Capitalizing on Health Care: A Q&A with Jay Roberts, CFO, AdvantEdge Healthcare Solutions


Jay Roberts, chief financial officer of AdvantEdge Healthcare Solutions, has more than 25 years of senior finance experience, 20 years as a CFO. Roberts has gained strong expertise in SEC reporting, accounting, M&A, and corporate-development transactions for health care technology companies, successfully completing over 100 corporate financing acquisitions and exit transactions.

This knowledge has proven a good fit for AdvantEdge, which provides medical-billing services for physician groups, hospitals, surgery centers, and behavioral health agencies, and was founded in 1999 by long-term veterans of the health care IT and medical-billing sectors. Roberts recently spoke with CFO Studio On-Camera about the dynamics of capital markets in health care technology. Below are excerpts from that conversation.

Andrew Zezas: Jay, it’s so nice to have you here on CFO Studio.

Jay Roberts: Andy, thank you very much for having me. I appreciate it.

Zezas: So, you’re in health care technology. Talk to me about the regulatory environment. How has the current environment impacted companies’ ability to secure bank financing specifically for growth funding?

Roberts: I’ve been in health care IT for 20-plus years, and over that time, the regulatory environment has become a little bit more challenging. Certainly, in the last several years, Dodd-Frank had a big impact on securitization of debt financing, and what we’re seeing today is: While the cost of capital in this current environment is very attractive and very competitive, we’re also finding that covenants associated with bank financing have become more difficult. We’re also seeing that, while there’s a lot of capital to deploy and there’s still a good opportunity to gain yield, a lot of the traditional lenders have still been challenged to find good opportunities because of the economic climate.

Zezas: How about private equity and venture investors?

Roberts: The venture and the private equity community has been very interested in coming into the space, specifically into health care IT and services. We’re finding that, in particular, the private-equity investors are coming to health care providers. So we’re seeing clinical labs, as an example, where that particular sector has had a lot of interest by venture and private equity investors.

Zezas: On the subject of growth, will your company’s growth be more from upselling to existing customers new products and services, or acquiring new customers?

Roberts: We want to focus on our existing client base and expand within that existing client base. We do more and more with hospital-based clients, and that’s been a big part of our growth strategy over the last several years. We also have a very strong initiative relative to growing organically with new-customer acquisition. We’ve completed eight
acquisitions in the last five years.

The CFO and General Counsel Relationship


In the best of worlds, both CFO and GC cooperate in creating the framework
for an organization’s strategic direction. 


Accountants and lawyers, those who become Chief Financial Officers (CFOs) and General Counsels (GCs), have different mindsets and training. The accountant learns to attack the problem and find the solution. The legal practitioner learns to argue both sides of an issue. For accountants, “the bottom line is the bottom line,” says Sam J. Germana, vice president and general counsel, Trinitas Regional Medical Center, in Elizabeth, NJ. It follows that CFOs often have a black-and-white way of looking at things. “The numbers work, or they don’t.” Lawyers, though, see the world in shades of gray. Some might perceive a problem in that. But not Germana.

When CFOs and GCs come together on the management team, it’s generally the CFO who’d say, “This is too speculative.” And that’s fine, says Germana, “because you do want to have a balance — the conservative, strategic-thinking finance exec taking a hard look at the numbers, balanced with the risk-taking, strategic view of the CEO. I’ve found that the GC is often the pivot point in providing advice to balance these two perspectives.”

Nestlé Nutrition’s Kevin Goldberg, vice president and GC, says that in 1999 when he was in law school, there was a distinct separation between business and law, but now young lawyers are given training to fill the role of business partner in corporations and large, global organizations. The focus of lawyers at Nestlé “is how do we add value?” and if a lawyer hasn’t absorbed lessons from business as well as from law, it’s hard to see the best answers.

Besides advising on technological, regulatory, and FDA issues, Goldberg says, he and the legal team at Nestlé, in Florham Park, NJ, get involved in the product development cycle, from concept through commercialization. Goldberg calls this “strategic embededness,” and it makes the GC a true business partner. His interest in the product goes way beyond just patents, he says. The GC wants to see the process from beginning to end to help “advance the speed of development.”

