Not too long ago, Stephen Gelineau found himself in the office of a longtime hospital CEO who had grudgingly agreed to create a new strategic plan only after hospital trustees "twisted his arm." The CEO's desk was stacked with reports on contemporary health care issues and sticky notes peppered with phrases like "bundled payment" and "ACOs," and he wanted Gelineau, senior vice president at the health care consulting firm the Camden Group, to help him pull it all together. But Gelineau sensed his heart wasn't in the effort.
"He was three and a half years from retiring and he wanted a strategic plan that got him to the intended horizon without rocking the boat," says Gelineau, who declined the entreaty to help.
Around the same time, the board of another hospital asked Gelineau to help rethink its operations. While the hospital was profitable and had strong operations, trustees increasingly were convinced they needed a change of leadership — their CEO, they said, simply wasn't investing in the new care delivery models other hospitals were establishing.
"That CEO was outplaced," Gelineau recalls.
Similar scenes are playing out in hospitals across the country as executives and board members confront an era of transformational change in health care, and consider a baffling array of potential partnerships, affiliations and collaborations. To meet the challenge, leaders need to pick up a related set of skills — including partnership building, risk management and the analytical chops to handle new payment models and increased regulatory and reimbursement pressure — all of which can be extremely stressful for executives already managing complex institutions. Some observers worry burnout and turnover are bound to accelerate in hospital C-suites.
In 2010, hospital CEO turnover averaged 16 percent, according to a 2011 study conducted by the American College of Healthcare Executives. The median tenure for community hospital CEOs was only four years in 2011. ACHE CEO Thomas Dolan attributes most of the turnover to demographic inevitability as baby boomers reach retirement age, but health care executives and leadership experts agree that executives of all ages face daunting challenges.
"There's a high stress level of the health care industry going into an era where the patients or family members or community members seeking care know more, want more and feel like they deserve more, and everything we get economically is a reduction in pay," says Tony Armada, president of Advocate Lutheran General Hospital in Park Ridge, Ill. "Burnout occurs because you're either doing the same thing, and the same thing will lead to burnout, or … engaging in a variety of things becomes a stressor."
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The Camden Group President Steve Valentine agrees. "Things are a lot tougher in this environment," he says. "Some people who were able to exist in a more cordial marketplace are seeing this change coming. They see the angst of doctors, and maybe some board members who want to exert more influence and are asking tougher questions. And CEOs are saying, 'I'm fully vested, or maybe I've got a couple of years left.'"
Other CEOs may not want to invest several years in a major organizational transformation, says Anthony Cirillo, president of Fast Forward Consulting.
But not every CEO is heading for the exit. Many — including plenty of executives approaching retirement age — say the rapid evolution of health care offers an unprecedented opportunity to leave a mark on their hospitals and communities. Far from feeling cowered by health care's transformation, they're reinvigorated by it and eager to transform their own organizations to meet and thrive in the new era.
One strategy: rebuilding the entire leadership structure to distribute the weight of all the changes. That includes adding more C-suite executives with clinical experience to manage physician alignment and quality initiatives, delegating more strategic responsibilities to chief financial officers and developing leadership and team-building competencies among senior leadership.
"There are new ideas, and a lot of work and uncertainty with that, but also frankly an exhilaration that a lot of progress can be made," says Robert Laskowski, M.D., president and CEO of Christiana Care Health System in Wilmington, Del.
From four walls to population health
The CEO's role is shifting from a focus on the operations of an acute care facility to a broader, community-based emphasis on population health. That requires competency in risk management, partnership building, and quality and patient safety.
CEOs traditionally have "led organizations [in] taking care of illness," says Dan Sinnott of Sinnott Executive Consulting. "Now [they're] going to be paid on keeping the community healthy. That's a skill set [they're] not aware of."
Cirillo worries that not enough organizations are transitioning their strategic vision to focus on the broader goals of community health. "Organizations are getting leaner and providing more quality, but they're still about taking care of patients who end up in their beds."
Adapting to a population health model — while simultaneously coping with more regulatory pressure from the Centers for Medicare & Medicaid Services, means hospital CEOs and other senior executives will need to be able to grasp process improvement and interdisciplinary team theory, says Robert Wise, president and CEO of Hunterdon Medical Center in Flemington, N.J. "The combination of leadership and analytical skills is becoming much more balanced in being successful than before," Wise says.
In addition, many of the emerging models of care — from accountable care and medical homes to more informal collaborations with other providers and the surrounding community — require strong interpersonal skills, ACHE's Dolan says.
The new approach, says health care futurist and H&HN contributor Joe Flower, also requires more of an entrepreneurial bent, as providers are forced to identify opportunities for growth outside the four walls of the hospital. For instance, Flower says, hospitals may want to add clinics in both the most and least profitable areas of their customer base — to attract patients from the former areas and treat patients early in the latter, leading to fewer hospitalizations down the road.
"Most health care executives in the office now are not used to thinking that way," Flower says. "They didn't come up through marketing or system thinking. They're used to thinking, what do you do to make this institution run well?"
At Christiana Care Health System, leaders created the Christiana Care Value Institute to address questions of value as they relate to patient care, access, affordability and other aspects of care delivery, Laskowski says. The institute's findings help inform Christiana's strategic decisions.
"In this environment, there are lots of change and lots of potential change," Laskowski says. "How do we position ourselves for the future? We settled on an approach, which is broad, but specific, to emphasize value."
