With more than 20 years’ experience in both healthcare and technology industries, Derek Morkel, HealthTech CEO, shares valuable insight to strategic planning in order to improve financial performance.

“If you can’t measure it, you can’t improve it.” Peter Drucker

We certainly could have made this article about any industry and picked a number other than Five Keys, but the backbone of our keys is captured by Peter Drucker. It is all about process, data and measuring what counts. This is the underlying theme as we explore what I consider to be the Five Keys to success in managing financial operations in the hospital industry.

Hospitals, and healthcare in general, are incredibly complicated to operate efficiently – clinically, operationally and financially. There are a hundred different ways a work day can go awry for a CFO, so understanding the key priorities and goals of an effective CFO and executive leader is important.  Having the discipline necessary to stick to them on a daily basis may even be harder but greatly improves outcomes.

As we explore the Five Keys – process, data, measurement and discipline should not be far from your thoughts.

My Five Keys:

1. Focus areas – figure out what is important and why

The daily pressure on CFO’s is enormous, especially at the hospital level. It is easy to get sidetracked as issues come up. This is why it is important to establish the key operational priorities that need to be focused on daily, weekly and monthly.

Dividing up focus areas into subsets of time enables you to keep the focus area to a manageable number of key performance indicators (KPIs).

Daily and weekly items should be leading indicators and monthly summary indicators.

Some management consultants indicate there should be no more than 5 KPIs. I believe if you have the right data in an organized manner you can certainly keep track of more – the next four keys are critical to achieving that.

2. Team

The first and second keys are almost interchangeable. Without the right team members (especially middle managers) it will be hard to get the other areas correct.

I see many CFOs who underinvest in their teams to save money and it ends up costing them significantly more in the long run.

It is about the 4R’s – the Right People + Right Process + Right Technology = Right Results. The one pillar that is the most important is People – the other 2 will not be effective without the right team.

3. Process & Technology

Now we begin to map out the key processes in each focus areas and determine if there are technology solutions that can help manage these areas more efficiently.

Many CFOs first reaction to problem areas or processes is to throw people at the problem without trying to understand if there is a technology solution or a combination of people and technology.

Chargemaster is a good example of this – I still see hospitals using consultants to review their CDMs vs. technology. It is not possible for any consultant to be as efficient as a good CDM platform.

4. Data

This is one of the most important items in building a data-dependent operation. You need a platform that enables automated data extracts that can manipulated and/or loaded into other tools to make the data meaningful, such as Business Intelligence (BI).

What we do not need is to spend hours extracting data, loading into excel and then rebuilding queries every day. Time spent on building even a basic BI data warehouse and then the associated KPI’s will save you and everyone on your team countless hours.

The goal is to spend time improving processes – not getting access to your own data. Pick the right KPIs, identify the data necessary to measure the KPIs, and ensure you are improving them.

5. Details

“Trust, but verify” – a great quote attributed to Ronald Reagan. The previous four keys are the backbone of good financial operations, but achieving greatness requires continuous attention to the details.

Assuming that everything is being done correctly is just not good enough anymore. It pays to periodically get into the details – at the account level for AR; the invoice level for AP/expenses; the timesheet for FTEs.

Understanding what is happening at the transaction level on a periodic basis (at least monthly) keeps you in tune with the various processes that are the building blocks for success.

In a follow-up article, we will explore these concepts relative to the largest line item on the income statement – Revenue/Cash/AR. This should be near the top of every CFO’s daily focus areas.

The best CFO’s that I have worked with in my career have all paid attention to these building blocks. There are many more that we can discuss, but having the right data to measure the health of the most important processes is at the heart of it. Measure it, monitor it and hold your team accountable to it – data!!!