Medical Group wants me to be CFO -- advice?

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financial.freedom
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Medical Group wants me to be CFO -- advice?

Post by financial.freedom »

I'm part of a small medical group (about 20) and they want me to take over the role of the former treasurer (new title CFO).

The group's finances are a bit confusing to me (multiple contracts and pay rates), but the former treasurer is going to go through it with me. I told the group we'll need an accountant to crunch the numbers for payroll each month. At first there was pushback, but then they agreed and are asking me to get quotes for accountants.

Hopefully, we can get everything organized and have a monthly profit and loss (P&L) statement. And I plan to do a yearly review to show all the ins and outs, to help with future planning for the group and staffing.

Questions:

1. Any tips on how to find a good accountant to help me out with this role? How much should we expect to pay in accounting fees?

2. Is there any liability issue with being named CFO for the corporation? If so, what can I do to protect myself?

3. Any general comments or advice from others who have been treasurer / CFO of a small medical group?

Thank you in advance!
desiderium
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Re: Medical Group wants me to be CFO -- advice?

Post by desiderium »

I had a similar role once, smaller group but lots of employees

You definitely need an accountant, if for no other reason than to have a neutral party determining the numbers. Financial disagreements among partners are one of the biggest risks for a medical group. Check around, there will be some locally who work for other medical groups. Seek input from colleagues in the area and set up interviews

One option for payroll is to farm out to a payroll company. It may be cheaper and more accurate than contracting this with your accountant, especially if you have a number of employees

Business liability for company officers should be covered by your business insurance (you should have this, it isn't expensive as I recall). Discuss with your provider

Your moves for transparency are healthy for the group and for the business; keep emphasizing that.
Boglegrappler
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Re: Medical Group wants me to be CFO -- advice?

Post by Boglegrappler »

I had a close friend who years ago became the CFO of a decent sized HMO. He didn't last long and didn't like it. A very capable and smart, highly educated and energetic fellow, but......

Here's (my paraphrasing of) how he summarized his dislike:

"we'd have the management meetings, and the physicians who ran the business would spend an hour or so discussing future plans about how the organization could buy this, or acquire that, or expand into such and such.......and then they would turn to me for the financial report. I would say something like--last quarter we had a net loss of $200,000....and the senior officers would jump down my throat and say "what in the world are you doing that caused us to lose that much?!" I'd respond that "I'm not doing anything to cause it, but if we undertake even a fraction of the things you all just spent the last hour discussing, we'll lose double that amount in the future!" Obviously there was a disconnect between plans and reality, and he seemed to be the person who was designated to fix it all. He saw that it couldn't be fixed, and moved on to a better situation.

Hopefully in your circumstance you won't be the one held responsible for decisions and actions that you haven't made or done. But apparently there is a syndrome of shooting the messenger when you are the one keeping and reporting the financial score.

Good luck.
Point
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Re: Medical Group wants me to be CFO -- advice?

Post by Point »

I would pay attention to the motivation for choosing you. Is it your professional training? Experience? People skills? Do the key partners go with the advice of the CFO, or do they want the CFO to act on their wishes regardless? Do you have the ability to return to your prior role if this does not work out, or will you need to leave?
finanzfrau
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Re: Medical Group wants me to be CFO -- advice?

Post by finanzfrau »

Boglegrappler wrote: Mon Apr 12, 2021 11:55 am I had a close friend who years ago became the CFO of a decent sized HMO. He didn't last long and didn't like it. A very capable and smart, highly educated and energetic fellow, but......

Here's (my paraphrasing of) how he summarized his dislike:

"we'd have the management meetings, and the physicians who ran the business would spend an hour or so discussing future plans about how the organization could buy this, or acquire that, or expand into such and such.......and then they would turn to me for the financial report. I would say something like--last quarter we had a net loss of $200,000....and the senior officers would jump down my throat and say "what in the world are you doing that caused us to lose that much?!" I'd respond that "I'm not doing anything to cause it, but if we undertake even a fraction of the things you all just spent the last hour discussing, we'll lose double that amount in the future!" Obviously there was a disconnect between plans and reality, and he seemed to be the person who was designated to fix it all. He saw that it couldn't be fixed, and moved on to a better situation.

