maintaining the strength of your convictions

Because patients and their families

In ranking such leaders by the degree of public trust required, healthcare financial executives must be held to the highest standard. Financial executives are the final authority on financial statements. To make good decisions, leaders must be able to trust the financial statements. Like a judge, a GFO acts as a final arbiter and must be held to the highest ethical standards.

Most financial executives can avoid being caught in an ethical maelstrom by maintaining the strength of their convictions. Their gut feeling about what is right or wrong is intact and can provide the needed guidance. Sometimes, however, financial executives might be asked to compromise their convictions. Or they themselves might wish to "bend" their convictions a bit, in effect letting down their moral guard.

Compromising Circumstances

The financial pressures experienced by most healthcare organizations are intense. Not surprisingly, financial statements receive frequent and persistent scrutiny. Declining financial performance makes the organization and its management team look bad. If financial covenants aren't met, a hospital's bond rating may be downgraded, resulting in reduced access to low-cost capital and other serious financial ramifications. For whatever reason, the board, management team, and external constituencies may want to "make the numbers look better." The heat is on the GFO to "do the books differently."

Some organizations still hold the CFO accountable for the organization's financial performance even though he or she may have no control over the actions that lead to negative financial consequences. The CFO may worry about job security. How much heat can the CFO withstand?

Presenting Financial Information

Ethics guidelines from the major professional organizations provide some insight into how CFOs should present financial information. November ?oo3 revisions to the American College of Healthcare Executives' Code of Ethics urge executives to "report negative financial and other information promptly and accurately, and initiate appropriate action" and to "prevent fraud and abuse and aggressive accounting practices that may result in disputable financial reports" (www.ache.org/ABT_ACHE/CodeofEthics.pdf). HFMA's Code of Ethics calls for members to promote the highest standards of professional conduct by "striving for the objective and fair presentation of financial information" (www.hfma.org/about/hfmastatements.htm).

The challenge is this: What is accurate, objective, and fair financial reporting or accounting in one person's eyes may not be so in another's. To those not well-steeped in the field, accounting may seem to be merely debits and credits-all black and white. In truth, however, accounting is all shades of gray, involving judgment at many points. For example, financial managers need to choose among numerous methods of depreciating assets. Different methods result in a different financial picture. Judgment is then required to determine the asset's useful life or residual value. A financial manager knows what the asset cost, but what it will be worth five years from now is a judgment call. To ensure consistency of practices organizationwide, accounting policies and procedures should be developed and maintained.

Conviction-Strengthening Strategies

What can financial managers do to maintain the strength of their convictions and build the conviction "backbone" of the finance staff?

Be selective about where you work. Lots of problems can be avoided by ensuring that you join an ethical organization. While interviewing, ask for an example of a finance-related ethical issue faced by the organization and how leaders resolved it.

Consider the consequences of your actions. This is a guiding principle for life, not just financial reporting. Make sure you can answer yes to the following questions: Can I explain my actions in a logical, rational way? Will my mother, spouse, and children understand and approve of what I've done?

Accept the privilege and responsibility of arbitership. Recognize that you not only are part of the management team, but also have a special place on that team as the final arbiter of financial statement "rights and wrongs"-even if that means strongly differing with the CEO, COO, or others.

Keep your personal finances in order. If you're living close to the edge, you may start worrying about losing your job and be more willing to bend your convictions in ways they shouldn't be bent. Do what you can to save for a rainy day so that taking a stand on financial issues doesn't become embroiled in angst about survival during an employment transition.

Address problems promptly. Ethical financial issues must be handled promptly. If you defer making a decision or declaring where you stand with respect to financial statements, you are not providing the required leadership. Support for the "right" decision could be wooed away by others. Take a stand. If necessary, go out on a limb for what you believe to be right.

Pick your battles. Don't fight every little issue, but be willing to go down fighting about something major. Materiality is the issue. The dollar amounts judged by the public to be material are getting smaller. A debatable accounting method that improves the balance sheet by $500 may not. be as material as $500 personally pocketed by an executive. If the act makes you feel bad, it probably represents a breach that should be avoided.

Lead by example. Promptly address ethical issues that staff members bring to you. Encourage discussions about ethical financial reporting in staff meetings. Ask job applicants to describe a conviction-shaking incident and how they addressed it. Hire those with high ethical standards.

"We will be known forever by the tracks we leave," notes my friend Frankie Perry, RN, FACHE, author of the book The Tracks We Leave: Ethics in Healthcare Management. Financial executives are held to a higher standard. Our professional reputations are the only things that survive our careers. The strength of our convictions to "do the right thing" is what keeps us valued by our constituencies and true to our profession.