The rate of CEO turnover in the hospital sector reached 17 percent in 2012, which is near a historic high, according to recent analysis by Phillips, DiPisa & Associates.
There are several reasons hospital CEO turnover is more prevalent than it has been in the past, says Paul Esselman, executive vice president and managing principal at Cejka Executive Search.
For one, many CEOs from the baby boomer generation are beginning to reach retirement age. Beyond retirement, other factors are developing in the hospital industry that have influenced CEO turnover, according to Mr. Esselman. Hospital boards are beginning to take a closer look at quality, safety and patient and provider satisfaction when evaluating a CEO. "In the past, most hospitals focused on the bottom line, but now boards are specifically looking at quality, safety and satisfaction. Boards are expecting a CEO to lead integration with physicians," he says. "That's a big influence on CEO stability."
Best practices for CEO turnover
When a hospital CEO leaves his or her position for any reason, the transition has the potential to have a significant negative impact on the hospital. "Generally, there is an air of uncertainty," when a hospital CEO leaves, says Mr. Esselman. However, the remaining leaders at the hospital can help make the change to a new chief executive a little smoother.
When a transition is planned
A planned turnover, such as a retirement or a planned resignation, can be an opportunity for members of the executive team to step up in the interim and take on an expanded role. If a member of the organization is chosen to replace the outgoing CEO, he or she should be identified early on and start to gain exposure as a leader with staff, physicians, the board and the community.
As with any change, communication is important with a planned CEO transition. "Successful organizations communicate the transition over a period of time so the rest of the staff and community view it as a natural transition," says Mr. Esselman.
When a transition is unplanned
For sudden or unplanned CEO transitions, the remaining members of the senior leadership team have an opportunity to instill confidence in the staff, physicians, community members and the board and maintain focus on the goals of the hospital, according to Mr. Esselman.
Staff members. With this group, open and transparent communication is the key to a smooth transition. The senior leadership team has an opportunity to address the CEO's departure and then refocus the staff on the organization's mission and key objectives, according to Mr. Esselman. The leaders need to get the rest of the staff focused on the mission and key objectives of the hospital so the organization can continue moving forward, even if it is temporarily lacking a permanent CEO.
Physicians. "Physicians who admit patients to the hospital must have confidence that things will continue to function as normal even though the CEO is in transition," Mr. Esselman explains, or the physicians may start referring patients to other hospitals in the area. The CMO or vice president of medical affairs can play a key role in communicating with physicians, whether employed or independent, minimizing the impact of CEO turnover on patient admissions.
Community members. While it is important to maintain positive relationships with physicians, it is equally important to keep community members confident in a hospital's ability to provide quality care during a time of CEO transition. "The success of a hospital is based on whether a patient or a patient's family is confident in the level of care they will receive," Mr. Esselman explains. "The senior leadership can play a vital role in communicating to the community…and reassuring the community that things are moving forward and it is business as usual." In particular, it is important that hospital leaders be visible in the community during a time of transition.
Board members. The stability of the team is a critical piece of the board's decision-making process when it comes to selecting a new CEO. During a CEO transition, those remaining at the hospital need to maintain the board's confidence in the executive team, according to Mr. Esselman.
Overall, when CEO turnover occurs for any reason, the most important thing executives can do is keep the hospital running smoothly with no disruption in care. This can be achieved through strong leadership from the remaining executives and focused communication with the staff, physicians, community members and members of the board.