Hopefully in your circumstance you won't be the one held responsible for decisions and actions that you haven't made or done. But apparently there is a syndrome of shooting the messenger when you are the one keeping and reporting the financial score.

Good luck.
This happens in big companies as well. So definitely look into the motivation on why they asked to bring you on.
SevenBridgesRoad
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Re: Medical Group wants me to be CFO -- advice?

Post by SevenBridgesRoad »

I’ve been CEO of a larger medical group, so I’ve hired, terminated and worked with CFOs. CFO in a medical group is a tough job. Some random thoughts:

1) Physician compensation is a big deal in any group and you will be in the middle of it. Some comp plans are very complex. You will likely be expected to be the physician comp expert, both in execution of the comp plan and recommending changes in the plan design. Every doc will want to you to be 100% accurate on their work (usually measured in RVUs), any ancillary revenue attributed to them, and assignment of costs. There will be frequent arguments over allocation of costs, fairness of the plan, who is paying too much/too little for shared overhead, etc.

2) Who can direct your work? Even assuming you will report to a group president or CEO, can any physician owner walk into your office and ask for a special report? If so, chances are your workflow will be constantly interrupted. Getting the owners to agree on standard reports and a process for requesting special reports will make your life easier.

3) Costs. Costs. Costs. You will likely be expected to keep costs as low as possible. Costs will need to be justified, especially any new additions to the costs. Understand and use benchmarking.

4) You mentioned multiple contracts. You will be expected to understand and manage lots of contracts, such as with insurance companies, vendors, and providers. Chances are you will be involved with contract negotiation and financially modeling proposed contracts. Monitoring actual performance of payers against the contract will be your responsibility.

5) The new title (CFO) implies the group will expect you to be strategic, not just managing the budget and the books.

6) Compliance with all sorts of regulations will be your responsibility. For example, Medicare is extremely complicated, and you will be expected to keep the organization in compliance with their rules and regs.

7) You will be responsible for an annual audit performed by an outside firm. This is great protection for you as well as the organization.

8) Is there a well-functioning board of directors? Is one of the physician owners assigned to be a managing partner? These best practices will make your life easier and safer.

9) You will hire and manage people. And unfortunately sometimes terminate for poor performance or behavior.

10) Communication. You will need strong communication skills.


There’s more, but these may be some areas you haven’t thought much about. This doesn't sound like a career path that you've been aiming for. I would be careful of accepting this job if you are not ready for it.
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financial.freedom
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Re: Medical Group wants me to be CFO -- advice?

Post by financial.freedom »

Point wrote: Mon Apr 12, 2021 12:04 pm I would pay attention to the motivation for choosing you. Is it your professional training? Experience? People skills? Do the key partners go with the advice of the CFO, or do they want the CFO to act on their wishes regardless? Do you have the ability to return to your prior role if this does not work out, or will you need to leave?
Good question. The current CEO is performing both the duties of CEO and CFO, and says he's overwhelmed.
Topic Author
financial.freedom
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Re: Medical Group wants me to be CFO -- advice?

Post by financial.freedom »

SevenBridgesRoad wrote: Mon Apr 12, 2021 12:44 pm I’ve been CEO of a larger medical group, so I’ve hired, terminated and worked with CFOs. CFO in a medical group is a tough job. Some random thoughts:

1) Physician compensation is a big deal in any group and you will be in the middle of it. Some comp plans are very complex. You will likely be expected to be the physician comp expert, both in execution of the comp plan and recommending changes in the plan design. Every doc will want to you to be 100% accurate on their work (usually measured in RVUs), any ancillary revenue attributed to them, and assignment of costs. There will be frequent arguments over allocation of costs, fairness of the plan, who is paying too much/too little for shared overhead, etc.

2) Who can direct your work? Even assuming you will report to a group president or CEO, can any physician owner walk into your office and ask for a special report? If so, chances are your workflow will be constantly interrupted. Getting the owners to agree on standard reports and a process for requesting special reports will make your life easier.

3) Costs. Costs. Costs. You will likely be expected to keep costs as low as possible. Costs will need to be justified, especially any new additions to the costs. Understand and use benchmarking.

