Technological innovations have caused massive disruptions across industries – from financial services to education to healthcare. As businesses grapple with these changes and fight to remain relevant, the CFO plays a key role in identifying risk and determining opportunities for growth. In light of these monumental shifts, Erik Wissig, CFO of Hixme, and I discussed how CFOs can continue to provide value to their organizations – despite fundamental transformation – by embracing innovation, moving beyond finance, and partnering across departments.
This interview has been edited and condensed.
Jeff Thomson: The healthcare industry has undergone fundamental transformation over the past few years. What are the greatest challenges the finance department has faced as a result and how are you addressing them?
Erik Wissig: The broad-based cost increases and regulatory uncertainty across healthcare and health insurance has exacerbated two key challenges: 1) anticipating where increases and changes will materialize and getting out ahead of them as an organization; and 2) a revenue model based on a reimbursement or commission environment that is continuously under pressure, where healthcare providers have limited ability to adjust pricing for their products and services provided.
For example, the ACA has impacted everyone in and outside of healthcare in some way. Many organizations are struggling to understand its impact and how best to deal with it. The finance department is challenged with identifying the impact on its business and strategizing about what can be done differently. With benefits existing the way they have for many years – as an extension of health insurance – Hixme has creatively identified the challenges that come with traditional benefits to help organizations find even greater opportunities using a new approach.
Thomson: Did your role as CFO undergo a transformation as well? If so, how?
Wissig: The role of the CFO is undergoing a general transformation, as innovation continues to present more opportunities for efficiency. The ability to adapt to operational needs is becoming more critical. To continually deliver value, CFOs must first understand the broader landscape, and then peel apart the structure of a company to determine where insights can be most beneficial.
While my background is shaped by traditional finance, my perspective on the role of the CFO has evolved, as I have become more versatile and immersed in operations. I have found it rewarding to serve as a resource for other financial officers by relating to the pain points I felt while adapting to the startup environment at Hixme and growing alongside the organization.
Thomson: During times of upheaval – whether industry transformation, political changes, etc. – how can CFOs continue delivering value to their organizations, despite ongoing uncertainty?
Wissig: Times of upheaval create a lot of opportunity for organizations to identify ways to do things differently. It’s important for CFOs and finance departments to partner with the rest of the organization. For example, there’s an opportunity for HR and finance to readdress their approach to benefits in a way that allows them to not only regain control of costs, but enhance the experience and satisfaction of their employee base.
CFOs need to work as ingrained team members of any organization to fully understand the company’s initiatives, as well as the financial impact on both the entire business structure and specific departments.
It’s critical in times of uncertainty to capture this in a proactive way that allows an organization the time to adjust. Traditionally, CFOs would crunch the numbers and report back on problem areas for someone else to deal with, which creates a disconnect. Now, CFOs are immersed in a business's goals and objectives, and innovative technology and ideas are helping to improve on existing practices and create new opportunities for growth.
Thomson: When facing industry changes, it’s important for companies to continue to innovate so they remain relevant; yet, the finance department tends to be risk-averse. How can CFOs properly determine which risks are “worthwhile” in the long-run, and what is the best way for them to communicate potential ROI to the C-suite?
Wissig: The tendency for finance departments to be risk-averse is something an organization needs to evaluate. The finance department should understand the overall risk dynamic of the company and align its approach accordingly, then routinely communicate where on the spectrum of risk the organization is operating. The most important elements of communicating ROI are transparency and consistency. ROI is really about evaluating use of capital and determining where (and where not) to deploy it.
The biggest point is for CFOs and organizations to align ROI, transparency and consistency, relative to the risk aversion of the company. If the finance team takes a very risk-averse approach because of its background, while the company overall is less risk-averse, that disconnect works against the organization. Finance needs to be aligned with the rest of the organization, and Hixme serves to help HR and finance departments understand where they sit on that risk spectrum related to their benefits strategy and the constantly evolving regulatory environment.
Thomson: Given the tumult in the industry, there have been several articles written recently about top skills required of a healthcare CFO. What skills do you believe are the most important for a health insurance or hospital CFO? Are these skills changing and, if so, what is the best way for finance leaders to prepare?
Wissig: I believe the role of the CFO is moving beyond accounting and financial reporting and becoming much more operationally important. This means CFOs need to have broader business experience beyond simply being a CPA. Financial and accounting expertise is still extremely important, but it is now just a baseline. The ability to connect with operations, product and corporate development, marketing, etc. is now essential. Keeping an open mind about the implications of technology is also crucial for making beneficial decisions on behalf of any organization. Innovation is something that not only Hixme embraces as a startup, but that I continue to value as a CFO.
