Working in the healthcare industry throughout most of my career, I found that fiscal departments and clinical departments functioned in silos. In my experience, most clinical supervisors did not understand the financial impact of decisions made on the organization. On the other hand, being part of the fiscal department, I did not always understand the clinical necessity of some of the decisions. When I became CFO at a community based non-profit center with a budget of $8 million, one of my first goals was to bridge the gap between the fiscal and clinical programs. Most of the supervisors had little exposure to financial statements and budgets. I thought it was especially important for the supervisors to understand financial statements and budgets as many times they were tasked with making programmatic decisions that impacted the financials. How can we expect supervisors to make good programmatic decisions when they do not understand the financial status of their program?
To begin the process, I held profit and loss review meetings. The first phase of these meetings was focused on educating the supervisors on reading their programs financial statements. This was the first exposure many had to financial statements and many could not read a Profit & Loss (P&L) statement. They had trouble comparing actual numbers with budgeted numbers. I reviewed the basic setup of a profit & loss statement, discussed revenue recognition and the matching principle, and explained accruals. Accounting principles are not second nature for supervisors who have never been educated in it. I facilitated a no-judgement environment so the supervisors felt they could ask any question and not feel inadequate. I embraced all questions and encouraged dialogue to further the understanding.
The second phase of the process was to hold review meetings designed for the supervisors to present their own programs financial reports and interpret the financial status of their own programs. This forced the supervisors to understand their financials and held them accountable for their programs. I noticed supervisors began tracking their program’s productivity each month and came up with new ideas to cut costs. This exercise was also beneficial to me. I learned more details around program requirements and some of the daily struggles the supervisors deal with in managing day to day operations. In essence, both the fiscal department and the clinical programs began working together to come up with solutions instead of pointing fingers at the end of each month when the numbers did not land where they were expected.
The final phase of this process was to include the supervisors in the budgeting process. In previous years, the Chief Operating Officers of the two departments completed their program budgets with little or no involvement from the program supervisors. Again, how can supervisors make decisions for their programs without knowing their budget? One struggle with the P&L review meetings was the comparison of actual numbers to budget numbers. I understood the struggle since the supervisors had little input into their budgets. Now that the supervisors had been exposed to their program P&L’s, they maintained a stronger understanding of how expenses and revenue impacted their programs cost center. The supervisors had now been given the opportunity to budget for items they want to help their programs and will know if they can actually afford it. As they review their profit & loss statements in the future, they will remember what they budgeted and will understand if they are meeting their own expectations. Previously, supervisors would ask why we could not give a larger bonus, raises, or make some type of large purchase for their program. Now they understand why and are better equipped to answer staff questions around these types of items.
Overall, implementing this process has improved the communication and broken down the proverbial siloes between fiscal and clinical programs. Processes and changes like these take time and patience. It is always evolving and a continual work in progress. Both sides now have a better understanding of what the other side does, therefore, bridging the gap between the departments and creating an environment where we all come together to work for the common good of the organization.