4) You mentioned multiple contracts. You will be expected to understand and manage lots of contracts, such as with insurance companies, vendors, and providers. Chances are you will be involved with contract negotiation and financially modeling proposed contracts. Monitoring actual performance of payers against the contract will be your responsibility.

5) The new title (CFO) implies the group will expect you to be strategic, not just managing the budget and the books.

6) Compliance with all sorts of regulations will be your responsibility. For example, Medicare is extremely complicated, and you will be expected to keep the organization in compliance with their rules and regs.

7) You will be responsible for an annual audit performed by an outside firm. This is great protection for you as well as the organization.

8) Is there a well-functioning board of directors? Is one of the physician owners assigned to be a managing partner? These best practices will make your life easier and safer.

9) You will hire and manage people. And unfortunately sometimes terminate for poor performance or behavior.

10) Communication. You will need strong communication skills.


There’s more, but these may be some areas you haven’t thought much about. This doesn't sound like a career path that you've been aiming for. I would be careful of accepting this job if you are not ready for it.
Great tips, really appreciate it. Seems they're not really giving me a choice. There is no additional compensation. I asked for one admin day a month to meet with CPA, verify / crosscheck the numbers and CEO got upset -- said that he's been doing it on his personal time. But that was when the group just had one hospital contract. Now there are 5 sites and more coming down the line.

My only reason for accepting besides being strongarmed into it, is that I want to improve transparency. This is healthy for the group as mentioned above. I'd like to run an annual report (something that's never been done) and also start monthly profit / loss statements.

If I decline, group finances will be a little difficult to get a handle on.
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financial.freedom
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Re: Medical Group wants me to be CFO -- advice?

Post by financial.freedom »

Not mentioned above, but one of my concerns is the finances are no bueno right now. Partners are earning about 60-70% expected salary by specialty despite decent RVUs. It looks like some 1099 physicians are overpaid, and we're losing money on them when factoring in overhead costs. 1099 and W2 employees have to be paid first, then not a lot left for partner split. But hopefully that will change soon.
New Providence
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Re: Medical Group wants me to be CFO -- advice?

Post by New Providence »

"The CFO of tomorrow should be a big-picture thinker, rather than detail-oriented, outspoken rather than reserved, prefer to delegate rather than be hands-on, emphasize what gets done rather than how things are done, and make collaborative rather than unilateral decisions.[8] The CFO must serve as the financial authority in the organization, ensuring the integrity of fiscal data and modeling transparency and accountability. The CFO is as much a part of governance and oversight as the Chief Executive Officer (CEO), playing a fundamental role in the development and critique of strategic choices. The CFO is now expected to be a key player in stockholder education[9] and communication and is clearly seen as a leader and team builder who sets the financial agenda for the organization, supports the CEO directly and provides timely advice to the board of directors."[10]
livesoft
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Re: Medical Group wants me to be CFO -- advice?

Post by livesoft »

There are "part-time" CFOs for hire.
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Topic Author
financial.freedom
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Re: Medical Group wants me to be CFO -- advice?

Post by financial.freedom »

livesoft wrote: Mon Apr 12, 2021 5:50 pm There are "part-time" CFOs for hire.
Thank you, I just looked that up and might be an option for the size of our group. Problem is group won't pay me for the duties, and had to get in a bit of a debate just for one admin day -- so 100% sure they won't pay for part-time CFO.
JPM
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Re: Medical Group wants me to be CFO -- advice?

Post by JPM »

Sound like the group is poorly organized. Improving its organization can be helpful for most but will be opposed by those preferring the latitude that loose organization and weak oversight allow.
sambb
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Re: Medical Group wants me to be CFO -- advice?

Post by sambb »

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Topic Author
financial.freedom
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Re: Medical Group wants me to be CFO -- advice?

Post by financial.freedom »

Thank you for the advice above regarding insurance -- I emailed the insurance company to ensure there's coverage for officers (CEO, CFO, secretary). Assume this is for liability insurance, correct? Not sure how much is the usual coverage and deductible, but I'll ask.
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Re: Medical Group wants me to be CFO -- advice?

Post by Jack FFR1846 »

From the CEO, I would want a clear job description. The fact that he's doing some tasks on his own time means nothing. If the task is impossible to do in normal working hours without hiring extra people (who are not allowed), then pass.

