How do finance professionals in the healthcare space balance a multitude of regulations, cost management objectives and changing reimbursement models, all the while keeping quality patient care central to the organization’s mission?
Given all the responsibilities, it’s surprising that CFO turnover in healthcare is among the lowest by industry.
Victoria Sartor knows it’s no cakewalk. Sartor is the CFO and executive vice president of the Amalgamated Family of Companies, which includes an employee benefits administrator and a medical management business.
Sartor handles the group’s internal and external governmental and regulatory financial reporting and coordinates periodic financial projections and pricing proposals for many of the Amalgamated businesses.
In an interview, Sartor spoke about the particular skills the healthcare CFO position requires and how Amalgamated handles a long list of risks while striving for operational efficiency.
How do the challenges for finance leaders differ at a healthcare industry company?
The healthcare industry poses many challenges for CFOs. There is a complex state and federal regulatory landscape, including compliance with the Health Insurance Portability and Accountability Act, the Affordable Care Act and the Health Information Technology for Economic and Clinical Health Act [which strengthened rules on privacy and security]. Finance has to navigate a highly regulated environment with layers of federal, state and private payer policies.
Another unique challenge is managing reimbursement models across private insurance and government programs like Medicaid and Medicare. These constantly evolving models have complex billing, collections and claim-processing systems and workflows. They require agility and a deep understanding of compliance risks.
At the same time, a healthcare company must provide excellent customer service and quality care to the participants it serves cost-effectively.
With the rising complexity of regulations and reimbursement models, how can CFOs maintain compliance and hit their efficiency KPIs?
CFOs must work closely with compliance, legal, cybersecurity and IT teams to align financial strategies with regulatory changes. Strong relationships with leadership across functions allow a company to proactively respond to evolving rules and regulations. CFOs should also prioritize regulatory education and awareness for their finance and billing teams and stay engaged with industry groups to anticipate policy shifts.
What strategies have you found most effective in managing operational and financial risks?
The best way to manage financial risks in this setting is through an active and engaged corporate enterprise risk management committee. Our ERM committee meets annually with key personnel to identify and evaluate the prominent areas of corporate risk. After assessing the identified risks, the committee is tasked with developing a risk rating system. I recommend quarterly meetings to optimize strategies to mitigate the identified risks.
For finance professionals looking to transition into healthcare, what key skills or industry knowledge should they prioritize developing?
I would urge any finance professionals looking to make this transition to familiarize themselves with state and federal regulations. Some key skills required are the ability to use analytics to interpret complex financial data, the understanding and ability to apply accounting principles and [an aptitude for] meticulous preparation.
The healthcare CFO must be highly skilled at developing and managing budgets and identifying and controlling costs. Finally, the healthcare finance chief must understand and operate in full compliance with relevant healthcare regulations and financial reporting standards.
