Transcript of Garrick Stoldt’s Interview
Interview with Garrick Stoldt
Interviewer: Andrew Zezas, SIOR
Following is the transcript of a CFO Studio interview between Andrew Zezas, CEO of New Jersey based Real Estate Strategies Corporation and finance executive, Garrick Stoldt, CFO of St. Peter’s Healthcare System.
Visit www.CFOstudio.com to read about this interview and to watch the entire on-camera interview.
Leadership, Healthcare Reform, and Solar Energy
Zezas: This is CFO Studio, and I’m your host, Andrew Zezas. I’m joined today by Mr. Garrick J. Stoldt, Chief Financial Officer of St. Peter’s Healthcare System in New Brunswick, New Jersey. Mr. Stoldt achieved his BA in Economics from New Jersey City University in 1979 and has been in the healthcare finance field ever since. He’s been a CPA since 1985, and his experiences include having been a government regulator for Medicare, an auditor for major accounting firms, a consultant on many healthcare issues, and a CFO at several health systems.
Mr. Stoldt’s recent accomplishments include having received the 2011 Regina Nostra Medal for service to the Diocese of Metuchen and the 2012 Outstanding Eagle Scout Award from the Boy Scouts of America. Mr. Stoldt was quoted in the February 2013 issue of “Health Leaders” magazine on solar energy. St. Peter’s Healthcare System is sponsored by the Catholic Diocese of Metuchen, New Jersey and includes a 478-bed teaching hospital. The hospital was established more than 100 years ago and specializes in womens’ and childrens’ services. St. Peter’s Healthcare System also includes a 120-bed nursing home and several joint ventures, including a surgery center, catheterization lab, and some of the world’s most advanced technology, including CyberKnife.
It also includes a for-profit solar energy company and an offshore captive insurance company. Today, Mr. Stoldt’s interview includes a topic; leadership, healthcare reform, and solar energy. Garrick, it’s so nice to have you here on “CFO Studio”.
Stoldt: Andrew, thank you for having me. It’s a pleasure to be here.
Zezas: Garrick, the role of CFO has changed dramatically in the last few decades. No longer is the CFO, or bean counter, strictly a rear view mirror type or a compliance type. The role has become very, very diverse, and great CFOs are very, very sophisticated in what they do. Share with me your views about how leadership plays into the role of CFO.
Stoldt: Andrew, you’re absolutely right. We were much more of a historian, looking at the past, and managing the assets and operations on a day-to-day basis. We were not looking at the future. Now the CFO has to be part of the strategic planning process and strategic implementation process, so we have to be part of the think tank, as it were, to implement the future of the organization that requires us to be one of the innovators of the organization.
Zezas: … so you’re actually leading thinking, leading strategy, leading planning, leading execution.
Garrick: Almost every decision you have in going forward has a financial implication to it. That’s why the CFO has to be part of the team making that decision.
Zezas: You’ve been at this for a while. How has your leadership style changed in your career?
Stoldt: Pretty dramatically. Early on in my career, when I first got out of school, I was driven by my goals and the accomplishment that needed to be done, whatever the task was, an not really how and who I work with to make it happen. Therefore, I was considered, I wouldn’t say a slave driver, but I was very determined and didn’t worry about the people as much as the goal. Today, it’s very, very different. Now I look at more of how do we get to that goal and how does the individual resources of the people and their weaknesses and strengths play into getting that goal to make sure that we can accomplish it in a more effective way.
Zezas: … so you’ve evolved from slave driver to true leader?
Stoldt: Yes, very much so. Very much so.
Zezas: Garrick, there’s a lot of great things going on in the world these days, as we well know, and one of those things, whether it’s great or not, I guess, is a matter of opinion, was the recent passing of the Patient Protection and Affordable Care Act, PPACA. Share with me your views about how, what some people call really is a healthcare insurance reform bill, how that’s changed St. Peter’s Healthcare System.
Stoldt: First off, you’re absolutely right. It isn’t really about covering people, covering more people with insurance. That is one of the goals of it, but much more of the legislation gears around insurance reform than it does about the overall accomplishment of covering more people. That is, trying to happen. It’s really questionable of whether it will happen or not, but really, much of the regulation revolves around insurance reform than it does about covering more people, so that has changed our operation quite a bit, because it has become a stimulus. Whether Affordable Care Act actually ever gets implemented fully or not, it has started the ball rolling down the hill of forcing organizations to change how they operate.
Zezas: Has it had an energizing effect in some respects?