Alternate: You put together what your job description will be, what people or organizations need to be hired (payroll, CPA) and a pay plan. I would think that if they're not paying you more to do this than you're currently getting, they are not really serious about supporting this new position......so the CEO can enjoy spending every waking hour doing it himself.

I'm not a DR, but have been offered a job that was clear to me needed 2 full time people. They were willing to pay double a normal salary but I wasn't willing to sacrifice my life to do it. I passed.
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rich126
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Re: Medical Group wants me to be CFO -- advice?

Post by rich126 »

I'm curious, shouldn't a CFO have a financial background?

My GF currently works for a small health care company which is having issues and their CFO has no financial background and that seems to be a part of the issue.
----------------------------- | If you think something is important and it doesn't involve the health of someone, think again. Life goes too fast, enjoy it and be nice.
obgraham
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Re: Medical Group wants me to be CFO -- advice?

Post by obgraham »

OP, you're gonna need a VERY thick skin!

Herding cats is a breeze compared to keeping 20 docs all happy with their finances.
ad2007
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Re: Medical Group wants me to be CFO -- advice?

Post by ad2007 »

I take it that you're one of the physicians?

Working with a large group of providers is like herding cats. Everyone seems to have a vision of their own on how things should be done.

Make sure you have a good understanding of all the major players' contracts, including your own.

Good luck.
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financial.freedom
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Re: Medical Group wants me to be CFO -- advice?

Post by financial.freedom »

ad2007 wrote: Tue Apr 13, 2021 11:43 am I take it that you're one of the physicians?

Working with a large group of providers is like herding cats. Everyone seems to have a vision of their own on how things should be done.

Make sure you have a good understanding of all the major players' contracts, including your own.

Good luck.
Yes, one of the physicians. I'm trying to get copies of all the contracts (W2, 1099, etc). Partners have the same contract and equal split of profit. Just low profits lately, so stressful times and CFO will likely be under the microscope.
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financial.freedom
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Re: Medical Group wants me to be CFO -- advice?

Post by financial.freedom »

rich126 wrote: Tue Apr 13, 2021 11:30 am I'm curious, shouldn't a CFO have a financial background?

My GF currently works for a small health care company which is having issues and their CFO has no financial background and that seems to be a part of the issue.
That would be ideal. But not enough profit to pay for CFO at this time. I like the idea of part-time CFO suggested above, but group likely won't pay for that either.
rich126
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Re: Medical Group wants me to be CFO -- advice?

Post by rich126 »

Sounds like a lot of extra work, stress and potential liability. I hope you are getting extra compensation for the task.
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financial.freedom
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Re: Medical Group wants me to be CFO -- advice?

Post by financial.freedom »

rich126 wrote: Tue Apr 13, 2021 2:11 pm Sounds like a lot of extra work, stress and potential liability. I hope you are getting extra compensation for the task.
No extra compensation. I asked for one admin day and it's being debated. But I want to make the finances more transparent for the group and determine ways to improve profit for the partners, so that would be the benefit.
Count of Notre Dame
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Re: Medical Group wants me to be CFO -- advice?

Post by Count of Notre Dame »

I still don't trust how my wife's group tracks RVUs.
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financial.freedom
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Re: Medical Group wants me to be CFO -- advice?

Post by financial.freedom »

Count of Notre Dame wrote: Tue Apr 13, 2021 2:49 pm I still don't trust how my wife's group tracks RVUs.
Which billing company? We use Change HealthCare and seems consistent when I've cross-checked it with EMR.
BillWalters
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Re: Medical Group wants me to be CFO -- advice?

Post by BillWalters »

Why on earth would you take this job? There is zero upside.
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financial.freedom
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Re: Medical Group wants me to be CFO -- advice?

Post by financial.freedom »

BillWalters wrote: Tue Apr 13, 2021 3:27 pm Why on earth would you take this job? There is zero upside.
I'm a partner with equal profit split. If I can identify ways to improve profit, then will receive more money. And as a typical BH, would like to know all the finances for my group. But it is additional work and stress without add'l pay.
Count of Notre Dame
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Re: Medical Group wants me to be CFO -- advice?

