A senior vice president at RGP Healthcare, Joni Noel, discusses the new lease accounting standards that over 80% of healthcare companies have yet to fully implement. With an average implementation time of 6-9 months, CFOs need to act now to avoid costs of up to $1 million. Noel recommends starting early to defray costs and stresses the transition will require comprehensive changes across finance processes. A formal assessment process should be the first step to identify gaps in policies, processes, controls and technology before the 2020 deadline. Ongoing lease management is also critical for sustained compliance.

1. Interview with: Joni Noel, Senior
Vice President, RGP Healthcare
“More than 80 percent of healthcare
companies have not started or are only
in the initial phases of implementing the
new lease accounting standard (ASC 842
or GASB 87). With implementation
taking six to nine months on average,
healthcare CFOs have to act now. This is
costing most health systems up to USD
1 million, but if you start early, you can
defray some of the costs,” says Joni
Noel, Senior Vice President, RGP
Healthcare.
RGP Healthcare is a solution provider at
th e m ar c u s ev an s N ati on al
Healthcare CFO Summit Fall 2019,
taking place in San Diego, California,
October 20-22.
How can healthcare companies
successfully comply with these new
standards? What do CFOs need to do
before the 2020 deadline?
Meeting the new accounting standard
(ASC 842 or GASB 87) will require more
than implementing a new lease
accounting software system. Sustained
compliance with the new standards will
involve a comprehensive finance
transformation effort requiring changes
to existing procurement, treasury,
finance, and accounting processes. Key
activities that will need to be addressed
during the project lifecycle include
assessment and policy elections, process
transformation, data collection and
abstraction, technology implementation,
project and change management.
Allocating the appropriate resources,
applying proper project management,
a n d selectin g a n experien ced
implementation partner can lead to a
successful adoption and sustained
compliance.
What are the biggest challenges
they encounter? What policy and
process modifications are often
required?
Above all, the biggest challenge
organizations face in the adoption of the
standards is the accumulation of all the
necessary data that is required to
perform accurate accounting under the
new standards, especially embedded
leases. Additionally, adequately
evaluating all of the policy and practical
expedients afforded for the adoption
prior to starting data collection can
significantly impact the quantity and
scope of data that may be required to be
gathered.
How can this transition period be
simplified and streamlined?
Key activities that can simplify and
streamline the adoption include
partnering with an experienced
implementation partner that can provide
a clear and concise roadmap of activities
to compliance.
Comprehensive project management
and a dedicated project manager can
ensure that key workstreams are
aligned, dependencies are identified and
key milestones are achieved to keep the
project phases of assessment, process
transformation, data collection and
system implementation on track.
What is the best way of identifying
(and closing) gaps in policy,
processes, controls and technology?
A formal assessment process should be
the starting point for all healthcare
organizations. This assessment process
should include formal lease discovery
activities, policy and practical expedient
analysis and decision, and evaluation of
the current state processes and controls
to understand what modifications will be
necessary to ensure compliance with the
new standards over time. Based upon
the information gathered during
assessment, most organizations are
choosing to deploy a software platform
to handle the accounting requirements.
Due to the labor-intensive work of
ongoing maintenance of leases in a
manual database, software platforms
provide automation of much of the
administrative activities.
Once implemented, what ongoing
lease management is required?
The date of adoption is not a finish line
for healthcare organizations, but rather,
a starting point. Sustained compliance
with the standards over time poses the
greatest risk to the organization. New
leases, lease modifications, and lease
terminations will need to be managed in
a timely manner to ensure the proper
presentation of assets and liabilities on
the financial statements. Failure of
sustainability could result in audit
failures and, potentially, a complete re-
implementation of the standards.
How can the implementation project
end up costing more and taking
longer than expected? How can
CFOs make sure that does not
happen?
Proper program governance and
allocation of resources is the key driver
to success as you prepare for the
adoption of the new accounting
standards. Most program overruns are
due to competing priorities within
organizations which pull resources from
the leasing initiative. Executive
sponsorship of this key initiative by the
CFO can set the tone for the organiza-
tion as to the importance of getting this
done and getting it done right. CFOs that
engage and remain engaged during the
lifecycle of the project can ensure that
resources remain dedicated to
completion and can assist in eliminating
any roadblocks the implementation team
may encounter.
A formal
assessment
process should
be the starting
point
Why Healthcare CFOs Do Not Need to Struggle
with the New Lease Accounting Standards

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About the National Healthcare CFO Summit Fall 2019
The 30th National Healthcare CFO Summit is the premium forum bringing senior
level finance executives and solution providers together. The Summit offers an
intimate environment for a focused discussion of key new drivers shaping the
healthcare industry. Taking place at the Fairmont Grand Del Mar, San Diego,
California, October 20-22, the Summit includes presentations on the role of federal
government in healthcare, exercising due diligence, using artificial intelligence and
machine learning to improve the hospital revenue cycle, and future trends in
innovative healthcare.
www.nhcfosummit.com
About RGP Healthcare
RGP Healthcare is an industry vertical within RGP, a global consulting firm that enables rapid business outcomes by bringing
together the right people to create transformative change. As a human capital partner for our clients, we specialize in solving
healthcare’s most pressing business problems across the enterprise in the areas of Business Transformation, Governance, Risk and
Compliance and Technology and Digital Innovation. Our engagements are designed to leverage human connection and
collaboration to deliver practical solutions and more impactful results that power our clients, consultants and partners’ success.
RGP was founded in 1996 to help finance executives with operational needs and special projects created by workforce gaps. Our
first-to-market, agile human capital model disrupted the professional services industry at a time when traditional talent models
prevailed. Today’s new ecosystem for work embraces our founding principle – quickly align the right resource for the work at hand
with a premium placed on value, efficiency and ease of use.
Our pioneering approach to workforce strategy uniquely positions us to support our clients on their transformation journeys. With
more than 4,000 professionals, we annually engage with over 2,400 clients around the world from more than 70 practice offices.
We are their partner in delivering on the Future of Work. Headquartered in Irvine, California, RGP is proud to have served 86 of the
Fortune 100.
www.rgphealthcare.com
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