A new leadership team
Managing in an era of greater complexity will take more than simply a versatile, entrepreneurial CEO — it will take a leadership team that can complement the top position effectively, says Tim Morgan, chief operating officer at the health care consulting firm B.E. Smith. For instance, CFOs may need to focus more on strategy than in the past when "watching the money and making sure the revenue cycle was working" was their main priority.
"A traditional CFO is not going to be effective in the new era of health care reform, with pay for performance, strategic alliances and ACOs," Morgan insists. "A new CFO has got to have a skill set with a strategic view and an understanding of clinical quality."
Other institutions might add more focused service-line management responsibilities, Valentine says. CEOs who include clinical expertise on their leadership teams can delegate certain critical responsibilities and relieve some pressure on themselves. Once those new executives are in place, hospitals can reorganize their leadership teams to create positions that directly address certain new imperatives. For instance, it might make sense for some hospitals to have an ACO president or president of an employed physician group.
Last year, Advocate Lutheran General Hospital reengineered its leadership team along those very lines, adding four new clinical executive director positions at the same time it eliminated its chief operating officer position. All four positions report to the hospital's chief nursing executive and vice president of patient experience. The changes, Armada says, enable the hospital to develop its clinical leadership capabilities.
"We're a clinical enterprise," he says. "We're now organized toward our service lines and an enterprise model. … What I've concentrated on is hiring very good leaders to bring in the pipeline of necessary leadership."
Kathryn McDonagh, vice president of executive relations with Hospira and a former CEO of hospitals and health systems, says it's also crucial for hospitals to invest in both leadership development and team-building training. "I've been there," she says. "It's tremendous pressure. But what can really buffer and [ease] stress is a highly competent team and a team that works well together."
The C-suite isn't the only place CEOs should be able to find supportive skills. Cirillo says that it might be a good time for hospitals to add board members with entrepreneurial backgrounds, and Dolan says trustees with business and risk management experience make strong additions to the governance team.
Succession planning still key
Experts advise hospitals to maintain formal succession plans that evaluate potential gaps in leadership and identify future leaders. Only 20 percent of hospitals now have one, and that can set back progress when a CEO steps down. According to a 2008 ACHE study, 25 percent of hospitals took six months to a year to fill a vacant CEO position, while 5 percent needed more than a year to make a hire.
"That's a long time to be without permanent leadership," Dolan says. A leadership gap often prompts other executives to leave and paralyzes operational decision-making. "The data's clear from the outside. The most successful transition is when you groom an internal candidate."
Morgan says organizations should work regularly to identify potential leaders and give them assignments that reflect the breadth of the hospital's operations. "At GE, if there's a rising star identified in a formal way, they take that star and move the person around the organization," Morgan says. "You're going to put in time in finance, marketing, business development, and you're going to spend time overseas. When you move up in the organization, you're going to have spent time everywhere. We should be doing that with young up-and-coming executives in hospitals."
That's similar to the approach at Hunterdon Medical Center, where senior leaders identify what qualifications would be needed if an opening occurs on the leadership team and among department heads. Leaders then can assess strengths in the current staff.
"It's useful in bringing to some of the leadership team's attention concerns they may have missed, or qualified talent for an assistant head or department head position," Wise says.
Succession planning also can help hospitals diversify their workforces, Hospira's McDonagh argues, by identifying women and other minorities who may be ready, willing and able to move up. "The pipeline's lacking and we need more leaders, and it certainly doesn't target women and other leaders [who are] trying to make that advancement," she says.
Challenge or opportunity?
While health care transformation will bring a unique set of challenges to the C-suite over the next several years, management experts say boards and CEOs also should remain alert to the usual pressures on top leadership. Morgan recommends that trustees monitor their CEOs to ensure they are maintaining a modicum of work-life balance. "A board should make a concerted effort to make sure the hospital CEO is balancing things, and not working seven days a week."
Some CEOs undoubtedly will view the next several years as a burden better left to others, and they will opt to leave the profession. But others will see a once-in-a-career chance to reinvent how their institutions and communities deliver care.
"For myself, this is a perfect way for me to change the position in my organization," Hunterdon's Wise says, and "to move from being an insider to an outsider and from being a superintendent of services to being a facilitator of health improvement in Hunterdon County."
Should I Stay or Should I Go?
Older CEOs are faced with a stark choice: Retire after several decades in health care or realign their organizations to meet new imperatives on quality and cost efficiency. For CEOs who commit to the future, that requires a major change in approach, says health care consultant Anthony Cirillo. "True visionary CEOs … are not necessarily steering the ship, but empowering people."
Time For a Succession Plan
Less than 20 percent of hospitals have a formal succession plan, notes ACHE President Thomas Dolan, adding that it generally takes several months for hospitals to find a successor. "As we go through this period of level or increased turnover, management succession becomes all the more important."
Learning to Lead, Again
For hospital CEOs who embrace the challenges ahead, it's key to understand what's required to thrive in a new era, says health care consultant Dan Sinnott. That can mean everything from transitioning an organization from an inpatient to outpatient focus to implementing population health strategies to partnering creatively with physicians, insurers and other emerging partners, Sinnott says. "The rules are still being written, and it's really requiring new and different leadership skills."
Rely on Your Team
Leaders also should be prepared to delegate key tasks to other senior executives, says Tim Morgan, chief operating officer at the health care consulting firm B.E. Smith. That could mean relying on a chief financial officer for more strategic advice, or adding more clinical expertise to the leadership team or C-suite. "A major factor to being successful and not being overwhelmed is their team. There should be an encouraging, very high-quality team surrounding the CEO."