Post by Count of Notre Dame »

financial.freedom wrote: Tue Apr 13, 2021 3:20 pm
Count of Notre Dame wrote: Tue Apr 13, 2021 2:49 pm I still don't trust how my wife's group tracks RVUs.
Which billing company? We use Change HealthCare and seems consistent when I've cross-checked it with EMR.
The billing is pretty standard it's the offline spreadsheets they use to reallocate certain things......
afan
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Re: Medical Group wants me to be CFO -- advice?

Post by afan »

I would not touch this. Not as the CEO has presented it. Lots of responsibility, a large amount of work with neither compensation nor time? No way.

Trying to do the job nights and weekends is not working for the CEO. There is no reason to expect it will work for you.

The reluctance to bring in and pay professionals suggests the CEO has not grappled with the scope of the problems or how to deal with them.

Bringing in a physician with no financial background to do the job as a hobby is a terrible solution.

If being a CFO and moving up in administration is something you would like to do, then you can discuss that with the CEO. It would have to be clear that you want to do it well. It is too important to the group to embark on this without a good, practical, plan. That should include which tasks can be outsourced to professionals, which can be shared among others in the group and what are the essential elements of the CFO position. Need concrete plans for the specific accountants, payroll firms and consultants that would be hired. You will need help with contracting. You are nowhere near qualified to do this.

It would be possible for one person to do the purely financial work while others manage the physicians and non -physician employees. It would be possible to have a CMO who handles the non-financial compliance issues. Investigate this.

If the CEO will not provide this support, then politely decline. If the CEO will not grant time, then politely decline. You cannot attend meetings and manage the practice while you are seeing patients. If they expect you to maintain your clinical level while doing this- too unrealistic to take seriously.

The above is only if you WANT to pursue this direction with your career. If you want to practice medicine and not be an administrator, then just turn it down.

Either way the message should starts with "I am grateful you think highly enough of me to do this important job..."

Then continue with either

"In order for me to do it right, we need to address a list of organizational issues. If we can work out way through them, then I can consider it. To do it right I also need X hours and Y dollars."

Or

"As a member of the group, I realize how important this is. I have neither the background nor the skills to do this. We, the group, should find someone who is qualified."

It may take the CEO a while to recognize that this is a setup for failure. Do you know whether others have already turned it down? Do you know how flexible the CEO is about realizing they have been wrong about something and changing course?

The last thing you want to do is to take the position and fail.

Either it is both a good job and something you want, or turn it down.
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TIAX
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Re: Medical Group wants me to be CFO -- advice?

Post by TIAX »

financial.freedom wrote: Tue Apr 13, 2021 12:44 pm
ad2007 wrote: Tue Apr 13, 2021 11:43 am I take it that you're one of the physicians?

Working with a large group of providers is like herding cats. Everyone seems to have a vision of their own on how things should be done.

Make sure you have a good understanding of all the major players' contracts, including your own.

Good luck.
Yes, one of the physicians. I'm trying to get copies of all the contracts (W2, 1099, etc). Partners have the same contract and equal split of profit. Just low profits lately, so stressful times and CFO will likely be under the microscope.
If it's low profit, why are you sticking around? Move to another group.
simas
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Re: Medical Group wants me to be CFO -- advice?

Post by simas »

financial.freedom wrote: Tue Apr 13, 2021 3:34 pm
BillWalters wrote: Tue Apr 13, 2021 3:27 pm Why on earth would you take this job? There is zero upside.
I'm a partner with equal profit split. If I can identify ways to improve profit, then will receive more money. And as a typical BH, would like to know all the finances for my group. But it is additional work and stress without add'l pay.
can I be upfront with you ? what you described is a horrible idea to take on and I would stay as far away from this as possible using whatever excuse (family, etc) I can. Zero reasons to take it on. Massive stress, impact on relationship with your partners, liability, etc.

if you have that much free time - go volunteer or something to that regard
if you want to help - you can always 'offer feedback' , etc without being responsible for any of this.

frankly, running into the wall and banging your head into it until you pass out is a simpler, easier, and ultimately less painful activity vs what you list as "CFO opportunity".

There is a reason why these jobs are (very) high stress, high pressure, high pay, and no, they are never done as additional work in spare time.. Stay away. Run away.
Blue456
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Re: Medical Group wants me to be CFO -- advice?

