'It’s not going back to normal': Philadelphia-area CFOs chart a path forward while preparing for future downturns
by Kennedy Rose, Digital Producer | Philadelphia Business Journal
Nearly all chief financial officers agree there was no way to prepare for the economic downturn caused by a global pandemic, leaving most holding the title to now factor even more risk into future decisions.
The Philadelphia Business Journal recently hosted a panel with three of the publication's CFO of the Year honorees to discuss the work of being a CFO and what they envision on the road ahead.
“It’s not going back to normal,” said Rob McMurray, CFO of ChristianaCare, a two-hospital health system with over 1,200 beds and 12,000 employees. “In fact, I’m not sure there will be a new normal. What it will be is different.”
The Mann Center for the Performing Arts' revenue plummeted because of Covid-19, and the cancelation of its summer season, CFO Megan O'Shea said. The nonprofit is now working to build its cash reserves and establish an endowment so it can weather another storm, she said. Cheyney University, a historically Black university in the Philadelphia suburbs, is similarly planning three to five years ahead with flexibility in the case of another economic crisis, said Cynthia Moultrie, chief financial officer of the university.
“It’s not going back to normal. In fact, I’m not sure there will be a new normal. What it will be is different.”
Businesses are going to need to plan differently going forward, McMurray said. There is no strict 12-month annual budget anymore, and now businesses will need to look ahead by 15 months and assess quarterly forecasts, he said. He also anticipates there being much more sophisticated financial planning models in the near future.
“We are looking, as part of our long-term strategy, into baking in what that risk means and how we can mitigate that risk going forward,” McMurray said.
Each CFOs first step as the region quickly shut down was to create scenario plans for the future. Some plans created in March were hopeful — predicting that the pandemic-related closures would last until early summer, and that the world would get right back to normal soon after. Other plans more closely mirrored reality, anticipating shutdowns lasting four months or longer.
The Mann Center prepared scenarios for the delay of the start of their season, which runs from May to September, as well as the outright cancellation of the season in case things didn’t get better, O’Shea said. With no revenue from its programming, The Mann slashed its $26 million budget to $3.5 million and cut pay and hours or furloughed most of its staff, she said.
The pandemic did provide some organizations the opportunity to innovate much faster than planned. ChristianaCare accelerated its telemedicine visit plans from a two- or three-year time frame to two to three weeks, McMurray said. Cheney University is preparing to move its semester entirely online, if necessary, and The Mann Center also has online programming available.
Financial liquidity is still a priority, but the pandemic presented the need to be more compassionate to patients and employees and focusing on their safety, McMurray said. All three CFOs reiterated that working with a team was imperative to working through the pandemic. Moultrie said the pandemic gave her a better appreciation of her team and teamwork.
“Being able to crunch numbers is one thing, but you really need to understand the organization and the organization’s goals and have everyone participate as part of the team,” Moultrie said.