Stoldt: It has both a positive and negative effect. The positive side of it is emphasizing quality and collaboration with physicians and a greater emphasis on patient satisfaction. These were all part of the past, but now the emphasis is far more energizing in terms of the collaboration with physicians. It will be driving down cost dramatically, cost that now is … it’s always been an issue, but no the collaboration with physicians has given us a greater opportunity to lower cost, because we’re now acting more in a collaborative way and in a more [homogistic 00:07:33] way than we were in the past.
Zezas: We talked about the past. We talked about the present. Where do you think the future of PPACA is? You can answer that in the context of St. Peter’s or the industry, however you prefer.
Stoldt: It’s a combination of them both. I think that there are some very good things coming out of it, which, I’ve talked about the collaboration with physicians, and it’s also forcing mergers at a greater rate. You won’t see too many community hospitals out there anymore. They’ll all be part of bigger systems. One of the downsides to that is then you’ll have corporate offices that are very distinct and very far away from where the actual healthcare is being given, so the personal aspects of healthcare will start to change in a negative way. The community benefits that we provide, as most healthcare institutions do, will have to be part of the cost equation, and we won’t be able to do the things that we do now.
We have a mobile health van that goes out into the community. We do this as a community service. That will have to be in question now, things of that nature, because that’s a cost without a real revenue associated with it. How many of those things can you do when you’re trying to constantly drive down cost? The community service aspect of hospitals will be diminished, I think, over time.
Zezas: How might the PPACA affect, in addition to cost, innovation?
Stoldt: That’s the other thing I have a real concern with. As cost gets driven down and you have fewer and fewer players, I think the United States today, which is a leader of innovation in healthcare, may not be the leader of innovation going forward because of the cost equation constantly squeezing. Some of the benefits of that profit is built into redevelopment of those assets into new innovations. As you squeeze that down, that dollar for re-investing in new technologies and new drug therapies will not be in there.
Zezas: That’s unfortunate. That’s unfortunate. Garrick, let me switch gears with you. St. Peter’s is involved in the solar energy business but from a for-profit perspective. Give me guidance on that. Why?
Stoldt: About two years ago, we looked into the opportunity of creating the solar energy company. It was brought to us by an energy company, and we looked at the service and from a steward of the organization. We are a high consumer of energy, very high consumer. All of our technologies come with high energy use to them.
Stoldt: Therefore, energy cost control or containment is a fundamental aspect of things that we look at. When we had this project in line, it will lower our energy costs about 30% from our actual usage, and this is really a hedge against future energy costs, getting into the solar energy business.
Zezas: Interesting. Do you see solar as being a good thing for the future of the country?
Stoldt: I don’t, really.
Zezas: You don’t?
Stoldt: I don’t, because it made sense for us as stewards of the organization. It was a good economic business plan to be in solar because of the government grants and the tax credits aspects of it. If you pull out the government support aspects of solar energy, it is no longer a viable business option for most businesses. It’s cost-additive. It’s not cost-reducing.
Zezas: Cost additive.
Stoldt: … because of the cost of the actual investment. You won’t be able to get that returned without those subsidies.
Zezas: … so you’re saying from the perspective of the company, it’s a good thing, but from the perspective of the individual tax payer …
Stoldt: Exactly. As a tax payer, I would not be supporting solar energy, but that’s a dichotomy. I have to deal with and CFOs have to deal with on a day-to-day basis. You have to take your personal preferences and issues aside and what’s best for your organization.
Zezas: Of course. Of course. Of course. Garrick, I’ve got time for one more question. For those finance executives who aspire to become great CFOs, what advice would you give them?
Stoldt: Several. I think your communication skills are critical and building trust relationships with your staff. You are now an innovator in the part of the future of your organization in terms of street strategy. You very often have to ask your staff to go well above and beyond what you need to do on a day-to-day basis. If you’re going to have them respond, they have to have trust and faith in your leadership, and that only happens with good communication and with building trust relationships with the staff.
Zezas: The advice for someone who hopes to become a CFO one day is communication, trust and leadership.
Zezas: Words to live by. Garrick, this has been wonderful. I thank you for appearing with use on “CFO Studio”. I hope you’ll come back and see us again some time.
Stoldt: Thank you for having me.
Zezas: This is Andrew Zezas, your host at “CFO Studio” with Garrick J. Stoldt, Chief Financial Officer of St. Peter’s Healthcare System, saying thank you very much for watching. We’ll see you again.