From transactional to strategic: The next evolution of the CFO

For decades, managed care sat firmly in the operational lane—an essential but largely transactional function focused on contract compliance, rate negotiation, and retrospective margin reporting. Today, that model is breaking down. 

Regulatory pressure, value-based care, Medicare Advantage dynamics, and a strained payer-provider relationship have elevated managed care from a back-office responsibility to a central driver of enterprise performance. At the same time, health system margins are under unprecedented strain. Denials are rising. Policy uncertainty is increasing. And the ways health systems generate and measure revenue have become more complex than ever. 

This has left CFOs in a bind. Many are being pulled toward short-term financial defense—even when what their organizations actually need is longer-term portfolio strategy. The result for some systems is a retreat to the familiar: focusing narrowly on the numbers, tightening controls, and treating managed care as a contracting function rather than a strategic lever. 

But the systems that will successfully navigate the next decade are making a different shift. A more strategic class of CFOs is redefining their role in managed care—moving beyond transactional negotiations to tie managed care operations into their organization’s broader vision. 

Why the traditional CFO role is changing 

Historically, CFOs have focused on the numbers: budgeting, contract compliance, financial reporting, and rate negotiation. Because of this, finance office conversations about managed care are largely transactional, with leaders focused on achieving favorable contract conditions, getting ahead of denials, and negotiating payment terms that serve their organization’s cash flow needs.  

But as managed care becomes a more significant part of healthcare organizations’ portfolios, it runs the risk of indirectly affecting health system strategy—and that’s when it’s crucial to have a CFO with a strategic mindset. 

An example: During contract negotiations, a health system’s largest managed care partner states that it will no longer cover visits to freestanding emergency departments or hospital outpatient departments. What does the CFO do?  

Given the significant volume of patients that come from this payer, a traditional CFO might green-light the contract as long as the terms and rates are favorable. But a strategic CFO with an eye on the health system’s overall portfolio is more likely to take a beat and wonder, “How could this impact our health system’s overall ambulatory strategy? Could it limit our efforts to open new outpatient facilities or even shutter existing ones—even if those sites remain attractive opportunities for other segments of our payer mix?”  

Both CFOs could end up proceeding with the deal. But knowing that these deals aren’t made in a vacuum, the strategic CFO would first evaluate the risks of letting payer strategy affect the health system’s overall portfolio and long-term growth strategy.  

As health systems come under pressure to rescue shrinking margins and explore sources of revenue, CFOs need to keep all options on the table. 

Evolving regulations, complex reimbursement 

The demand for a new kind of CFO has arisen from the impact of regulatory volatility and reimbursement complexity. Uncertainty about Medicaid and Medicare Advantage, which often make up significant portions of a health system’s managed care portfolio, is complicating the CFO role. The One Big Beautiful Bill Act imposed stricter work requirements for Medicaid and Affordable Care Act (ACA) marketplace plans, narrowed Medicaid eligibility requirements, and limited coverage for certain non-citizens. It’s expected to lead to an additional 10 million uninsured people by 2034 and is already having an impact on provider payer mix, cash flow, and managed care strategy. 

Rising claims denials are another contributing factor. In a recent HFMA/Guidehouse survey, 20% of provider leaders reported a denial rate exceeding 5%—nearly double the share reported the year before. Denials have been identified as particularly acute for MA plans. Our survey revealed an average MA prior authorization denial rate of 6.5%, with a quarter of respondents reporting a denial rate of more than 9%. That’s making it hard for health systems to plan for cash flow. 

With these headwinds, CFOs must be more forward-looking. They need to link finance to strategy and have a comprehensive view of a health system’s portfolio to inform their decisions. 

How CFOs can become strategic integrators  

The most effective CFOs no longer operate at the edges of strategy. They sit at its center, integrating financial insights with operational and clinical decision-making. Here’s how CFOs can elevate their role and drive more coordinated, strategic outcomes for managed care and beyond: 

Build a dedicated team around the CFO. CFOs can’t do this alone. The most important thing they can do is build a leadership structure that enables a more strategic finance office. In health systems with a chief strategy officer, finance and strategy teams should meet on a regular basis to align on goals, discuss potential risks, and jointly evaluate potential growth opportunities.  

For smaller systems without a strategy office, the CFO may need to serve as the de facto strategy leader. While they should still be involved in major negotiations and high-level rate-setting, these leaders need to have a broader view of an organization’s strategy, linking their activities to that of the COO and other key departments.  

Reframe negotiations. Payer negotiations are still a critical function of the CFO office, but they should be reframed as one component of a broader enterprise strategy—and leveraged strategically to manage margin, reduce risk exposure, and enable financial sustainability.  

Emphasize managed care as a system capability. Whether it’s the CFO or a senior executive reporting to them, there needs to be a single point of accountability for managed care. More than just a necessary function, it should be seen as a component of a health system’s overall strategy and an opportunity for leverage. 

Use technology and AI to inform strategic decision-making. The modern revenue cycle is more than just a P&L sheet. CFOs need an all-encompassing scorecard that incorporates all of the ways they measure money and forecast financial performance. That scorecard should go beyond simply monitoring revenue, cost, and margin to help leaders understand how these metrics are impacted by managed care, payer strategy, chargemaster strategy, direct-to-employer deals, and more. 

AI is making it easier than ever for health systems to analyze data, simulate decision-making, merge data from multiple, complex systems, and simplify performance reporting for their multi-faceted enterprises. But CFOs need to prioritize those tasks by committing resources that make this level of reporting possible. 

As financial, regulatory, and operational pressures continue to converge, the CFO’s value increasingly lies in their ability to connect the dots across the enterprise. Acting as a strategic integrator requires moving beyond isolated financial decisions to aligning capital, performance, and partnerships with their organization’s broader goals. For CFOs who embrace this role, the payoff isn’t just stronger financial stewardship but a more resilient, coordinated, strategy-led organization.