The world of the aged care provider is becoming increasingly complicated and overwhelming. Aside from the well-documented problems of a complex funding model, external forces are imposing more compliance, more competition and higher community expectations – the triple threat as I call it.
Internally, the pressure is on to deliver more with less, serving people with more complex needs but with limited resources.
With so much going on, service providers certainly have their hands full. So what should be their focus?
In late 2018, I facilitated a series of LASA Aged Care Finance workshops around the country. I asked more than 250 aged care finance professionals to write an answer to one question: “If the government fixed the funding model, what else would you change in your business?” My question probably caught these experts by surprise because many couldn’t immediately answer it.
What this shows is there is a strong belief that the only solution to the aforementioned triple threat is more government funding. Will the policy pendulum ever swing back to the good old days? Some might think so. But what happens if sufficient funding doesn’t ever come?
To find a way forward, I find it often helps to look at a problem from a different perspective.
Conceptually, an aged care operation is made up of just three things: dedicated people working with useful technology and a sensible profit formula. Ideally, the triadic works nicely together to deliver on the organisation’s strategy. This is no different to how most businesses operate.
What most providers are dealing with is an adaptive challenge. Adaptive organisations are deeply engaged in understanding their human capabilities, their technology and their financials to navigate their way through uncertainty. Today’s challenges can be overwhelming, not only due to their scale, but also because longheld belief systems are being questioned at the same time the entire organisation is under review. There isn’t an easy fix or a simple path. Many providers are plainly in survival mode, putting out spot fires as they arise and hoping for a state of stability.
What I am seeing is a small cohort of excellent leaders holding hope for a future that is better than the past. Their hope stems from a faith in how their people and technology can re-balance their profitability equation.
So, having the right people, a strategic CFO in this case, will be essential to their ongoing viability.
Value of a strategic CFO
Strategic Chief Financial Officer (CFO) leadership takes finance out of the back office into a stewardship role, giving hope of a sustainable future. A strategic CFO re-frames the organisation’s relationship to, and perceptions of, money.
Since finance is critical to success, how would you describe your present finance function?
Strategic Partner – Espouses a culture of business discipline. Presence. Strategic thinker.
Business Partner – Optimises systems and processes. Financial insights and advice.
Controller – Efficient report generator and processor of invoices, payroll and payments.
Spreadsheet Junkie – Drowning in irrelevant data with untimely and inconsistent information.
Most organisations I see have a decent financial controller. A few have a strategic CFO. Effective business partners are a mixed bag.
Firstly, a strategic CFO brings a different mindset. Of course, day to day the invoices will still get paid but it’s about being future-focused. A financial strategist explores company direction and strategic aims, then leads by determining the best steps. What happened in the past is less important than where you currently believe your business will be in one, two or even five years.
Secondly, the “strategic” part of the title also means there must be a shift. As a leader, their goal is to bring people with them to an alternate future, whether it’s a new business idea, a re-organisation or a new strategic direction.
It doesn’t really matter what the shift is that you are trying to make. Leaders enable things to shift. If you can’t get people to come with you, by definition, you are not leading anyone.
Third, a strategic CFO recognises whose job it is to own the economics of your business. It’s actually not just a finance role. Everyone must have their eyes on the money. A strategic CFO is the financial guru and supports business areas by teaching, mentoring and coaching on what the numbers mean to facility managers, department heads and home care workers.
Lastly, strategic CFOs have a vision for a great business. They exist to partner. Everyone is responsible for building the business. A sharpened pencil is replaced with a hand offering support. They recognise their role is to help business leaders understand the imperatives and issues which could affect their success. By asking the right questions and offering their insights, mindset shifts also happen.
Financial foundations for success
These foundations enable well-developed systems and processes to emerge, along with business automation and some useful business performance measurement frameworks.
Role clarity – where finance stops and starts – whose business is it anyway?
Strategic thinking – going well beyond block funding and acquittals into commercial acumen.
Management accounting – deep knowledge of business activity and drivers.
This all sounds terrific. However, the one thing to watch out for is when well-educated and experienced finance professionals get stuck in a “know it all” mindset. The challenge for the broader accounting profession is shifting people who are deep functional experts into ‘learn-it-alls’ by being open to new