According to Mayo Clinic CFO Dennis Dahlen, who recently sat down with Becker’s Hospital Review, the CFO role has morphed in recent years. Healthcare is changing rapidly, and CFOs are struggling to balance their traditional responsibilities with new strategic expectations.
While today’s CFOs are expected to deliver traditional skills — accounting, compliance and financial reporting — they are also expected to be a catalyst and a strategist. Revenue streams are evolving, or at least they should be, and the CFO role must evolve in tandem.
Below are other insights from the interview, paraphrased for length. You can read the interview in its entirety here.
What was hospitals’ greatest challenge in 2018, and what will it be in 2019?
Cost control was the key challenge in 2018. Patients have been routinely disappointed by high out-of-pocket costs. The need to reduce costs must be balanced with the need to grow and expand.
These challenges will continue in 2019. There are signs that merger trends will shift in 2019. Non-traditional partnerships, most notably the CVS/Aetna merger, are on the rise, signaling a changing marketplace. New market entrants have a tremendous advantage as they have less to lose and tend to be more agile. It’s disruption in healthcare.
What are Mayo’s top cost-containment strategies?
Mayo successfully eliminates excess costs using traditional cost-containment strategies, like lean principles, procurement rigor, and practice optimization. In 2018 savings totalledtotaled $200 million.
Mayo’s boldest cost-containment example from 2018 is Civica Rx, a non-profit, mission-driven drug company Mayo helped launch with seven large health systems and three philanthropic groups. Civica Rx is designed to be a game-changer in the way the industry supplies patients with generic drugs.
But the most fundamental key to cost containment rests with data. It needs to be credible. The metrics must be 100% sound. The billing data must be scrubbed, filtered, and normalized before it can be used to drive decision making.
“Otherwise, you end up fighting yourself,” Mr. Dahlen concluded.
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