward, implement effective internal controls, and ensure compliance with financial regulations.
Looking for the right Chief Financial Officer or Chief Future Officer for your behavioral health company? JDi Healthcare Consultants and Recruiters can find each position or a combined superstar.
We also invite you to an open dialogue featuring workforce trends at all organizational levels during the Treatment Center Investment & Valuation Retreat, November 27-29 in Scottsdale, Arizona. Please contact us at email@example.com for more details and a special mid-summer savings before August 4th.