“The key challenge for any treasurer in building a strategic treasury function that is valued by management is to constantly and proactively be identifying opportunities to increase earnings, reduce volatility, and enhance strategic flexibility,” says Bob Castagna, vice president and treasurer with medical device manufacturer Boston Scientific.
Castagna plays a major role in helping guide the company’s financial dealings and security, but he’s quick to point out that the job is not his alone and the success of any treasury function relies on multiple people and departments throughout the company working in concert. During his nearly twenty-three years with the company, the company has grown from $500 million in sales to almost $10 billion in sales.
“The company is really focused on two things,” he notes. “Transforming patients’ lives through innovative medical solutions and being the most prolific provider of leading innovative technology to physicians and their patients in the categories we serve.”
To be at the front of the pack on both fronts, Castagna says it requires deep investment (to the tune of approximately $1 billion) in research and development, supplemented with a strong M&A pipeline. Impressive as the dollar amounts being bandied about are, Castagna says Boston Scientific began as a very small company that needed to expand its access to capital markets to build the leadership position it enjoys today. That meant everything from sourcing various bonds and bank capital markets around the world to ensuring transparent relationships with several ratings agencies so that their access to capital would come at a reasonable cost and support further growth.
A longtime partner of Boston Scientific that Castagna has worked closely with is Wells Fargo. “It has been a great pleasure to partner with Bob and Boston Scientific to support their growth and ambitions with our capital,” says Gina Peters, managing director in Wells Fargo’s Healthcare Corporate and Investment Banking Group. We look forward to continuing to strengthen our partnership.”
Beyond the financial investment required for growth however, there also needed to be strong personal investment.
“We also needed strong engagement with senior management across the entire company—from the executive committee to business development to all the different businesses and functions at Boston Scientific,” he says. “It’s about being in tune with what the company needs to do to support this growth and making sure the resources are there when we need them.”
Therein lies the path to success and growth, he says. Company-wide engagement provides the best chance to create value.
“Any treasury department deals with all the issues of classic corporate finances, determining capital structure and advising management on what moves should be made,” Castagna says.
“When you pull back and can look at what’s happening in and around the company and take into account the capital market and regulatory environment including accounting changes and tax regulation changes, there’s a rich opportunity for a proactive treasury function to reduce enterprise risks and create value.”
That kind of 360-degree insight allows Boston Scientific to increase cash flow to provide the company more capacity to invest in technology and innovation for physicians and their patients.
“Over the years, we’ve been able to reduce working capital investments with hundreds of millions of dollars in receivables financing programs,” he says. “We’ve also championed a supply chain finance initiative in which we put together a cross-functional team that enables us to extend payment terms to suppliers while also giving them the chance to get paid faster. This initiative increased cash flow by approximately $200 million to help fund the journey to fuel growth—a key component of our corporate strategy.”
“Whether it’s helping with legal, accounting, tax, or the executive committee, we all need help from somebody to do what we do, and this department needs to be able to provide and obtain that help.”
Castagna credits his team with the ability to capitalize on new financial opportunities and says he specifically targets people who have the capacity to learn and also the energy, interest, and creativity to discover the best solutions to the challenge at hand. Not only does the treasury department at Boston Scientific foster that kind of engagement but the company at large sets up leadership development programs and job rotations to give some entry-level hires a more holistic look at where they might want to take their careers in the future.
“We’ve had a lot of people in treasury who have gone on to impressive careers in other parts of the company,” he says. “What I look for is the ability to collaborate in addition to everything else. Whether it’s helping with legal, accounting, tax, or the executive committee, we all need help from somebody to do what we do, and this department needs to be able to provide and obtain that help.”
The ability to provide support is also of paramount importance to Castagna because, as he notes, major change isn’t always welcomed with open arms. Sometimes people are satisfied in their roles and enjoy their comfort zones, so being encouraged to take a next step or tackle a difficult challenge can meet resistance.
“Before we started the supply chain finance initiative, for example, we had a steering committee made of members from different functions of the company. We were getting thousands of questions and didn’t have all of the answers,” he recalls. “We had never done something like this before.”
“I had to pause one meeting and say, ‘You know, we’re in a wagon and we’re going west. We think west is that way, but we’re not sure. We’re taking fire along the way, but we’re going west because there’s gold in those hills,’” he continues. “The point was we’ve never done something like this before, but we’re going to figure it out and do it right. When we run into challenges, we’ll solve them. Maybe we don’t have all the answers today but be patient: we will figure out the answers together and find the gold.”
So it was and so it shall be. As long as Castagna remains at Boston Scientific, he’ll be seeking new opportunities and doing what he can to help his team, different departments, and leaders move boldly to the future.
“I don’t like change,” he says. “I love change. I constantly have to throttle myself back because I see opportunity everywhere—it can drive people crazy. But if you’re going to be strategic and add as much value possible, a little patience goes a long way in influencing teams.”