LUTZ BUSINESS INSIGHTS
The CFO Outsourcing Option for Hospitals and Why it May Make Sense for You
KIRK DELPERDANG, HEALTHCARE MANAGER
Outsourcing of Chief Financial Services (CFO) services is gaining traction in a broad spectrum of industries, but specifically it is expanding within the healthcare profession.
There are two prevailing reasons why it makes sense to outsource CFO services. First, for many hospitals, it is simply cost effective. Median compensation for Critical Access Hospitals (CAH)/Rural Hospitals with NPR (net patient revenues) under $20 million is $92,123¹. For CAH/Rural Hospitals with NPR of $20M-$50M, that number jumps to $123,698¹. When evaluating total facility costs, organizations must also consider the rising cost of benefits in their determinations. Another potential advantage of outsourcing CFO services is the continuity of personnel and expertise. For many hospitals, it can be a struggle to find the right candidate for the organization. Upon finding the right candidate, it can be an even greater struggle to retain this talent. Outsourcing the CFO function in healthcare organizations alleviates these struggles.
The traditional role of a CFO has been more bottom-line focused with an emphasis on revenues and expenses. Today’s CFO needs to be much more. The hospital model has shifted in recent years, making it necessary for the CFO of today to facilitate physician employment arrangements, address care coordination, assess the multitude of performance measurements required in an environment of increased reporting, and address the changing demographics and needs of their respective healthcare communities.
The healthcare CFOs of today face an increasing workload to keep their facilities afloat. In many instances, the training they possess is inadequate to prepare them for the multitude of decisions they are facing. These decisions, in an ever-changing healthcare environment, can make the difference in a facility being successful and growing or becoming stagnant and failing. The expertise provided by an outsourced CFO (whether full-time or simply as a trusted advisor to the current CFO) is customizable to your facility’s needs. These services can range from the monthly accounting/finance services of simply compiling the facility monthly financial statements to the more complex issues of completing cost report interim settlements, balance sheet estimates, revenue cycle benchmarks, DSH (disproportionate share hospital) surveys, assessing high-risk areas, compensation studies and organizational strategic planning.
The same benefits of outsourcing the entire CFO function apply to those healthcare facilities that prefer a CFO within the staffing of the hospital. Eventually, the search for a CFO will become a need for every healthcare facility, whether due to promotions, relocations, retirements or the like. Interim CFO services can be crucial to the ongoing operations and financial viability of your hospital. The best candidate to succeed the departing CFO will not simply fall into your lap. The search for a proper replacement can take an extensive amount of time, energy and money.
Another common problem within healthcare facilities (as well as many other industries) occurs when organizational personnel simply cannot identify the solutions to facility and industry problems like specialized healthcare consultants can. The healthcare industry faces an increasing burden of growing and changing laws and regulations. Outsourcing these services or even simply partnering with an organization with a broad spectrum of healthcare expertise can provide a completely new viewpoint, unburdened by previous problems, procedures or expectations. This expertise comes from an independent source with a broader range of experiences. A fresh perspective can often diagnose solutions to problems quickly, enabling the facility to make agile decisions for the betterment of operations. The fresh perspective and/or confirmation of current organizational determinations can be of significant importance to a Board of Directors facing strategic decisions that determine the future of your facility.
¹ Source: Yaffe & Company, Inc. 2012 Executive Compensation Survey for CAH/Rural Hospitals
ABOUT THE AUTHOR
KIRK DELPERDANG + HEALTHCARE MANAGER
Kirk Delperdang is a Healthcare Manager at Lutz with over 25 years of experience. He provides accounting and consulting services to healthcare and related organizations.
AREAS OF FOCUS
- Healthcare Industry
- Medicare Enrollment
- Financial Analysis
AFFILIATIONS AND CREDENTIALS
- Healthcare Financial Management Association - Nebraska Chapter, Member
- Nebraska Society of Certified Public Accountants, Member
- BA in Accounting, University of Northern Iowa, Cedar Falls, IA
- St. Vincent de Paul, Knights of Columbus, Member
- Active in various youth sports leagues: Aldrich Elementary, Millard Athletic Association, Millard North Schools, Omaha FC, Skutt Catholic High School and YMCA
- 2019 OOPS + ASC Proposed Federal Registers
- Provider Enrollment Updates
- CMS Survey & Certification Emergency Preparedness Initiative
- Medicare Provider Enrollment
- Risk Tolerance + Payor Contract Reviews/Audits
- OIG Work Plan Update
- 2018 Proposed Federal Registers + OPPS & ASC
- Classification of Provider-Based Space a Key Consideration for Rural Hospitals
- Summary: CMS 2018 IPPS Proposed Rule
- Medicare Provider Enrollment
- OIG Work Plan 2017
- RHC Billing
- Medicaid Provider Screening and Enrollment + Revalidation
- Provider Enrollment
- Provider-Based Arrangements
- The CFO Outsourcing Option for Hospitals and Why it May Make Sense for You
SIGN UP FOR OUR NEWSLETTERS!
We tap into the vast knowledge and experience within our organization to provide you with monthly content on topics and ideas that drive and challenge your company every day.
13616 California Street, Suite 300
Omaha, NE 68154
747 N Burlington Avenue, Suite 401
Hastings, NE 68901