SKILL 2: Data-driven

Perhaps the most significant change in the health care environment is that hospital performance data are now available to buyers and patients, says Paul H. Keckley, managing director, Navigant Center for Healthcare Research and Policy Analysis. Those data increasingly drive contracting and purchasing decisions. Mastering it is an essential strategic skill for hospital CEOs — and one that often is lacking.

“I have done hundreds of hospital board retreats and, invariably, everyone sees quality of care and their medical staff as their greatest strengths,” Keckley says. “It’s like Lake Wobegon, where all the children are above average, but that’s not reality. And the people who can tell you who does what well come from the payer side, not the hospital side.”

Insurers and employers increasingly use commercially available analytics and models that pinpoint inefficient or inappropriate care. CEOs need to be familiar with these as well, and develop the internal capacity to capture and analyze data to drive performance improvement and strategic decisions.

The CEO must lead the transformation because it requires major capital investment, as well as overhauling clinical and administrative structures and practices. It also requires an ability to speak truth to power, persuasively, Keckley adds.

In the past year, Phil Dalton, senior vice president of physician strategies at VHA Inc., worked with California’s attorney general to arrange mergers and acquisitions of 30 failing hospitals. The CEOs and the boards “were ignoring the signals of market change and financial distress,” he says. “The boards want to remain independent, and the CEOs do, too, because they like the autonomy.” However, “you have to put providing services to the community ahead of the board’s comfort level. Distressed hospitals need a leader willing to tell the truth, even if it means things have to change.”

SKILL 3: Motivated executive

To succeed not just as an analyst but as a transformational leader, the new CEO also must be motivated to do what is necessary, says executive recruiter Peter Rabinowitz, president of P•A•R Associates, Boston. “If the board sees a need to rationalize the organization, which may mean some people have to go, the CEO needs to understand and want to go through with it — not just building, but taking people out if necessary. If you have someone who doesn’t want to do that, they will not be a good candidate.”

On the other hand, while change often means new roles for many employees, it doesn’t always require mass layoffs. Scripps Health in San Diego has undergone a complete operations reorganization, saving $350 million in costs without a layoff, says system CEO Chris Van Gorder. He believes committing to the well-being of employees builds trust and helps them to take the risks needed to truly change.

Rabinowitz advises developing an organizational strategy first and letting that drive the CEO candidate selection process, as White Plains did. Figure out in concrete terms what needs to be accomplished by a specific time, and then find a candidate with the skills and motivation to do it.

SKILL 4: Clinically competent

Creating a clinically integrated delivery network implies a high level of clinical competence to assess needs and gaps in the system, develop new clinical capabilities to address them and coordinate complex services going forward. This requires close cooperation among physicians who will be asked to work together and individually in new ways.

The new CEO doesn’t necessarily need that level of clinical competence personally. But as the “owner” of system resources and processes, the CEO must convene, develop and lead clinical leaders who can develop a physician plan that fully supports system strategies.

Charisma and a coherent vision of how that future system will work — backed by evidence-based practice and credible performance data — are essential to gain physician support, Giella says. “You need physician buy-in. It’s easy to acquire a doctor’s practice; it’s much harder culturally and technologically to integrate them. If they are still running their own business and not referring to the system, it’s not going to work.”

Boards often seek a physician as CEO. This may not be necessary or always wise, Dalton says. “There is an assumption that because they are physicians they understand clinical integration, but I often don’t find that to be true. They are highly intelligent and talented, but their experience generally is not in running organizations, and if it is, it is a physician organization.”

In fact, more nurses have the management background to take on senior leadership roles, says Michael Rowan, president for health system delivery and COO at Denver-based Catholic Health Initiatives. “Nursing historically has been more involved in management, and they are clinicians.”

Nonetheless, CHI appreciates the value of physician leadership and proactively identifies and develops physicians as future leaders. Many of its local systems use dyad management in which services are headed by both a clinical and administrative leader.