Providers crunch the numbers
VIDALIA, Ga. - Biram Chapman hired his first CFO in July, and the HME owner seems to have done it for all the right reasons, say industry consultants.
“I wouldn’t have brought on a numbers-crunchers CFO - that could be handled on a part-time basis or contracted out,” said Chapman, president and CEO of Chapman Healthcare Services. “Our CFO has healthcare experience. That makes it a strategic-partner position.”
In today’s environment of increased competition and reduced reimbursement, it’s critical that companies grow their financial expertise along with their sales, consultants say.
That doesn’t mean that a start-up company needs to go out and hire a full-time CFO, which can be an expensive addition to a company’s management team. For a small company, an in-house person with bookkeeping skills is probably sufficient on a day-day-basis, provided that company meets several times a year with a financial advisor, said Don Clayback, vice president of networks for The Med Group.
“You want an outside accountant who is a financial manager, who knows how to do a tax return and those kinds of things, but who is also business savvy, who knows the issues around growing and financing a business, who has banking relationships he can draw upon,” Clayback said.
While it varies from company to company, Clayback said, a business with revenues from $1 million to $2 million can probably get by with an in-house bookkeeper; a $5 million HME may need to rely more on outside financial expertise; a $10 million should consider hiring its own CFO.
A good financial adviser can help a company manage information and technology needed to cut costs; develop leasing relationships; analyze financial statements and make cash-flow forecasts six months into the future, said consultant Wallace Weeks of The Weeks Group in Melbourne, Fla.
“Just making do with someone who can operate a software application doesn’t give you management information,” Weeks said. “If a company is satisfied with 1% to 2% growth a year, they may not need a professional. But if they are looking to take the company from $3 million to $5 million over the next couple of years, they should have that professional.”
That’s Chapman’s challenge. He prefers not to discuss his company’s revenue and other financial data, but he wants to grow and tackle upcoming Medicare reimbursement cuts head on.
Chapman’s hired a CFO who can help develop a budget and forecast revenue growth; analyze contracts; develop company policy and procedures; drive down his DSO; and determine which products are most cost efficient. In short, to grow his company aggressively, Chapman needs expertise he doesn’t possess. And he wants that information in a timely manner, not via quarterly meetings with an outside financial adviser.
“We need an influx of new blood and ideas to step up and move forward,” he said. “If you do the same things you have always done, you will always get the same results.”