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What's the Finance Function's ROI?

"Ads proliferate across St. Louis as hospitals push services, name-recognition" is the headline above this interesting article from the St. Louis Post-Dispatch's website.  Featuring all sides of the debate, the article includes this from Samuel Steinberg, decribed as a Florida-based hospital finance consultant who "...remains skeptical about the benefit of advertising."

“It’s very difficult to be able to demonstrate that these things are worth the investment,” he said. “Hospitals and health systems that put a lot of money into advertising say it is beneficial. But when you ask them to prove it, there’s a real shortage of good research that verifies that it’s worth it.”
Yes, hospital marketers are frequently remiss in not building more value-driven metrics into their work.  Too many of these marketers (those with limited job prospects) devolve from saying that measuring marketing is difficult to concluding it's a waste of time to try.  And in my experience, far too few say "We're going to do MORE of what we CAN measure and LESS (or NONE) of what we CAN'T," even at the cost of annoying a CEO's favorite physician or two.

Yet as uncomfortable as it may be for the Finance side of the house to hear, they and marketing have a lot in common, as BOTH functions sometimes do things based more on faith than on solid evidence of results.

Don't believe me?  I'll bet you have CPA after your name.  But I digress...

Take the internal audit function for example, people and processes designed to keep the organization compliant and fraud-free.  But how do you measure "frauds avoided" - misadventures that would've happened but didn't thanks to the IA boffins' work?  Tough to do.  At some point one must believe - there's that pesky 'faith' thing again - that organizations WITH a strong IA function are more successful than those without (a point with which I happen to agree by the way.) 

There's an entire superstructure of intuition and supposition built around that idea, just as with the idea that a healthy and well-communicated brand is an important organizational asset (even though not everything about it can be measured.)  But intuition and supposition are not facts, and saying that without IA we'd have more Enrons and Worldcoms is wishing and hoping, not evidence.

So bring data to the argument when you can.  But next time you hear Mr. Steinberg echoed by YOUR finance team, ask them for the cost justification on what THEY do.  And watch 'faith' suddenly rise up the priority list.

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