In an interaction with, Sandhya J Group, Chief Financial Officer (CFO), Narayana Health, talks about the emerging role of the CFO today, the digital transformation charter of Narayana Finance and how CFOs are equipping themselves for tomorrow.
Describe the role of a chief financial officer in a healthcare center.
There are different aspectsto the role of a CFO in any organization, whether healthcare or otherwise. One aspect is to be the custodian of financial information, which comprises of reporting of financial information and all the underlying processes that enable bringing the financial information together. The management information system looks to determine and generate the metrices which drives the business, as well as the compliances, audit, and control-related activities. All this has to function seamlessly, for an organization to be able to effectively report out its numbers both for external stakeholders and for internal decision making. This is a big part of the role of the CFO.
The second and equally important aspect is that the CFO is like the co-pilot to the business, which means that the CFO works side by side with the Leadership of the business, in driving the strategic thrusts and making strategic choices for the business. The strategic choices, ie, enable prioritizing and allocation of the resources of the company not just based on financial considerations but also what will fit the business culture, its organization’s capability and its long term objectives. Once the choices are made, the finance organisation will also act as the mirror of the performance of the organisation. The true value of the CFO comes from driving the right measurement, reporting and influencing to drive business outcomes.
Now, having said this, when it comes to the healthcare industry the key objective is that the patients can gain access to high quality affordable health care and finance plays an important role in achieving that objective.
The second aspect is about how the organisation utilizes its assets well. The CFO works closely with the operations to continuously drive better resource management. The health care sector is cash intensive both because the cost of capacity expansion is high and there is a constant need to refresh/ replace assets in line with emerging technologies.
There is a common misconception that hospitals are cash rich. A significant part of the hospital collections is on credit, either from insurance providers or from Govt schemes. This results in locking up of working capital. As a CFO, one looks forward to unlocking cash and enable funding the needs of the business in an efficient manner.
What are the major changes you have bought in Narayana Health with your power skills and experience?
I have been in this job since 2021 December.We had a very powerful data warehouse which provides readily available curated insights at the click of a button. Within finance, we have started using this treasure trove of information to drive business outcomes in a more targeted fashion. we have createdmicro-projects with the business on how effectively we can use this information to deliver business value.The second change we have kicked off is the finance digitization exercise. We're looking at various aspects of the finance processes And how we can build a digital process journey. for instance, we are exploring concepts such as digital shared services.
So, historically when a CFO had to set up a shared service, the CFO had to take one large campus in one of the metro cities and put some 50 people there and start processing through some scanning solution. After COVID, the way technology is advancing and processes are executed, it is no longer about physical proximity. So, therefore, in our digital shared services model, which we are building, we are docking our current employees into a digitally orchestrated process journey.
So, each unit finance team can dock into the process and execute the same function that a typical shared service in a physical environment will execute but on a digital landscape. So we get the benefits of a shared service without losing business intimacy. It's like a digital twin to a physical shared service. The members who participate in the digital twin can actually contribute from wherever they are.
Likewise, there are multiple projects we've kicked off in the finance digitization charter.
How can you help us and finance technology for optimum efficiency?
As I mentioned a little while earlier, in Narayana, we've invested in a very state-of-the-art business information system called MEDHA. It is a very intuitive and business-aligned solution, which tracks decision-making KPIs at the level of each unit, each user, and each parameter, and in a way makes it available to the users in an intuitive and actionable fashion. The second piece, in terms of transactional systems, whether it is the purchase to pay-systems or Supply Chain Management or the ERP that is used, the ability to automate has increased. So, we are working on automating many aspects of the process so that we can drive efficient outcomes.
Please state the stages for acquiring capital for establishing the healthcare center.
From a capital acquisition point of view, I think there are few ways in which a healthcare organization can grow. One is organic growth..Add more beds, add more equipments, more specialities etc.. These kinds of organic CAPEX expansions are normally funded through self-accruals and bank loans. Then there are inorganic capital expansions.. In these cases, it's a mix, some parts which get funded by self accruals and some parts which get funded by different types of financial instruments available in the market.
State your thoughts about the development of a chief financial officer in the near future.
In addition to the traditional roles of finance, as custodians of reporting, cash flow and information, the role of a Chief Financial Officer will deepen in three dimensions. One is the responsibility that the regulators vests on the Chief Financial Officer, especially in listed companies where businesses are working with public money. In those cases, the compliance and governance responsibility issomething that CFOs has to be equipped to deal with, whether it is right people, processes or review mechanism. The second aspect is that the finance organization is evolving to be more business-aligned and business-centric.
Distinction between business and finance is disappearing and finance is an integral part of delivering business transformation and outcomes. Also, the time spent on business partnering is going up. Accounting responsibilities which predominantly used to take 80 percent of the time of a finance professional is either getting automated, eliminated, or outsourced. The time is getting re-invested in business partnering and creating business value.
The last aspect is the shifting talent paradigm. At some point in time an accounting degree, whether it's a chartered accountant or a cost accounting degree, was enough for people to get into the finance work stream, but now more and more people with more diverse backgrounds choosing finance.. Data analytics, transformation, technology, digitisation etc are equally important skills in Finance. Finance teams of the future will be a potpourri of varied skills and competencies which will come together to create meaningful business value. Finance leaders have to be at the fore front of nurturing and building the talent of the future.
