Chief Financial Officer
Little Rock, Arkansas
The Rottman Group, Inc. has been retained to find the Chief Financial Officer for CARTI. CARTI is the largest network and source for comprehensive oncology treatment services in Arkansas. There is a fairly unique history that brought all this together in the last few years, creating the dynamics of a turnaround, but with a great outlook for success and future growth/development. This is a great career building opportunity for a CFO.
CARTI is a not-for-profit, market dominant, full-service cancer care provider
with 25 physicians treating patients in 11 sites of service. CARTI opened a new
170,000 square foot, state of the art cancer center in November 2015. CARTI
currently treats more than 22,000 patients per year. In their most recent fiscal
year ending June 30, 2017, they generated $171.3M in net revenue ($500M+ in
gross revenue). At the same time, they recorded a $5.8M loss. (see “History &
CARTI enjoys great clinical and professional reputation. They have some well
recognized and phenomenal physicians. It embodies a very supportive culture,
excellent benefits, and overall is described as a great employer to work with.
History & Outlook:
The first question any quality CFO who would consider exploring this opportunity should ask: “How does a $1/2 billion (gross revenue), market dominant cancer center with 25 physicians lose money?”
To understand CARTI today, it’s important to understand its past and how it got to today. Starting in 1976, initially CARTI’s focus was on radiation treatment. CARTI’s beginning was somewhat unique and not the type of thing you see happening today. Instead of the hospitals in the market each buying the very expensive equipment, competing to provide radiation treatment services, they put competition on the back burner and created Central Arkansas Radiation Treatment Institute as a non-profit organization. CARTI functioned this way as a virtual monopoly for 35 years.
Jan Burford, the previous CEO, started with CARTI in a COO position in 1990, becoming the CEO in 1995. For the most part, CARTI was relatively the same organization she came into until 2011. Burford spent 21 years managing/leading a single service line (radiation treatment) in several locations, without any meaningful competitive pressure. There had been rumblings and market evaluation by US Oncology about developing a competing cancer center in the Little Rock market, but it never came to pass.
2011 became the pivotal year for CARTI. In August of 2011, CARTI announced the decision to integrate medical oncology by acquiring Little Rock Hematology Oncology (LRHO), the largest independent medical oncology practice in Little Rock. With this acquisition they talked about and planned the building of a 60,000-80,000 square foot cancer center. When this happened, UAMS (University of Arkansas, Medical Sciences), the academic medical center in Little Rock, saw this as a competitive threat. This led to them severing ties with CARTI who had both space and radiation treatment equipment on their campus.
Instead of adding just LRHO, over the course of the couple years, three different hematology oncology practices joined together with CARTI. The plans for the cancer center grew significantly to a 170,000 square foot facility; an almost $90M project. Construction started in 2013 and opened in November of 2015. In the construction of the almost $90M new cancer center, CARTI contributed approximately $40M and financed almost $50M with bonds. CARTI’s services now include the most advanced forms of diagnostic radiology, surgical oncology, hematology oncology, as well as leading-edge radiation therapy.
To understand the scope/scale of change, in 2011 CARTI saw approximately 3,000 patients in comparison to 22,000 per year now.
From an organizational dynamics perspective, there were multiple large scale things happening almost simultaneously:
Adding medical oncology as a service offering. While in the oncology family of service, the operations are very different as well as the physician practice dynamics. Radiation oncology has expensive equipment/capital with the ability to schedule patients with specific scheduling. In contrast, medical oncologists are evaluating and using multiple pharmaceuticals which are ever changing. They are rounding and seeing patients in an inpatient setting as well as office visits. This is only a partial view of some key differences.
There was the entire construction process and moving 4 entities (radiation oncologist and 3 different medical oncology practices) into one central physical location. The operations in the satellite locations didn’t see the same type of change in service as the Little Rock headquarters did. As a side note to later financial implications, it ended up that whomever gave the estimate of physical plant operations expenses was significantly “off” in those projections.
There was the IT general system conversion to one singular platform.
There was the merging of 4 EMR systems into one uniform system
There was the combination of 4 revenue cycle operations into one system, perhaps the most challenging of all with the most financial implications.
Any one of the above things would present leadership with challenges. To consider all of them, one can see how this was a daunting task at the very least. Having lead or managed through any one or more of these things in your past would make it more manageable to do so again. Without being critical, but instead observational, the previous CEO had been with the same, fairly static organization for 21 years prior to 2011.
Fast forward to 2016. June 30, 2016 FY end realized a $152M net revenue with a $13.8M operating loss. In the spring of 2016, Jan could see that there were significant issues and CARTI may not meet their debt coverage ratios with bondholders. At this time, they were still trying to manage all of this themselves. When the numbers came out for the fiscal year end, it triggered the requirement to bring in a management consulting firm. CARTI did this in the fall of 2016. Berkley Resource Group (BRG) was chosen for this. In September 2016, their bonds were downgraded from BBB+ to BBB-. Since that time, they have been downgraded again to BB+. When the first 6 months numbers came in (7/1/2016-12/31/16), they were less than hoped for. In February 2017, the board of directors made the decision to replace Jan Burford, engaging Witt/Kiefer to conduct a national search for her replacement.
After a national search, a set of highly qualified finalists interviewed with the board and Adam Head was their selection. He started September 5, 2017. He has been very well received by the physician and staff thus far. There can’t be enough said for fundamental leadership that is interactive, responsive, and proactive. We are looking for a CFO that can, with their own skill set and personality, mirror these characteristics as well.
