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Every winter, Children's News covers the hospital's
financial performance over the past year and the outlook for what's
ahead. This month, we asked CFO David Kirshner
why it's worth understanding where money comes from and where it
goes.
Why should employees care about understanding
the hospital's finances?
When we think about what Children's Hospital does, first and foremost
we think about taking care of children. Then we think about teaching
new doctors and discovering cures for diseases. Managing the finances
of the hospital enables all of these things to happen.
I'm fortunate to have this interview at a time of strength in Children's
financial performance, thanks to the hard work of so many of
our employees. Employees caring about the hospital's finances is
the reason we are where we are today.
Having financial strength makes it much easier for employees to
do their jobs. It's a partnership. Everybody has a role in ensuring
the hospital's financial strength. If employees are doing their
jobs effectively, at times financial considerations will cross their
minds. In turn, if employees are investing in their careers by working
here at Children's, they probably want to know if the organization
is financially healthy, can invest in its future, and at its most
basic, can pay their salary. A lot of us came to Children's with
the idea that it is one of the best hospitals in the world, and
we want to know that it's going to have the resources to meet the
demands of the future.
How does the hospital choose how
to allocate funds to different services?
In addition to business as usual, in Finance we think about new
information systems, the new research building, future volume growth
to support the new clinical building expansion and implications
for space. As many employees know, we have an annual budgeting process
that starts with a five-year forecast that helps us determine our
annual operating and capital investments. This budgeting process
is a data-driven way to make decisions with input from those who
touch our customers and understand our clinical and research needs.
Not every program makes enough money to cover its own costs; some
services we provide lose money. Ultimately, the services that we
provide that don't make money are supported by the hospital's endowment,
or income from donations. That's why fundraising is so important
to us. [For more on fundraising, see last month's Spotlight on the
Children's
Hospital Trust.] On the other hand, as a financial manager it's
my goal to have each patient care program cover its own costs and
be as well managed as it can be.
| If employees are investing in their careers
by working here, they want to know if the organization is financially
healthy, can invest in its future, and at its most basic, can
pay their salaries. |
What factors are taken into account
when decisions are made about what programs receive funding, and
at what levels?
We think first about volume, the need for the service and the way
that funding might enhance care. Then we weigh the dollar costs
and benefits of a particular decision. If a program is very innovative,
we might start small and then grow it over time. The Magnetic Resonance
Assisted Operating Room is a recent example; we evaluated all the
numbers, and even after we found there was a significant investment
that we weren't going to recover in the short term, we decided it
was still the right thing to do for surgical care.
Conceivably, you could bring your
skills for financial decision-making to an organization in any industry„what
led you here?
The basics of financial management are similar across industries;
however, I've always had an interest in the health care industry.
My background was in public accounting as a Certified Public Accountant
with Ernst and Young. About half of my clients were in health care.
My MBA is in healthcare finance and I like the intricacies of hospitals.
When I came to Boston with all of its great teaching and community
hospitals, the attraction of being part of something this important
really made an impact on me.
I came to Children's from Winchester Hospital to support the institution's
financial recovery. I love doing jigsaw puzzles„and trying to piece
together the Children's financial puzzle was a great challenge.
Now to see it all coming together with the hospital being able to
invest strategically in its future is very gratifying. This is a
tribute to the dedicated work of so many employees who do understand
and care about the hospital's finances.
My job today is very different than if I were working to make money
for shareholders. Children's has scientists and caregivers who come
here at the absolute peak of their careers. It really motivates
me to try to eliminate financial hurdles so that our people can
focus on what they do best.
Recently in Dialogue:
Janet
Cady, president of the Children's Hospital Trust, on philanthropy
Sandra Fenwick, COO, on balancing
work and family
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