A general counsel can be of great strategic value to his or her company by looking at things in multiple ways, from many sides, says Michael Keefe, executive vice president and GC, MISTRAS Group Inc., in Princeton Junction, NJ. In law school, lawyers are taught to consider the many facets of a situation. CFOs need to act within strict rules, some of which are overseen by outside auditors, says Keefe. Attorneys, of course, have ethical obligations, and need to always advise the company to act within the law, but have been trained to understand most situations have many sides and can be looked at several ways.

Nevertheless, both CFO and GC have a mandate to act with the company’s best interests in mind and can do that better together than either can separately. Moreover, both CFOs and GCs are highly evolved risk managers who bring to the company very different perspectives on risk management. To present the GC viewpoint, CFO Studio interviewed several general counsels for this article (go to for bios). CFOs may not agree with every opinion they expressed.

Complementary Disciplines

“Many decisions, if they are to be truly informed decisions — by either the CEO or the board — are multidisciplinary in nature,” says William Farran, vice president, general counsel, and secretary of Innophos, Inc., in Cranbury, NJ. “I think being a team member has a lot to do with understanding one’s role and what the mission is” in relation to others, especially on a management team. He goes on to say that a GC and a CFO must understand that, to succeed, they can collectively deliver the greatest value by collaborating to achieve the team’s objectives and must bring to bear their respective disciplines to ensure that all decisions are based on balanced intelligence. He points out, there are often additional aspects to decision-making beyond finance and legal matters. So, frequently HR will sit in on meetings, and often other members of the leadership team will need to be involved, too.

Working together on a project, a GC and a CFO need to thoroughly discuss their viewpoints, so they can “research and determine the best decision,” says Keefe. As an example, a proposed acquisition presents numerous points for discussion: Does it make financial sense? Is there undue risk? Are there existing litigation issues? Even if you get an indemnity agreement from the other party, how good will it be? If the acquisition brings to the company a different line of business, what compliance or other issues will that raise?

“GCs must provide the wide range of legal options open to management to meet strategic objectives,” says Germana. “CFOs can then best determine which among the possibilities may likely provide the greatest return on investment. Even that which seems to defy logic can be ‘legal.’ Conversely, sound business decisions can violate a host of laws and regulations.” He adds, “By having early tie-in between the finance and legal departments, the right hand knows what the left hand is doing.”

In its hospital system with two campuses, says Germana, Trinitas developed a good contracting policy, “driven by our finance department. They would say, ‘As the lawyer drafting these contracts you’re working with the administrator [on the ins and outs of an agreement], and next thing you know we, in finance, are paying the bills… We want buy-in, we want certain parameters to be addressed. If there is no immediate return on investment, when will it happen?’??”

Good Working Relationships

In-house GCs who are members of the management team are in the best position to consider business goals and to be effective counselors. That being said, “there is sometimes a need for outside expert counsel or independent counsel, depending on the nature of the issue,” says Farran, “but in my experience, a majority of issues can be handled best by a GC who is part of the management team.”

But a GC won’t survive on that team very long, Farran says, unless he or she understands that “an answer of ‘no, you can’t do it that way’ is really useless to the company.” A GC who is a team-player would instead say, “?‘Well, no, we can’t do it that way, but here are three other ways we can accomplish the same objective and I’m happy to work on others.’?”

In the best case, GCs and CFOs work together productively, and are not afraid to speak their minds. “You have to have an open system where people are free to brainstorm, collaborate, share insights, and be critical, without being antagonistic,” says Germana.

To not do so creates a dysfunctional management team that operates as if the GC exists only to answer a few questions. Says Keefe, “bringing in the GC at the end of a matter, like when sign-off is needed, can often lead to problems and delays.” Germana suggests: “One of the most effective approaches to a well-built management team is to place the GC in the decision-making process early, to get the benefit of his or her unique way of viewing challenges and solutions.”

In Nestlé’s management meetings, because there’s a concept of value, every question is considered through the frame of “What is the value of what you’re doing?” says Goldberg. CFOs and GCs are thus thinking similarly.

Goldberg goes on to say that debates and different viewpoints can be “a huge value to a company. So, CFOs and GCs may come at things from different angles, and they may come to the same conclusion or different conclusions, but the main thing is that with both in on the discussion, there exists a much greater likelihood that all issues will be considered.”

