132: Optimizing Your Firm’s Organizational Alignment, Jay Roberts, CFO, AdvantEdge

The following is an edited abstract from CFO Thought Leader’s podcast featuring Jay Roberts, CFO, AdvantEdge, and Jack Sweeney, co-host of CFO Thought Leader.

CFOTL: What was your background that helped you prepare for your current position?

Roberts: I started in corporate finance in about 1988 or so. And at that time, you may remember that there were some pretty significant challenges with savings and loans, and the banking environment was a little bit challenging. And as a result of that, I did a lot of advisory-type work with companies that were being challenged by their senior lenders.

And many times, these companies had their fair share of trouble, maybe it was positioning from a strategic perspective. But it did give me a great opportunity early on to learn how to think strategically, number one, and to be prepared and really able to make very hard decisions. That meant reducing cost in a pretty significant way, and sometimes that affected people. And those are difficult decisions to make from time to time. But certainly, as a CFO and as I've learned over the years, making hard decisions ultimately brings important value to companies that allow them to be able to grow and prosper.

CFOTL: When you stepped into your current role, did you have a sort of a philosophy of finance or the kind of the job that you wanted to create?

Roberts: Yeah, a couple of things come to mind. One is I found that it was important to influence my team, to recognize and to act on the idea that our role in finance is to serve our internal customers. And so we at AvantEdge take, in our finance and our people services group that I'm responsible for, take that internal customer as a very important component of our work life. And so we think a lot about making sure that folks in operations or sales, or our IT department or our compliance team, all have the necessary tools that they need and that if they need something from us, they're the customer. And it's very important to us to make sure that they're satisfied.

The second part of that would be I do believe that organizations must have a passion for being disciplined, particularly in and around the accounting area. We know that accounting is tedious work and it requires a fair amount of repetition. That discipline is really important. We've spent a lot of time within the accounting and the finance team at AvantEdge improving upon our discipline and making sure that we have a certain amount of rigor, and that we meet deadlines and that we do what it takes to meet those deadlines. Frankly, it’s part of continuing to prepare that AvantEdge has the right platform and has the ability to be able to grow, and know that finance isn't going to be at all a burden relative to its growth path or its ability to raise capital.

CFOTL: What is the competitive landscape out there for AvantEdge’s services and offerings?

Roberts: AvantEdge is a healthcare solutions technology-enabled service company. We provide medical billing and claims processing, coding and business intelligence solutions for physician groups across multiple specialty areas. Our customer base, for the most part, are in almost every state in the U.S. We have eight operating centers between Chicago and New England and down into the lower mid-Atlantic area.

Competitively, the industry that we compete in directly is a very highly fragmented business. There are almost 2000 companies in the U.S. that provide services such as what AvantEdge does. However, it's principally dominated by the top 10 or 20 companies in the industry, of which AvantEdge is one of those top 10 companies, as we measure it by either revenue or by the dollar volume of payments that we process for our clients or potentially even employees.

CFOTL: What are some of the key metrics that are important when it comes to understanding how your business is growing?

Roberts: Obviously top-line revenue is one of the important and primary areas. We do measure, again, the dollars that we drive in payments for our physician clients. But, you know, as we track the business – because there is reimbursement pressure on our clients, which does have a direct correlation to our business – we track our growth in operating margin. We've had actually great success in continuing to drive efficiency into our operating model that has resulted in growing margins, notwithstanding the kind of pressure that our clients are under.

CFOTL: What role did finance have in driving and achieving that efficiency?

Roberts: To a certain degree. I would say that the primary driver was a combination of our technology, so our IT and development team was principally behind it. Using technology in a very highly efficient manner has been key to that success. Also, from an operations perspective, our operations team has continued to build new workflows that drive that efficiency. So combining technology and workflow coming from operations has really been the big driver. Finance has a role to play, of course, in that we're there to support, providing necessary data and internal information to allow our IT and our operations team to be successful.

CFOTL: Can you recall a moment of strategic insight that led you to drive change within your organization?

Roberts: Yes. It's kind of an interesting story. It was really day one of arriving at AvantEdge. When I arrived, I quickly discovered that the finance department had been really without leadership for several months in the transition between my predecessor and my arrival. The group really didn't have the necessary discipline, I think, at that time. I found – I wouldn't call it antiquated – but certainly not current technology and solutions to run general ledger and various other requirements that we had in the company. The business was highly centralized, or the department was highly centralized.

I attacked all four of those areas out of the gate, from the beginning. Over the period of the last three years, we've been able to really change the attitude relative to the team. Now we've got a team of people that are very effective, they are very motivated, they do a great job for us. So bringing that amount of leadership to them, I think, was helpful. Bringing a level of discipline.

Focused on performance management, we do a good job of keeping people incentived, but we also do – and are pretty rigorous about doing – performance evaluations and setting appropriate goals and then holding people accountable to them.

We adopted about two years ago, a little more than that now, to move all of our accounting systems and all the related support systems, so expense and timekeeping and all that, out into a hosted environment. We're running all of those systems in the cloud. It does allow us to then successfully be centralized. We've moved a lot of the functions out into our business units. We do operate an operating center in India. Between all of our U.S.-based operations and that wholly owned operation there, I can have people doing finance- and accounting-related things anytime, anywhere. It's worked out very well for us.

CFOTL: Was the operation in India opened on your tour of duty or was it something you just expanded?

Roberts: It did open on my tour of duty. When I arrived it was a small operation there that we had under contract. Part of my early responsibilities was to form a wholly owned sub company in India and to put together all the necessary legal and various other regulatory requirements in order for us to operate.

We found it was imperative for us and very important as a strategic direction for AvantEdge, which I think is somewhat different than many of our other competitors, but we wanted that operation to be an extension of our existing U.S.-based operations; owning it and having people that are doing work for us be a part of the AvantEdge family. What it does for us, it gives us 24-hour, really around-the-clock operations, which is critically important in our business because speed of cash flow to our physician clients is really the key driver. Through this operation we are actually able to really expedite how we are processing operations.

CFOTL: Was opening the Indian subsidiary and moving to the cloud at the same time the result of synergies or were they separate decisions all together?

Roberts: It was a combination of things. There were two things that drove that decision for us. One, yes, we wanted the ability to have anybody within our company gain access on a self-service basis to our financial reporting systems. I wanted to continue to run a decentralized finance organization because I believe that that allows for a better understanding of what our internal – but more importantly, what our external – customers require. Having people on the ground closer to our customer was very important to us. So it was probably that.

The other part of it is because we are a technology-centered company, we want our IT folks focused on building, maintaining leading-edge technology solutions that allow our operations to be successful. The last thing I want to do is put any of the burden related to running our internal systems onto our IT department. It really allows us to move that requirement completely outside of our IT folks. They're happy about it and they can focus on the things that are most important to us, which is our customer. Our finance team gets to rely on other people that can keep us up and running and current, which is important to us, on various tasks and requirements at hand.

CFOTL: Is there a book you'd recommend to aspiring finance leaders?

Roberts: I was at my parents' home over the holiday and there was this book sitting there that my father had picked up called, "The Hamster Revolution." The foreword was written by Ken Blanchard, who’s the author of the "One-Minute Manager." It's a very simple, similar read to the "One-Minute Manager." I'm sure many people would remember, but it's all about strategies and ways to be more effective with email. It's not focused just simply on the individual, but it's also focused on leaders and how leaders can then know how to mentor their colleagues in being more effective. There's some interesting tools that get laid out in the book relative to how to be more effective and how not to get inundated and really overwhelmed and turn into inefficient and unproductive activities.