As the CIO role continues to evolve, building and maintaining solid relationships with fellow executive leaders has become increasingly critical. Perhaps none is more vital than the chief financial officer, particularly given the razor thin margins on which health systems operate. In fact, “if you’re at odds with your CFO, it’s only a matter of time before you’re no longer than the CIO,” said Michael Restuccia, SVP/CIO, Penn Medicine, University of Pennsylvania Health System.
“You need to function as a team,” he said during a recent discussion, which also featured Chuck Podesta (CIO, Renown Health) and Kelly Summers (SVP and CIO, Valleywise Health). For forward-thinking healthcare leaders, that means understanding the pressures CFOs face and collaborating to help alleviate them. It’s a far cry from the traditional arrangements where IT was viewed largely as a cost center, according to Podesta. “That’s not the case anymore. Now, most CFOs understand the benefits of technology,” and are willing to work closely with CIOs to maintain a healthy bottom line.
For that to happen, however, CIOs need to do their part by achieving a higher level of “financial literacy,” said Restuccia. During the discussion, the panelists shared insights on why it’s so important to build those skills and the strategies they’ve leveraged to get there.
The hard truth is that the majority of hospitals are in the red, which means “a lot of hard decisions have to be made and a lot of rationalization has to be done” before selecting and prioritizing projects, Restuccia noted. Leaders must be able to “clearly communicate the anticipated benefits” of an initiative, whether it’s generating 20 percent more revenue or reducing expenses by 15 percent, for instance.
When those goals are met, it helps establish accountability and trust, which paves a smoother path for future objectives. “That’s why we spend so much time on the budget.”
And it’s why CIOs must be strategically aligned with the business, and be able to clearly articulate how technology ties into overall objectives, according to Summers. “I don’t want to be on the side of technology where I have to justify my capital expense or operating expense,” he said. “I want to be arm in arm with the business and clinical leaders.”
For Summers, who has been with Valleywise for 11 years, one of the key components in building those relationships is in realizing a simple fact: “You’re helping to run a business.” Therefore, understanding the intricacies of different roles and departments is essential. “You have to think like a businessperson before you think of being a technologist.”
Restuccia concurred, adding that building the background and experience to become a “problem-solver” has been critical in his journey. “Our role is to be a mile wide and a few inches deep across a large span of territory.” And while he doesn’t believe advanced degrees should be mandated, he does “highly encourage” aspiring leaders to take the step. “It’s not just finance; it’s operations. It’s problem-solving. It’s being the type of person who can mill operational and IT folks together.”
However, what was just as beneficial as earning his MBA from Villanova University was the time Restuccia spent founding and growing a consulting firm. “If you want to learn how to manage budgets and feel pain, and if you want to learn how to make decisions and take risks, run your own business. That was a big learning experience for me.”
That education, he believes, will continue to prove pivotal as the CIO role advances beyond technical and billing and takes on more of an operational role, he said. “The next era of the CIO is going to be about operations and taking the gadgets, widgets, and AI, and transforming it into the day-to-day workflow.”
Of course, without solid relationships with finance, doing so is next to impossible, according to the panelists. Below are some of the best practices they identified based on their own experiences.
- Learn the terminology. For Podesta, who had “almost every job in IT, from computer operator to programmer to director,” before becoming CIO, being exposed to different roles helped build his financial acumen. But for those who didn’t learn about cost centers on the way to the C-suite, he advised attending monthly budget meetings and taking note of terms like P&L statements, EBITDA, and zero-based budgeting. “That can go a long way,” he said, especially in gaining credibility with the CFO.
- Be accountable. When Summers took the helm at Valleywise, one of his first priorities was to replace the single cost center with separate units — and make each functional area responsible for profit and loss metrics. “Once they became visible to their particular line of business, that accelerated the learning curve from a financial standpoint, because I was holding them accountable,” he said.
- Be transparent. A common mistake CIOs make in discussions with financial leaders is holding back information, according to Restuccia. “You have to be transparent in the good, the bad and ugly that takes place in enabling those strategic objectives,” he said. “You’re only as good as your last project. And so, it’s important to reiterate the good things that happen, but if it’s not going well, you have to be equally transparent,” even if it the projections were off by a small number. “Be upfront about it. Don’t be sneaky, because you’ll get caught.”
- Meet the CFO. One of the best ways to build credibility and trust is by singling out the CFO as soon as possible and requesting a sit-down. When he came to Renown, he met with the CFO before any other senior leaders — and showed up armed with information and a strategy for how the organization could reduce total OPEX. “The first thing out of my mouth was that we were spending too much money on IT,” he said, much to the surprise of the CFO. By being “open and honest,” he was able to quickly establish trust and get working on a plan to improve finances, which Renown was able to achieve (as he explained during a past webinar).
- Identify allies. And it doesn’t necessarily have to be the CFO, said Summers, who recommended forming relationships with directors and managers, which can lead to candid conversations. “If you find allies in finance, you can pose a challenge or problem statement and ask for counsel,” he added. Asking, “how can I partner with you so that we can do a better job of presenting to the CFO can go a long way.”
Restuccia agreed, noting that education can come in different forms. What’s important is that leaders are willing to do whatever it takes to understand the pressures that keep CFOs awake at night—and create a strategy to mitigate them. “When you can build that rapport and have that type of teamwork, it’s critical.”
To view the archive of this webinar — No Margin, No Mission – Optimizing CIO-CFO Relations — please click here.