Hospital CEOs are leaving their posts at an unprecedented rate, according to the American College of Healthcare Executives, potentially adding more stress to health systems already under pressure.
ACHE’s annual report on CEO turnover looks at data reported by more than 4,500 hospitals to the American Hospital Association. Turnover rose to 20 percent in 2013, the highest it’s been since ACHE began compiling the data in 1981, and 3 percent higher than in 2012. Over the last decade, turnover has fluctuated between 14 and 18 percent annually.
In the release of the report, ACHE President and CEO Deborah Bowen attributed the uptick to a combination of an aging population, consolidation and drastic changes in the health-care system.
Donna Padilla, a senior partner at health-care executive search firm Witt/Kieffer, agreed. With the provider industry in the midst of heavy consolidation and under pressures to cut costs, Padilla postulated that some executives may be retiring earlier than they would have a decade ago.
“I think CEOs who have been in the role for 10 or 15 years are asking themselves, do I really want to resign?” she said. “I don’t think there’s the ability to ‘hang on’ for two or three more years; there doesn’t seem to be a gentle slide into retirement.”
Of course, some of those CEOs may not be leaving of their own accord. In some cases, mergers and acquisitions may lead to the restructuring of a hospital’s executive leadership. “In the independent hospital getting acquired example, we’ve seen where moving into a larger system, the CEO either isn’t equipped or doesn’t want to work in a larger hospital,” Padilla said. “Or a hospital decides they want someone else.”
To avoid having to hire someone in the interim, or risk having a vacancy in the top spot, hospital boards should be looking a few years out and engaging in succession planning, she said.
A previous report prepared for ACHE by researchers at the University of Oklahoma found that many CEOs thought their departure had a negative effect on medical staff relations, hospital culture and employee morale, and some said it affected strategic planning and development of new services.
More and more, the likely successor may be a physician, like Dr. Toby Cosgrove at the Cleveland Clinic, Dr. John Noseworthy at the Mayo Clinic and Dr. Kenneth Davis at Mount Sinai Medical Center.
“We’re seeing more clinical leaders, not just physicians, but nurses,” Padilla said. “You didn’t see quite as many of them 10 years ago, when CMO [Chief Medical Officer] was a more natural career progression for a physician, or maybe even COO [Chief Operating Officer].”
The job looks different than it did a decade ago. A CEO must not only oversee operations but think strategically about reining in costs and improving outcomes and patient satisfaction.
“Anyone who’s been at the bedside or close to the patient at a point in their career is nice to have at the top,” she said. “I think we’ll continue to see the role of the CEO change.”