Issue link: https://beckershealthcare.uberflip.com/i/1003496
95 PRACTICE MANAGEMENT THOUGHT LEADERSHIP Banner Health CFO Dennis Laraway's top piece of advice: Give back By Alia Paavola P hoenix-based Banner Health saw its financial profile drastically improve in 2017, reporting a net income more than double the year prior — a feat picked up and followed through by its CFO Dennis Laraway. Mr. Laraway joined Banner Health in September 2017. Prior to his role at Banner Health, the seasoned finance chief served as CFO at Houston-based Memorial Hermann Health System; CFO at Temple, Texas-based Scott & White Healthcare prior to its merger with Dallas-based Baylor Healthcare System; and CFO at Phoenix-based Catholic Healthcare West's St. Joseph's Hospital and Medical Center, which is now part of San Francisco-based Dignity Health. In addition to his healthcare finance roles, Mr. Laraway also holds a teaching appointment at Houston-based Rice University's Jesse H. Jones Graduate School of Business. Here, Mr. Laraway discusses his top priority as CFO in the upcoming year, describes the most challenging decision he had to make as finan- cial chief and offers a piece of advice to other CFOs. Note: e following responses were lightly edited for length and clarity. Question: What major changes in healthcare have you seen in recent years that you would have never expected when you started in the industry? Dennis Laraway: e integration and convergence of cross-venue companies seeking deeper alignment in today's healthcare sector is redefining our industry. UnitedHealthcare and Optum's foray into nearly all aspects of healthcare, including the acquisition of physician practices; CVS' pending acquisition of Aetna, combining national pharmacy and insurance companies; and the recent announcement of JPMorgan [Chase], Amazon and Berkshire Hathaway combining to address the trajectory of healthcare spending are clear examples of a transforming industry. e healthcare sector's spending pattern — now approaching 20 percent of gross domestic product — is arguably unsustainable and gives pause to value and outcomes compared to cost. Government, employers and consumers are all challenging these trends, putting pressure on the industry for change. Pricing and uti- lization pressure under fee-for-service healthcare has led to consoli- dation and vertical integration, especially payer and provider models, as organizations attempt to transform from a volume-based system to one paid on value. Combinations of [Baylor Healthcare System and Scott & White Healthcare] in Dallas, [Milwaukee-based] Auro- ra [Health Care] and [Downers Grove, Ill.-based] Advocate [Health Care] in the Midwest, and systems like Banner Health or Memorial Hermann expanding their insurance and population health offerings are all examples of the industry's response to transformation under a value-based payment system. Hard to imagine this level of change when I took my first hospital finance position in 1984 — when the fo- cus was learning how to operate under Medicare's new [diagnosis-re- lated group] payment system. Nearly 34 years later, we've needed to transform as leaders in a highly transformational industry. It's been a challenging but purposeful career journey for me, serving as CFO for three of the aforementioned healthcare organizations, and there's no better industry than healthcare to sharpen your leadership skills. Q: You recently joined Banner Health. What is one of your top priorities for 2018 as CFO? DL: With joining Banner Health in September 2017, I'm excited to bring new ideas and collaboration with my teammates in pursuit of Banner's own transforming vision. A highly successful hospital company over the past few decades, Banner's company profile today has introduced a new academic partnership with [Tucson-based] University of Arizona, a rel- atively new and growing insurance division offering products to Medi- care, commercial and Medicaid members, and a renewed vision to the consumer through a comprehensive customer engagement platform. ese new dimensions represent the foundation of Banner's vision as an integrated delivery system. rough a model of integration, we're working to deliver efficiency and value by reducing [clinical] variation, driving cost efficiency and improving quality and outcomes for our pa- tients under lower pricing conditions. As CFO, I'm hoping to continue educating our employees, our physician partners, and our communities on the importance of this transformation, while spending valuable time with the banking and investor communities to ensure our journey is well understood by the capital markets. Q: Describe the most challenging decision you had to make as CFO. Why was it so challenging? DL: Most decisions involving people. In a transforming industry like healthcare, it's critical that we match competencies and skill sets of our staff with the vision and direction of the company. While Banner Health has a history of success primarily [as] a hospital company, that same model will not support Banner's future under changing conditions. As an [integrated delivery system], Banner requires new competencies to integrate insurance products with physician networks, to align academ- ic medicine with community hospitals, and to develop the infrastruc- ture and tools to align our customers [patients and insurance members] with Banner Health for a lifetime. Every day, we are challenged to make decisions on recruitment of new talent, training and developing existing staff, and continuously finding the right fit for our people with a new vision and company profile. We are in a service industry, and our most challenging and important decisions we make each day involve the peo- ple working on behalf of Banner Health. Q: Beyond financial knowledge, what skills are essential for hospital and health system CFOs in today's healthcare landscape? DL: Managing people. Oen difficult for CFOs to admit, but our suc- cess as an organization, even financial success, lies in the people we have across the organization to pull the company forward. As oen said, it takes a village ... Never more true than in a transforming industry. Change management is led and executed through people. Shaping cul- ture of an organization and matching competencies to the company's current profile is achieved through the development of people. As CFO, I spend a great deal of time on leadership and communication skills targeted at educating others and creating a sense of urgency for others. From the boardroom, to senior leadership meetings, to staff or depart- ment meetings, or town halls, we work tirelessly as leaders to commu- nicate our vision and various strategies for execution. Complex matters