Over the 12 years Jay Boyer spent building Facktor Healthcare's finance team, he knew something was missing. They’d been through a long sprint to serve far more clinics and employ 10 times as many people, but their back-office systems hadn’t grown with them. They didn’t have a process for collecting past-due invoices or projecting income to ensure they could cover new hires.
Jay implemented “a year of infrastructure” which included hiring Pilot CFO advisory and bookkeeping. As a CFO himself, Jay knew the importance of having experts implement a true process to close each month’s books along with having an advisor build models and share insights into how they could scale.
“The ROI of Pilot is that now we know our ROI,” laughs Jay. “It’s hard to quantify. But really we’re going to see that value in the years to come.”
Facktor Healthcare is the largest management consulting firm dedicated to helping launch qualified health centers across the country. Health centers are a form of nonprofit clinic for underserved communities that treat patients regardless of documentation or ability to pay and are regulated by and receive funding from the government.
As you can imagine, these health centers face a number of challenges, and one of those is bureaucratic process. Facktor Healthcare specializes in speeding clinic applications through and has reached an 80% acceptance rate in an industry where 10% is common. There’s a great deal of industry specialization involved and it puts pressure on their consultants to work hard and to be in it for more than the money.
“We have a few principles. One of those is ‘With heart,’” says Jay. “Our clients are nonprofits. They serve the safety net. The talent we get is mission-driven or they’re not going to work out. We have to keep those people and also think about how we’ll endure and really benefit the community.”
The growth almost killed us multiple times. Without solid reporting, it can be like, wait, are we out of cash?
Facktor Healthcare has never really had a problem with demand—their challenge is more around finding and training enough consultants to keep up. Yet Jay knew they had a few financial irregularities that were holding them back. One was that he suspected their compensation structures were causing consultants to compete with each other, rather than cooperate, and people who worked overtime weren’t paid enough for it. Another was that despite all the demand they sometimes came dangerously close to running out of cash.
“The growth almost killed us multiple times,” says Jay. “On paper, you can look phenomenal. You’re investing in growth. You hire five more people. But now they’re ramping and that money won’t arrive for three more months. Meanwhile, you’ve paid out five months of salaries. Without solid reporting, it can be like, wait, are we out of cash?”
This cycle was taking a toll and the effects worsened as they grew.
“If I’m honest, it really created a somewhat toxic situation where we would be flush with cash and telling people they could do things and then be out of cash and telling them they couldn’t,” says Jay. “We decided we needed to professionalize and move past those habits.”
Jay has a deep background in finance and knew it was time to:
“Accounts payable is not our problem—90% of our expense is staff,” says Jay. “The thing was our billables. It’s our time. I had no idea what was outstanding or how long those pay cycles were. And because we were on a cash basis, we didn’t have any insight.”
The cash basis books was a real issue: Because they only recorded cash as it hit their bank account, it was difficult to plan—it often looked like they had plenty of reserves. But had they been on accrual, they would have seen how much they owed in salaries and bonuses.
Their first step was hiring several admins which helped them realize how behind the executives had been. “We’d always done it ourselves,” says Jay. “We were so used to being buried in work we didn’t realize we’d been spending less and less time on strategy.”
Jay then evaluated several bookkeeping and CFO alternatives and chose Pilot based on how many healthcare and consulting clients it has and the fact it could do bookkeeping as well as advisory.
Pilot kicked off several tactical and strategic projects—cleaning up the financial books and addressing employee compensation so it was better aligned with the company’s goals. “We wanted to incentivize people to behave like we wanted them to behave,” says Jay. “We have this value, ‘Shoulder to shoulder,’ but the existing plan encouraged consultants to grab business for themselves to get their billables up.” It also didn’t sufficiently reward people if they chose to put in longer hours.
Pilot’s CFO team helped Facktor design and relaunch the bonus program as a revenue share plan that encouraged people to live the principles. “It was honestly a much bigger deal to our employees than I expected,” said Jay. “The benchmarks were clarity for everybody.” People now care deeply about their benchmarks and that added effort has significantly furthered the mission.
One year later, with the same headcount, Facktor Healthcare’s consultants are booking 20% more revenue.
Facktor Healthcare’s consultants are booking 20% more revenue.
At the same time, Facktor had just started the new year in a cash crunch because of the same old visibility problem. “I’ve always said if we ever come apart, it’s the growth that’s going to get us,” says Jay. Pilot got Facktor switched over to accrual books and worked through their invoice backlog to collect faster. “We had an additional million dollars in invoices that weren't coming in and the CFO team was there with strategies for loans and lines of credit,” says Jay.
The special projects rolled on. Pilot helped them enact their budgets; they had one the year prior, but not followed it. This year, they are comparing budgets to actuals and producing reports the whole leadership team can see. Every division lead now has their own profit and loss statement and knows precisely what they’re bringing in.
We had additional million dollars in invoices that weren't coming in and the CFO team was there with strategies for loans and lines of credit.
“I’ve come to really appreciate Pilot’s technical skill, especially in modeling,” says Jay. “And if it’s not too personal, Cole is the perfect CFO for us. He's worked in one of the big consulting firms. His direct insight is gold for us.”
Jay feels that the value has been outstanding. “This is very cost-effective for us. Someone of Cole’s experience? And a whole team? Amazing,” he says. “We aren’t ready for a full-time CFO so this is perfect.”
Of all the benefits, Jay is excited about the peace of mind Pilot affords him. “The most important thing is Pilot allows me to focus where my energy needs to go. I can't even tell you how exciting it is to have the data we now have in place. We haven't really entirely reaped all the benefits yet and I think in the next year or two, it will be powerful. In a way, the Pilot ROI is that we now know our ROI.”
As a result, Jay gets to invest his full effort with added insight into the mission, and their compensation structure, budgets, and targets are fully aligned on passing that value along to their health centers.
Facktor Healthcare is the only management consulting firm focused on helping community health centers get their start. Over a decade, they grew from five people to 50.
