This is a very interesting and informative article.

Personally, I agreed with the conclusion of the article, that to survive the continued change in the industry, hospitals must integrate financial strategic planning with financial priorities and not only purely by the mission, vision and values of the organization.

Furthermore, CFOs responsiblities should not only be revenue control, but it should include revenue drive.

I agree. This is an interesting topic. My view is slightly different. In my experience, an organization's strategy should be based on its mission, vision, and values. The strategy also needs to account for the organization's external environment and current levels of performance. Financial realities and priorities are critically important considerations, but the organization must also reconcile its financial results with other key dimensions of performance such as patient safety, clinical quality, patient satisfaction, community benefit, and people management. A financial priority that suggests increasing the operating margin to fund future program development is not helpful if the implication is that productivity must increase to the point of compromising the patient experience. In this scenario, the organization could improve profitability in the short-term, fund new programs, and find that their patients have decided to go to another facility where the staff has time to address their specific needs. A SWOT analysis can be used to describe the organization’s current reality or situation, providing leadership with an opportunity to review and consider a full range of issues. Also, while much of the required data and information can be provided by the finance department, in my experience valuable information can also be provided by planning, marketing, decision support, human resources, IT, facilities, nursing, operations, and other departments. While I firmly believe that finance must play a lead role in strategy formulation, I would be wary about a process that was driven by finance, or by an organization's financial interests alone. An organization’s strategy should be developed, in part, by reconciling the views and perspectives of multiple key constituents. In the end, organizations must integrate financial plans, quality plans, facilities plans, safety plans, people plans, I/T plans, etc and ensure that they are all aligned with the overall strategy. The driving force for such an effort must always have the entire organization’s best interest in mind. CEOs, strategic planners, and consultants are the best candidates for driving the process, in my experience.

Historical financial performance helps to predict business opportinities and present financial information can measure current successes and failures. We can use financial information to assist in strategic planning, but I see it more as a result or outocome of your strategic direction. A helpful strategic exercise I have used is the TOWS matrix: after performing a SWOT, I turn the analysis into the following strategies:
SO =strengths taking advantage of opportunities;
WO= take advantage of opportunities by overcoming weaknesses;
ST =use strengths to avoid threats;
WT= minimize weaknesses and avoid threats

I find this most helpful in developing action steps you can start working on tomorrow.

We complete a process at my hospital termed the "Integrated Strategic Financial Operating Plan" (ISFOP). It is a lengthy document that, by design, addresses the combination of finance and planning in association with capital planing. The integrated process, while a dogmatic one, forces us to think and look at these important processes as synergestic. I highly recommend such a process! Much of this work was orginally developed by a finance consultant group - Kauffman Hall.

Pat Murtha

thank you, great article, thought provoking.