The Role of the Chief Financial Officer in the Health Center

1
The Role of the Chief Financial Officer in the
Health Center

• Presented by
• Michael Holton
• National Association of Community Health Centers,
  Inc.

2
Goals of the Training

• To understand the responsibilities of the Chief
  Financial Officer in a Health Center
• To review the structure of the Finance Dept.
• To identify priorities of the CFO and Finance
  Department
• To look at the informational needs of the
  organization

3
Anxiety?
Too Little Time?
Demands?
Priorities?
Pressure?
Conflicts?
STRESS???
Understanding?
Deadlines?
4
CFO Responsibilities

• Some Types of Stuff
• No Financial Problems
• Make the Numbers Work!
• Mission vs. Dollars
• Vulnerability breadth of responsibility
• Whose cash flow problem?
• Just print us a report..today!
• Well have Finance do it!

5
How Can We Deal With It?

• Manage our time
• Recognize, we may be one of the few business
  minded
• Must provide proof (data).
• Might need to be consultant minded
• Stay in Tune with other health centers
• Keep up-to-date HC current events

6
Role of the Chief Financial Officer

• Core Requirements
• Maintenance of the Books and Records, ensuring
  compliance with all applicable laws and
  regulations
• Stewardship of assets
• Provide information, insight and guidance as a
  key member of the management team
• Provide solid financial information to the Board
  in conjunction with the management team

7
Role of the Chief Financial Officer

• Core Requirements
• Monitor and Control billing to third parties and
  collection efforts on receivables
• Liaison to external parties with regard to
  financial information
• Develop and monitor budgets (including
  regulatory, internal management, and capital)
• Manage cash flow
• Knowledge of all aspects of health center
  operations

8
CFO Responsibilities

• Accurately report the financial condition of the
  organization
• Assure compliance with laws regulations
• Integral part of management team
• Must have knowledge, provide input, and be
  involved in health center operations
• Develop policies, procedures, and processes that
  assure organized and efficient financial/informati
  on management systems
• Must provide meaningful, useful information to
  Board, management, staff and external parties

9
Core Competencies of the Chief Financial Officer

• Bookkeeping/Accounting Skills
• Preparation of Financial Statements
• Billing and Collections
• Healthcare Operational Expertise
• Grants Management
• Treasury Management (including financing)
• Interpersonal, negotiation, and supervisory
  skills
• Knowledge of information systems

10
Responsibilities of the Finance Department

• Safeguarding of Assets
• Accurate and timely preparation of financial
  reports
• Efficient management of cash flow
• Contain costs/Maximize Revenue
• Interact with Outside Auditors
• Comply with Regulatory Requirements

11
Elements of an Effective Finance Department

• Well-defined organization structure (including
  current job descriptions for all positions)
• Complete accounting policies and procedures
  manual
• Strong financial management systems (tailored to
  your operation)
• Timely and accurate financial/other reporting
• Continual reassessment/re-evaluation
• Compliance with Regulatory requirements

12
Finance Departments Organizational Structure

• Review/Revise Job Descriptions
• Clearly define responsibilities of each employee
• Clearly define supervisor
• Is workload humanly possible?
• Should allow for proper segregation of duties
• Review/Revise Organizational Chart

13
Finance Departments Organizational Structure

• Assess each positions responsibilities and job
  qualifications and
• Compare to existing staff
• Hire the appropriately qualified individual
• Train and cross-train staff
• Emphasize communication
• Supervise and promote teamwork
• Maintain routine and structured evaluation process

14
Compliance with Regulatory Requirements

• Types of Requirements
• Generally Accepted Accounting Principles
• Federal Grant Regulations
• Medicare Regulations
• Medicaid Regulations
• IRS Regulations

15
Compliance with Regulatory Requirements

• Federal Grant Regulations
• OMB Circular A-110 (Administrative Requirements)
• OMB Circular A-122 (Cost Principles)
• OMB Circular A-133 (Audit Requirements)

16
Compliance with Regulatory Requirements

• Federal Grant Requirements (continued)
• Program Expectations (BPIN 98-23)
• 45 CFR, Part 74
• PHS Grants Policy Statement
• RPGM 91-6 Financial Status Reports
• RPGM 91-7 Excess Program Income
• RPGM 96-17 Prevention, Problem Identification
  Resolutions (PPIR)
• Information can be downloaded from the following
  website
• www.bphc.hrsa.dhhs.gov/

17
External Reporting Requirements

• Bureau of Primary Health Care
• Uniform Data System (UDS)
• Financial Status Report (FSR)
• Prevention, Problem Identification and Resolution
  (PPIR) Indicators
• Primary Care Effectiveness Review (PCER)
• Audit under OMB Circular A-133
• Form PMS-272

18
External Reporting Requirements

• State/Local Funding Agencies
• Monthly/Quarterly Expenditure Reports
• Audit Reports Under Specific Requirements
• Medicaid/Medicare Cost Reports
• Tax Returns
• Internal Revenue Service
• State/Local Tax Authorities

19
External Parties That Evaluate Health Centers

• Bureau of Primary Health Care (BPHC)
• Medicaid/Medicare
• Independent Auditing Firms
• Office of Inspector General (OIG)
• Internal Revenue Service (IRS)
• State-specific Government Auditors

20
Internal Reporting Requirements

• Financial Statements (Exhibits A B)
• Cash Flow (Exhibit C)
• Activity Report (Exhibit D)
• Other Reports (Exhibit E)
• Varying Degrees of Reporting based on User
• Board of Directors vs. Finance Committee
• Executive Director vs. Program Directors
• Management vs. Board of Directors
• Finance Director

21
Internal Reporting Requirements

• Board of Directors (Monthly Statements)
• Balance Sheet, Current year vs. Prior year
  (Exhibit D)
• Statement of Operations (Exhibit E)
• Current year vs. Budget
• Current year vs. Prior year
• Activity Report of Patient Visits, etc. (Exhibit
  B)
• By Payer Source (with payer mix) vs. Budget
• By Provider or Provider Type vs. Budget
• Could include prior year for comparison

22
Internal Reporting Requirements

• Finance Committee (Monthly)
• Cash Flow Report
• Managed Care Analysis
• Members and Capitation analyses
• Utilization
• Key Financial Indicators (Exhibit F)

23
Internal Reporting Requirements

• Health Center Management (Daily/Weekly)
• Encounters by Provider vs. Standard
• Visits by Payer and Payer Mix
• Cash Position Worksheet (Exhibit C)
• Encounters Appointments kept vs. missed

24
Internal Reporting Requirements

• Health Center Management (Monthly)
• Revenue Expense Statements by
  Department/Program
• New Users by Payer Source
• Days in Accounts Receivable by Payer Source
• User Trends Medicaid to Self-Pay
• Managed Care Actuarial Mix and Utilization
• Contract Revenue and Receivable Analysis
• Patient Revenue Per Visit by Payer Source
• RVU Analysis Productivity Costs

25
Budgeting

• Preparation of Budget(s)
• Departmental
• Organization-Wide
• Justification of Budget Items (revenue and
  expenses)
• Preparation of Budget Forms
• BPHC Funding Summary
• Standard Form 424A
• Projected Revenue Table
• Key Employees

26
Revenues

• Base Award Recognize on a 1/12th basis
• Specific Granting Purpose Recognized Based on
  Actual Expenditures
• Effects of UOB vs. EPI on Revenue

27
Expenses

• 70 Personnel
• 10 Facilities
• 20 Other Than Personnel
• Decreasing expenses is difficult
• Increasing volume creates opportunities to
  improve cash flow