Health system margins have dropped for the last four months, leading to layoffs, job cuts and reorganizations.
According to Strata Decision Technology's Monthly Healthcare Industry Financial Benchmarks report on August performance, health system margins dropped to an average of 1.9%, compared to 2.1% in July. The rising costs of supplies, staffing and IT tied to digital transformation and cybersecurity pressure hospital executives and boards to make tough decisions.
In June, Cleveland-based University Hospitals reduced its leadership structure by more than 10%, including vice presidents and C-suite executives.
Baystate Health in Springfield, Mass., and Lifespan in Providence, R.I., have made similar top leadership cuts.
Are more coming?
"Not to state the obvious, but healthcare is changing at a rapid pace and our leadership team needs to have the skills to not only keep up with those changes, but pivot quickly. One thing that the pandemic taught us is that healthcare can look drastically different in one day and we need to be ready to meet those challenges," said D. Richelle Heldwin, chief risk and compliance officer of St. Johns Health in Jackson, Wyo.
Leadership teams have access to more data now than ever, and good data will lead to better decision-making as organizations aim to stay relevant. St. Johns is looking for team members who can generate and analyze accurate data before acting on trends.
"I also see the recognition that we can be a little top heavy in healthcare and so I anticipate that most organizations will be working to lean out that top layer to focus more resources at the bedside and that means we need leaders that can wear multiple hats and manage a broader scope of services," said Ms. Heldwin.
Peter Crossno, MD, medical director of pulmonary and respiratory care for Intermountain Health's Canyons region, sees a similar fate.
"I think leadership teams will become much leaner with fewer levels in reporting structure between leaders and caregivers and those leaders will be established caregivers themselves," he said. "Important skills will be creating an environment of effective teaming in the wake of ever-expanding communication technology and geography."
The most valued leaders, Dr. Crossno said, will be those who forge relationships with their teams and can appropriately message initiatives across sprawling networks. He aims to appoint leaders who can "bring many threads, teams and conversations together" and those who can build work groups from across the system.
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