CFOs may be familiar with the “Business Judgment Rule.” Germana explains: It provides a level of protection against judicial interference with the workings of a corporation if the officers act in good faith, in the best interests of the corporation, on an informed basis, in ways that are not wasteful and do not involve self-interest. “GCs’ advice is part of the process of establishing that managers acted on an informed basis and in good faith,” he says.
Cooperation Is Key

At Trinitas Hospital System, a key business issue is negotiating physician contracts that are not in violation of the Stark law, which bars referring a patient to a medical facility in which the physician has a financial interest. In trying to satisfy one need, hospital administration might create an arrangement that would lose money for a period.

Sam Germana, VP and general counsel for Trinitas, says it’s best to get all the parties in the room together: finance, legal, and administration.
“I’ll say, ‘John, the CFO says these numbers don’t work.’ And the manager may respond, ‘But do you realize, we have to do this strategically — or lose this line of service to a competitor down the road.’

“There are nuances such as community benefit,” Germana says. Unless everyone is working together on not just the strategy but also the contract, some of the questions won’t get asked, and opportunities will be missed.

This Legal Department Earns Its Keep

At Nestlé Nutrition, the legal and finance functions are true partners, and as an example the CFO, Matt Reindel, with whom GC Kevin Goldberg works closely and effectively, sits down with Goldberg periodically to review opportunities where legal can bring money and value into the company.

“My legal department is a profit center,” says Goldberg.

Its revenues come from opportunities to make the company whole, reviewing tax liabilities (such as when “we enter into renaissance zone agreements with state governments,” and revaluation of assets. This brings great opportunities and yields “millions, or some years, tens of millions of dollars of revenue that would not otherwise be here.”

On the other hand, the legal department is frequently called on to defend Nestlé in frivolous or opportunistic lawsuits that can unwarrantedly “harm our reputation even if we are successful,” he says. “We know how to win against these suits, but we spend a lot of money winning them, and you can’t stop firms from filing them.”

A Jet All the Way: Brian Friedman Honored at CFO Studio Reception


It’s not every day that CFOs get a chance to sit in the seats where NFL players hold their strategy meetings. And it’s not every day they can enjoy a reception while gazing out at the field where one of the area’s biggest sports franchises practices. On March 27, about 150 New Jersey–area finance execs had both those experiences when CFO Studio held a reception at Atlantic Health Jets Training Center in Florham Park, NJ, honoring the CFO of the Jets, Brian Friedman, featured in the Q1 2014 issue of CFO Studio magazine.

Andrew Zezas, publisher of CFO Studio, introduced the “very accomplished” CFO of the Jets and noted that Friedman joins?a distinguished group of cover subjects at the magazine, including Harald Henn of Mercedes-Benz, who was in the audience.

“With on-camera interviews (111 of which are ready to view at, and the magazine, CFO Studio provides CFOs with the opportunity to position themselves as thought- leaders and to promote their companies,” Zezas told the finance execs in attendance. “On behalf of my staff, please accept my sincerest thanks for permitting us to serve you in this way!”

Friedman, in his remarks, focused on how CFO jobs have changed in recent years. Strategy, once the smallest part of the job, fills substantial hours now, while numbers and accounting are no longer the basic CFO responsibility they once were. He said, “Strategy, operational focus, things that were outside of the CFO oversight historically are not only part of the daily routine, but they are critical functions driving the organization that the CFO is directly responsible for, especially at a midsized company.”

He went on to say that “the amount of data available to analyze is greater than ever before in every area, and these areas are all requesting millions and millions of dollars. So somewhere between shooting from the hip and overanalyzing is where the CFO has to live.”?In his own world, he said, the “undebatable goal of the organization is improving the fan experience,” so from many competing priorities, these will get the biggest invest- ments: 1) technology, 2) security, and 3) digital ticketing. In the area of security, high- megapixel cameras will show every seat in the stands, allowing facial recognition, “even after the fact, without losing any coverage.”

Tying together his themes, Friedman said, “Fan satisfaction drives interest in the sport and keeps fans watching on TV and buying merchandise. That being said, it certainly does not have the clean, direct connection we learn about in school: Investment A drives Revenue B and then the return works or doesn’t work. At the Jets, the biggest part of my role is understanding what is truly an investment in the fan or just an unnecessary expense in the fan experience.” All CFOs face similarly difficult choices of strategy and prioritizing.

Copyright 2017