Hospi­tal CEO turnover rate sta­ble

But it’s not likely to stay that way: ACHE pres­i­dent

Modern Healthcare - - FRONT PAGE - Ashok Sel­vam

Hospi­tal CEOS left their jobs at the same rate as the year be­fore with a turnover rate of 16%, but the pres­i­dent of the Amer­i­can Col­lege of Health­care Ex­ec­u­tives isn’t call­ing that good news.

Thomas Dolan, ACHE pres­i­dent and CEO, pre­dicts the rate will con­tinue to rise, pos­si­bly re­turn­ing to the all-time high of 2009, when lev­els reached 18%.

“I think with the re­tire­ment of baby boomers, and fur­ther tur­moil, we’re go­ing to see that level may go a lit­tle higher,” Dolan said.

The turnover-rate data re­leased last week by the Chicago-based ACHE re­ported the new­est num­bers from 2011. Dolan holds firm that it takes CEOS at least five years on the job to make a sig­nif­i­cant im­pact on their or­ga­ni­za­tions. He’s wor­ried, he says, be­cause the me­dian ten­ure of a hospi­tal CEO is four years, with 58% of cur­rent CEOS at their posts for fewer than five years.

ACHE re­search ver­sus that con­ducted by Hins­dale, Ill.-based ex­ec­u­tive search firm Cristkolder As­so­ciates shows the CEO turnover rate at hos­pi­tals is higher than that at large com­pa­nies. Cristkolder re­leased data last year from 669 com­pa­nies from the For­tune 500 and Stan­dard & Poor’s 500 that showed the turnover rate at those firms was 13% in 2010. That rep­re­sented the high­est rate since 2005, and their data from 2009 showed the rate at 10%, which rep­re­sented a 15-year low.

Even if re­cruiters at­tempt to lure them away from their jobs, CEOS at larger com­pa­nies tend to stay at their posts in a tur­bu­lent eco­nomic cli­mate, said Matt Mcgreal, a prin­ci­pal at Cristkolder.

“The devil that you know is bet­ter than the one you don’t,” he said. “You know what’s wrong with your com­pany.”

From what Mcgreal’s seen—tak­ing into the ac­count the larger sam­ple, as the ACHE sur­veyed 4,542 hos­pi­tals—the health­care sec­tor typ­i­cally has a higher turnover rate com­pared with those larger com­pa­nies, he said. He pre­dicts CEO turnover at those larger com­pa­nies will in­crease in the near fu­ture, mir­ror­ing the trend pre­dicted in the health­care field by Dolan.

The stress lev­els hospi­tal em­ploy­ees en­dure is an­other fac­tor in the higher turnover rate, said John Tis­cor­nia, man­ag­ing di­rec­tor of Huron Con­sult­ing Group in Chicago. He wishes hospi­tal boards showed more sup­port for their CEOS. He cites the pres­sures from the evolv­ing in­dus­try, not only be­cause of the Pa­tient Pro­tec­tion and Af­ford­able Care Act, but also changes in the in­sur­ance in­dus­try and re­im­burse­ment.

Get­ting the board in­volved is im­por­tant. One prob­lem Dolan cited in find­ing a CEO who will stay is that many hospi­tal of­fi­cials de­lay es­tab­lish­ing a suc­ces­sion plan be­liev­ing that they have to wait un­til the end of the new CEO’S hon­ey­moon phase. That’s a mis­take, Dolan says.

“The av­er­age is in four years the per­son is go­ing leave the or­ga­ni­za­tion; we should start CEO suc­ces­sion the day the new CEO comes on­board,” he said.

Tis­cor­nia has a dif­fer­ent take suc­ces­sion: “The plan should be an on­go­ing plan, con­tin­u­ally up­dated ev­ery year,” he said. “It’s not a plan you lay out only three to five years, it’s an on­go­ing, liv­ing plan for suc­ces­sion.

Dolan also said hos­pi­tals should make more in­ter­nal pro­mo­tions, as those in­di­vid­u­als will have a bet­ter fa­mil­iar­ity with per­son­nel, the fa­cil­ity’s cul­ture and are more likely to have bet­ter suc­cess in con­tin­u­ing their pre­de­ces­sor’s poli­cies. Health­care of­fi­cials also may just lack enough time to make re­ten­tion a pri­or­ity, as they’re deal­ing with changes in pol­icy in­clud­ing the re­form law, Dolan said.

He put much of the bur­den in retaining a CEO on the hospi­tal board. He said boards need to do a bet­ter job at se­lect­ing can­di­dates and en­sur­ing new hires have a bet­ter un­der­stand­ing of the board’s goals and the hospi­tal’s in­fra­struc­ture. Once the CEO is hired, the board’s work isn’t fin­ished.

“There needs to be more pos­i­tive com­mu­ni­ca­tion be­tween the board and the CEO; is­sues need to be ad­dressed im­me­di­ately,” Dolan said. “When the board or CEO puts off ad­dress­ing dif­fi­cult is­sues, by the time they do ad­dress those is­sues, it of­ten might lead to the ter­mi­na­tion of the CEO.”

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