Related Items
The CFO's Role in I.T. Negotiations
June 2006
When a health care organization makes an information technology purchase, the CIO or I.T. director, often assisted by an attorney or consultant, typically takes the lead during contract negotiations.
But many chief financial officers, like Howard Tepper, play an important role in the process.
Tepper is vice chair and CFO at the Samuel Bronfman Department of Medicine at Mount Sinai School of Medicine in New York.
For some projects, Tepper is "just crunching the numbers," he says. But if an I.T. purchase could have a considerable impact on revenue, he's heavily involved in negotiations, he says. Tepper also sits on the I.T. steering committee, which chooses Mount Sinai's technology vendors.
CFOs often find themselves playing a supporting role in I.T. contract negotiations. However, it's usually a significant role, experts say.
CFO approval at many organizations is required before any large-scale contract can be signed. But many CIOs seek CFO involvement because of their unique understanding of enterprise financial and corporate strategy, and their experience with contract negotiations, including the mind-numbing task of combing through contract minutiae.
Number crunching
When I.T. negotiations get down to the dollar amounts, CFOs typically are at the table to go line-by-line through the contract, says Deborah Kohn, a 20-year contracting veteran and principal at Dak Systems Consulting, San Mateo, Calif.
But during negotiations on software functionality, most CFOs are part of the supporting cast, she adds. "Negotiations are a team effort, but the CFO typically is one of the signers of the contract."
One of the important skills CFOs do bring to the table is political savvy, Kohn says. Every organization has its politics. The CFO knows the various issues and players, and most in the organization respect the CFO.
Internal politics can make it tough for leaders of a hospital to reach consensus on issues that will land on the negotiating table. A CFO, for instance, knows how to mollify an influential but stringent physician, Kohn says.
Or, a team member may have difficulty understanding an issue and the CFO often is the best one to explain it. "Their answers and suggestions are listened to," Kohn says.
At CRC Health, a Cupertino, Calif.-based operator of 90 drug and alcohol treatment centers and residential facilities, Chief Technical Officer Jay Raimondi leads contract negotiations with the aid of corporate counsel.
But he often relies on the organization's CFO for his industry contacts and institutional knowledge, he says.
For instance, CRC Health recently bought the CareLogic practice management and electronic medical records software from Qualifacts Systems Inc., Nashville, Tenn.
At the time, the organization didn't have a corporate counsel, and the CFO recommended a law firm he used at a previous organization to assist in final negotiations.
More than anyone else in a hospital, a CFO understands the financial position of the organization. So sometimes it's the job of the CFO to make sure additional items don't get put into a project that had been financially manageable and blow the budget.
When Lakeview Center in Pensacola, Fla., bought Qualifacts' practice management and records software, CFO Allison Hill was significantly involved from the start.
That's because the software and related technology represents the largest I.T. investment ever for Lakeview's behavioral health unit. Its 900 employees provide mental health and drug/alcohol treatment services to more than 25,000 patients each year. The center, part of Baptist Health Care, also offers vocational and adult/child welfare services.
I.T. Spotlights
- About Us
- Advertising/Media Kit
- Reprints
- Editorial Calendar
- Contact Us
- Customer Service
- Privacy Statement
©2008 HealthDataManagement and SourceMedia, Inc. All rights reserved.
SourceMedia is an Investcorp company.
Use, duplication, or sale of this service, or data contained herein, is strictly prohibited.