The following is an excerpt from the announcement in Arkansas Business (8/22/17):
“When we first started the search, we knew we needed someone who had a passion for delivering high quality patient care and who focused on clinical outcomes,” said Harry Hamlin, president of the CARTI Board of Directors and a member of the CEO Search Committee. “Adam has a proven track record at the Heart Hospital, earning accolades for his strategic direction, his leadership and his focus on patient satisfaction. We are looking forward to Adam joining our team.”
Head began his career in health care in 2004 as a captain in the U.S. Army Medical Service Corps at Martin Army Hospital in Fort Benning in Georgia. He served in military in Ramadi, Iraq. He returned to Arkansas in 2008 as the assistant administrator of the Arkansas Heart Hospital. He also has served as the chief operating officer of HealthSouth Lakeshore Rehabilitation Hospital in Birmingham and of Medical Assets Holding Co. in Little Rock.
On the surface, this may seem like a daunting position and full-scale turnaround to consider walking into. I would challenge someone to realize there had, in my opinion, been a leadership void for a very long time, and the executive band width to succeed with so much change and growth just wasn’t there.
To offer one example: One of the first things Adam did was to schedule a meeting with all of the CARTI physicians together. This seems like something that would be normal, even something that would happen routinely. However, this was the first time since their merger they had ever been in the same room together for such a meeting. A CEO that is visible, interactive, proactive, and follows up, has been a very contrasting and experiential difference for both physicians and staff. Most would consider this basic blocking-and-tackling type things. There are a lot of opportunities like this.
One of the highest risk things Adam walked into was the expiration of many of the key physician contracts. This put CARTI at risk of the possibility of losing physicians. Adam addressed this immediately and successfully negotiated new 3 year contracts. This goes a long way to reduce the risk of this possibility.
While there were multiple things that contributed to the financial situation, one of the large factors has been the revenue cycle. There were many denials that were not followed up on, and as a result, aged out and were unrecoverable. With oncology, this can mean significant revenue loss. There has been attention by BRG with operational, as well as leadership change in this area since the initial problems. This will be an area of continued focus.
As a synopsis, this shouldn’t be an opportunity that one should shy away from. There was a leadership void in a time that needed exceptional leadership. That isn’t the case anymore. There is a lot of “low hanging fruit” in way of fundamentals that already have, and will continue to make a meaningful difference. There is a vision beyond the current operations for growth and development in the future, not only in service development, but also in geographic growth.
This Chief Financial Officer will lead all the financial operations of the organization.
The current organizational chart has the following 5 direct reports, a total of 111 total staff (As the organization is going through evaluation, this could change.):
Controller (accounting and purchasing)
AVP Revenue Cycle
2 Quality & Compliance Coordinators
Along with leading these people, this person will instrumentally lead and oversee the negotiation and management of contracting with both vendors and payers.
It is expected that this CFO will be instrumental in this and multiple other facets of analysis and change management.
This person should have experience using analytics or be able to build/develop that capacity.
This CFO needs to embrace being an active contributing member of the senior executive leadership team.
Ideal Experience, Skills, and Knowledge:
This needs to be someone who has demonstrated effective experience in finance, accounting, revenue cycle operations, payer contracting, etc. The following are facets of these things:
Experienced in working in a physician centric environment
Has worked with multi-site, distributed operations
Worked with financial lenders, specifically debt/banking relationships
Experience effectively using analytic tools and/or the ability to build and develop them
Negotiation competencies and experience both with payers and vendors
The ability to make effective presentations to the board of directors and other groups.
The ability to coach, guide, and develop staff and support others organizationally in applicable matters.
Have experience supporting growth and development, both programmatically as well as geographically.
Bring a proactive nature and positive energy.
Little Rock has a great quality of life. Whether you like beautiful scenery, museums and
cultural events, parks, gourmet dining or the night life, Little Rock has it all. And you can
forget about the traffic congestion and long commutes to work in comparison to many
It’s no accident that Arkansas is called “The Natural State”. Little Rock is surrounded by
natural beauty at every turn and enjoys a four-season climate. Resorts and state and
national parks are all within easy driving distance to enjoy on the weekends too. There
numerous craft breweries, the only public diamond mine in the world, thoroughbred
Little Rock has a lower cost of living than the national average, so your money will go a long way in this region. Little Rock features new multi-unit and single-family dwellings in development and under construction every day. The average cost of a home is noticeably lower than the national average, while Little Rock residents generally pay less for things like food, utilities and health care than the average American. Little Rock accommodates a variety of tastes. Neighborhoods range from luxurious, well-appointed loft apartments in midtown and downtown Little Rock, to the suburban and family-oriented dwellings of Chenal Valley, Hillcrest and The Heights.
U.S. News analyzed 100 metro areas in the United States to find the best places to live based on quality of life and the job market in each metro area, as well as the value of living there and people's desire to live there. Little Rock ranks as #38 with an overall score of 6.6 out of 10.
The following links have a wealth of community information:
This person will have a very competitive base salary, currently targeted at $200-250K base salary with some possible flexibility for the right person, as well as a 25% annual bonus incentive. All other health and retirement benefits that one would expect to find in a company of this size. There is also paid relocation assistance.
Feel free to openly share this information. If this is something you are open to exploring, please contact:
The Rottman Group, Inc.
(501) 519-2514 cell
Director of Recruitment
The Rottman Group, Inc.
(501) 317-1782 cell