CFO Studio Magazine with Alison Cornell

Q1 2017 WWW.CFOSTUDIO.COM 17 Baldwin believes the outcome of the presidential election will likely have a big impact on the economy. Both candidates suggest more action on the corporate tax front. In a bid to bolster the economy, Republican candidate Trump has proposed a low, 10 percent tax on corporate profits that are repatriated back into the U.S. According to Clinton’s website, Hillary will close tax loopholes like inversions that reward companies for shifting profits and jobs overseas, but her proposals do not address repatriated profits directly. “The candidates’ approaches to business and economic stimulus are starkly different,” Baldwin asserts. “A Democrat as president will continue some or many of Obama’s current policies. The question is whether you’re happy with the performance of the U.S. economy over the past seven or so years, or do you want change to stimulate economic activity?” Wellness Emphasis Despite the uncertain economy, Morristown, NJ–based Atlantic Health System— a not-for-profit health care organization that comprises six medical centers and hospitals, in addition to Atlantic Rehabilitation, and Atlantic Home Care and Hospice — continues to “make investments in our services, facilities, and employees to develop the infrastructure necessary to be successful for the future,” according to Kevin Lenahan, Senior Vice President and Chief Financial and Administrative Officer. “Our capital and budget plans are developed with the objective of creating a trusted network of caring to serve our communities and ensure every patient can access the right care, in the right place, at the right time, at the right quality, and at the right cost.” But, even health care providers have to keep a close eye on their own health care costs, he adds. “Internally, we are aligning our benefit structure with an emphasis on wellness. Our successful and nationally recognized Atlantic Accountable Care Organization is making strides to better manage and reduce the overall cost of care.” As the company plans for 2017, Atlantic Health “will continue to manage its cost structure and look for opportunities to grow as health care reimbursement transitions from fee-for-service to value-based care,” Lenahan details. “We are building an economic engine able to support the infrastructure needed to provide high-quality, outcome-focused care. We will continue to recruit and retain highly qualified, talented staff.” Head Count, Interest, Taxes Atlantic Health System’s 2017 budget provides for more internal investment, he adds. “Our workforce planning analytics from2013–2015 shows a steady increase in the number of hires. In 2015 we showed a 14 percent increase from 2014. For 2016, based on our hires to date and anticipated hires for the rest of the year, we project a slight increase. We continue to steadily recruit for new and replacement positions across the system. In addition, our internal hires continue to be strong and are trending about the same or a slight increase from 2015.” Still, he’s concerned about the prospect of higher interest rates in the near future. “I think interest rates will go up in 2017,” reports Lenahan. “Atlantic is preparing for an interest rate increase by taking advantage of current rates and going to market for a $225 million bond refinancing [in September].” Lenahan is also closely monitoring tax issues in New Jersey, where hospitals have been roiled by cash-strapped municipalities’ and private citizens’ challenging their tax-exempt status — Atlantic Health System’s Morristown Medical Center among them. “Atlantic Health System had supported the proposed legislation which would have provided much-needed clarity on the fair-share community service contribution from New Jersey’s not-for-profit hospitals to their host communities with predictability,” he says, referring to failed proposals like a fee-based formula of $2.50 per day per bed, or $250 per day for satellite facilities, in lieu of traditional property tax assessments. “We continue to work closely with legislators and the New Jersey Hospital Association to define a clear path on how hospitals and host towns can agree on a fair-share community service contribution. However, in its absence, Atlantic Health System has opted to begin this process with its own host communities, and has reached agreements in both Morristown and Newton.” For CFOs who are annually asked to be their organizations’ financial navigators despite limited visibility, challenges like these simply represent the latest in a long list of obstacles they’re expected to overcome. But most CFOs would probably agree with Kepner-Tregoe’s Baldwin, who says the review, forecast, and planning that go into a year-end budget are a significant part of the task of creating positive growth. C “We do expect further rate hikes and have built that scenario into our capital plans.” — Dave Pearson, Chief Financial Officer of Vonage Kevin Lenahan, CFO, Atlantic Health System