What Behavioral Health CEOs Expect From Their CFO: Takeaways From the MHCA Summer Conference
The session was titled “Reading the Story Behind Healthcare Financial Statements: What Your Financials Are Telling You.” The room at the Fairmont Olympic in Seattle held about two dozen CEOs of mental and behavioral health organizations from across the country. We had prepared a full walk-through of understanding your financial statements.
We got about as far as “cash is king.”
Then the conversation went where it needed to go. One CEO asked how to handle a CFO who treats every morning like an emergency. Another was trying to grow a longtime controller into the CFO seat and wasn’t sure it would work. Within minutes, the session had become a candid, peer-to-peer conversation about what a CEO should expect from a finance leader, and what happens when they don’t get it.
Why this matters now
Mental and behavioral health organizations are absorbing Medicaid cutbacks, reimbursement pressure, workforce shortages, and rising costs all at once. We wrote about that convergence ahead of the MHCA Winter Conference, and it has only tightened since. The CEO is accountable for the organization’s financial health, and that accountability has gotten heavier.
It has also gotten harder to staff. At one table of six CEOs, four were actively searching for a CFO. The role is specialized, these organizations are competing with the private sector for it, and the days when a community behavioral health organization could let finance run quietly in the background are over. A CFO today has to look around the corner and deal with adversity alongside the CEO, rather than report on it afterward.
1. A worsening cash position is usually telling you something else
Cash is king. Everyone in the room agreed. The more useful point is what a deteriorating cash position tells you: usually, that something else is wrong. Revenue that isn’t converting to cash. A contract that renewed at a stale rate three years ago and nobody noticed. The number is the symptom.
2. The “no news is good news” CFO relationship is gone
We asked the room a direct question: Is your relationship with your CFO more “no news is good news,” or are you joined at the hip and talking all the time? Not long ago, the answer for most organizations was the former. Today, for nearly everyone in the room, it’s the latter. Or it needs to be.
The CFO these CEOs described wanting:
- Forward-looking. Anyone can report what already happened.
- Able to explain finance to non-financial leaders. In this sector the CEO is often a clinician or a PhD who didn’t come up through business.
- Constructive when raising issues. More on the alternative below.
- A working member of the executive team, in the room when decisions get made.
3. The panic-button problem
One CEO described it perfectly. The CFO would come in every morning with an alarm: we can’t do this, we’re in trouble, here’s the problem. By evening, once the CEO had time to process it, the crisis had dissolved. “I found $200,000. We’re fine.” Business as normal.
Every one of those mornings costs the CEO something. A CFO who frames everything as urgent creates stress without creating clarity, and eventually the CEO stops hearing the real alarms.
The skill a CEO should expect is judgment: knowing when a problem needs to be escalated today and when it needs to be analyzed first. The best CFOs spot the landmines early and bring them forward in a way that’s business-minded and helpful. They still tell you the hard things. They just tell you once they know what they’re looking at, with a recommendation attached.
4. Your financials tell a story, the CFO is the narrator
A good question came up: any CEO wants a CFO who is forward-looking and solutions-oriented. Financial statements on their own won’t present a solution. They’re an information set. The CFO’s job is to use that information to build a narrative the executive team can act on, which means three things working together:
- Historical financials: what actually happened
- Budgets and forecasts: what we expect to happen
- Ongoing updates: what changed, and what it means now
A CEO should reasonably expect the CFO to know the detail behind the numbers and to come up with recommendations. If expenses are up, is it overtime? A benefits contribution that hit all at once? An evergreen contract renewing at a rate nobody has looked at in years?
The gap we see most often, and several CEOs in the room recognized it immediately, sounds like this: “I can complete the financial statements, but I can’t tell you what we need to do to make them better.” That’s the difference between a reporting function and a strategic partner.
5. Practical cash strategy: fixed costs, variable costs, and silos
While everyone agreed that your CFO should have intimate knowledge of cash, cash cycle and cash flow forecast, the room also asked for tangible advice on cash. A few examples we discussed:
Break silos before they break the budget. The moment a budget goes sideways is often when department heads hire against their own needs and HR fills the roles without a conversation with the CFO’s office. Hiring decisions and budget realities have to sit in the same meeting.
Build buffers for the predictable-unpredictable. Denver had a heavy snow year. The snow truck came more often, and facilities costs rose. That isn’t a surprise. It’s a semi-variable cost, and it belongs in the budget with a buffer, along with any other seasonal swing your organization sees regularly.
Watch how benefits hit cash. An organization promises $1,500 per employee in HSA contributions. The full annual amount is deposited in January. With 200 participating employees, that’s $300,000 out the door in month one. A monthly contribution schedule delivers the same benefit and preserves cash across the year. And if an employee leaves in March, the organization hasn’t prepaid nine months of a benefit that walked out the door with them.
Audit your evergreen contracts and renewal terms. Auto-renewing agreements are one of the quietest ways fixed costs climb. Know when they renew, at what rate, and who’s responsible for renegotiating.
6. The controller-to-CFO leap and the Peter Principle
This may have been the most honest part of the session. Several CEOs are trying to grow a controller into the CFO role, often because that controller has been with the organization for 15 years and knows the books cold.
Some controllers make the leap. Many don’t, and it isn’t a character flaw. A strong controller can tell you exactly what happened last month. A CFO has to tell you what happens next if a payer cuts a rate, and have a plan ready if it does. Weighing business risk, and knowing what to do when an HR issue or a lawsuit lands on the desk, is part of that job. Closing the books is a different one.
A CEO in the room who described himself as a “recovering CFO” put it bluntly to a peer: get your finance leader to where she needs to be, or make a change. Leaving someone in a role they’ve outgrown or can’t grow into is the Peter Principle in action, and it’s unfair to the person as much as to the organization.
We’d add two things. First, many controllers who struggle in the CFO seat have never had anyone show them how. Mentorship changes outcomes. If you have someone with the raw ability but not the experience, developing them is a real option, and often the best one.
Second, the problem runs the other direction too. Some organizations hire a CFO and then, because the budget is tight, expect them to also do the controller’s work too. That CFO never gets to do the strategic work you hired them for.
7. Be explicit about what you need from your finance committee
Finance committees range from highly engaged to largely ceremonial. The finance committee and the CEO should agree about what support the committee provides around financial oversight, and where the lines sit between the CEO, the CFO, and the board. It is best that the finance committee is sufficiently involved to fulfill its fiduciary obligation to the organization.
What to do next
If you lead a behavioral health organization, three questions are worth asking this month:
- Do I have the relationship I need with my CFO? Are we joined at the hip, or am I finding out about problems late, or all at once?
- Am I getting the story, or just the statements? Does my finance leader bring forward-looking analysis and recommendations, or only the historical detail?
- Is my finance leader in the right seat? If I’m growing a controller into the role, do they have the strategic capacity, and are they getting the mentorship to build it?
Assess it yourself first. If you’d like help making that assessment, or you’ve made it and realized you need support, that’s what we do. And if you have someone who isn’t where they need to be yet but has the ability, and you’d like a mentor alongside them while they develop, call us for that too.
Thank you to MHCA and to everyone who joined the conversation in Seattle. Whether you were in the room or are reading this afterward, we’d welcome the chance to compare notes on what financial resilience looks like for your organization.
