Battling Hospital CEO Turnover – Part 1
An interesting trend is currently happening within American Hospitals. CEO turnover has recently reached a record high of 20 per
cent, the highest since motoring this statistic began. In the next two blog posts, we will take a look at some of the possibilities as to why this is happening, current hiring trends, and what you can do to make yourself more competitive for senior management positions.
According to the president and CEO of the American College of Healthcare Executives, Deborah J. Bowen, “The increase in the turnover rate may be indicative of a combination of factors, including an increased number of baby boomers seeking retirement, the emerging trend toward consolidation in our industry, and the complexity and amount of change going on in healthcare today. The increase in the rate reinforces the need for healthcare leaders to work with their boards to ensure appropriate succession plans are in place.
As more baby boomers are leaving their executive positions for retirement, a great amount of pressure is placed on hospitals to find a worthy successor. Struggling hospitals in the hunt for the strongest talent are extending their searches to senior leaders from banking, financial, and manufacturing backgrounds as strategy changes devalue the skills of long tenured, hospital seasoned professionals. A recent healthcare executives’ survey said that the next generation of leaders would come primarily from the financial sector, with the hospitality field trailing closely.
Searching outside of the industry is not necessarily a bad thing, as many of these executives bring with them fresh insight from positions within a variety of sectors. An outside hire may not have necessarily developed hospital management skills from within or understand an organization’s unwritten rules at first, but that’s okay. As hospitals attempt to avoid bankruptcy, expedite smoother consolidations, overcome payment reform, and tackle productivity issues, a fresh face can be a welcome change.
Another interesting statistic states that, 94 percent of CEOs coming from other industries indicated that they do not believe healthcare expertise is required for replacing other senior leadership members after a management overhaul. The same study also revealed the following:
- The average tenure of a hospital CEO is less than 3.5 years;
- Fifty-six percent of CEOs exits are involuntary;
- Nearly half of chief finance officers, chief information officers and chief operating officers are terminated within nine months of a new CEO’s hire; and
- Eighty-seven percent of chief medical officers are typically replaced within two months of a new CEO’s appointment.
As a current MBA student who has a desire to one day become a member of hospital senior leadership, it leaves me to wonder whether or not I should perhaps focus my MBA on a field other than healthcare management. What do you think? Please feel free to comment with your opinion.