Hospital EBITDA falls 174% in April as CFO leadership expectations rise

Hospital EBITDA falls 174% in April as CFO leadership expectations rise

May 29, 2020
Business Affairs

As strategic leaders, CFOs should strongly consider the use of rolling forecasting or other forecasting methods to quickly assess performance and improve organizational agility. A continuous forecasting process helps identify potential issues related to liquidity, credit ratings, or debt covenants, and provides flexibility for the organization to respond with mitigating actions. Ongoing, intense focus on progress compared to internal benchmarks (based on financial planning targets) will be essential for financial leaders to ensure that their organization’s recovery stays on pace. Transparent sharing of these data will highlight successes and opportunities for improvement, and provide essential proof points for debt holders and other stakeholders.

Over the next several months, CFOs also should look to enhance processes, review operations, and develop and implement considerable process improvements. Finance leaders will need to assess broader changes to traditional healthcare models. For example, staffing productivity models will need to be re-evaluated to help cope with anticipated backlogs in non-COVID care. Organizations should also challenge “just-in-time” supply chain processes that have contributed to widespread supply shortages.

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CFOs will need to work hand-in-hand with other executive leaders to determine what pre-COVID strategies and capital projects can continue post-COVID, and which need to change completely. Many traditional strategies may no longer fit or will need to accelerate (e.g., telehealth). Regardless, financial leaders must be both creative partners and financial advisors to operational leaders.

Future role: Advocate for innovation. The COVID-19 crisis has accelerated significant changes to healthcare payment and care delivery models. How long, or whether, those changes will continue remains to be seen. Future-focused CFOs will help organizations adapt to a new healthcare paradigm, with new expectations from patients, boards, physicians, and their communities.

CFOs will need to partner with the rest of the management team to help conceptualize and develop new businesses, service lines, revenue sources, and priorities that will emerge as a result of new market expectations. It will fall to the CFO to challenge historic structures and processes, step forward as a strategic leader, and ensure their organizations have the data and analytic support needed for new processes as they evolve—and that those resources are used effectively.

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