Post by Blue456 »

financial.freedom wrote: Tue Apr 13, 2021 2:48 pm
No extra compensation. I asked for one admin day and it's being debated.
Why would you work for free?
Strayshot
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Re: Medical Group wants me to be CFO -- advice?

Post by Strayshot »

Financial.freedom ignore all the comments about working for free etc. You are doing this because you want to increase the profitability of the practice and put more money in your pocket.

The biggest problem you will face is culture. Physician owners of a group practice who don’t recognize you live and die by the finances are a serious problem for the practice and other partners. They see it as just being employees who work and pull a paycheck with a bit more schedule flexibility but want to be abstracted from the business ownership hassles. They will argue about overhead but only in ways that benefit them individually, and that is if they understand it at all. You probably need to remind your partners that you are running a business.

First, get a good practice manager if you don’t have one. They should be the primary person running the business and keeping a handle on finances. It sounds like from your post this person may not exist?

Second, get a good accountant team. Your practice should have one already because who else is doing your taxes, but find a group that specializes in medical practices and even better if they have clients in your specialty already. Using a local yahoo who doubles as an individual tax prep person can be a mistake vs a group who specializes in businesses, they can also help with overhead model suggestions.

Yes, you are probably overpaying both your employed/contract docs and also overpaying mid levels. Welcome to competition with hospital systems. In hindsight, going to school for 4 years to make 120k seems much more appealing than going to school for 15 years to make 250k but it is what it is.
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financial.freedom
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Re: Medical Group wants me to be CFO -- advice?

Post by financial.freedom »

Strayshot wrote: Wed Apr 14, 2021 7:23 am Financial.freedom ignore all the comments about working for free etc. You are doing this because you want to increase the profitability of the practice and put more money in your pocket.

The biggest problem you will face is culture. Physician owners of a group practice who don’t recognize you live and die by the finances are a serious problem for the practice and other partners. They see it as just being employees who work and pull a paycheck with a bit more schedule flexibility but want to be abstracted from the business ownership hassles. They will argue about overhead but only in ways that benefit them individually, and that is if they understand it at all. You probably need to remind your partners that you are running a business.

First, get a good practice manager if you don’t have one. They should be the primary person running the business and keeping a handle on finances. It sounds like from your post this person may not exist?

Second, get a good accountant team. Your practice should have one already because who else is doing your taxes, but find a group that specializes in medical practices and even better if they have clients in your specialty already. Using a local yahoo who doubles as an individual tax prep person can be a mistake vs a group who specializes in businesses, they can also help with overhead model suggestions.

Yes, you are probably overpaying both your employed/contract docs and also overpaying mid levels. Welcome to competition with hospital systems. In hindsight, going to school for 4 years to make 120k seems much more appealing than going to school for 15 years to make 250k but it is what it is.
Thank you for the reply. Yes, the culture makes it difficult for sure. We do not have a practice manager.

We do have an accountant, but he only knows a portion of the financial situation and cuts checks per calculations from the CEO. And yes, it's someone who does individual tax prep (he does it for some of the partners).

Thank you for recognizing that I would only accept in order to increase profitability of the practice, which is better for all partners (myself included). To answer one reply above, I do not have an interest in going into admin down the road.
obgraham
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Re: Medical Group wants me to be CFO -- advice?

Post by obgraham »

Here's my minority viewpoint: A doc is the absolute best candidate to be the CFO. Having been in practice, seen the difficulties and rewards, and related with the other docs, he/she is in a great position to be the CFO. He knows what the doc want to accomplish. The financial theories etc are easily learned. The job is NOT that of an Accountant. There still needs to be an accountant.
If you disagree, please explain how having a "business" type in charge, like all hospitals do now, is a better choice for docs.

However, 2 big conditions:
1. The other docs have to buy into the idea of having a CFO and agree to accept the decisions. Some will, some will leave.
2. For a 20 doc group it's a full time job. Should receive a salary commensurate with at least the average doc's pay. This means the other docs are paying you to do the job.

So as to the position under discussion here: No Way.
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Re: Medical Group wants me to be CFO -- advice?

Post by Onlineid3089 »

From what you've said about the job and practice in this thread, I'd politely decline.
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