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Why Hospital Success Depends on Succession

December 09, 2014 14:02 PM (GMT-04:00)
Healthcare News

Why Hospital Success Depends on SuccessionHealth care reform has exacerbated an already pressing issue for hospitals and healthcare systems across the U.S. – the lack of a robust pipeline of leadership talent. Unique industry challenges, including aggressive consolidation, cost containment burdens and compliance requirements, are all contributing to a lack of qualified C-level executives available – or willing – to take the helm at our nation’s facilities.

The trend should sound an alarm for hospital boards and executive suites to refocus on succession planning.  Yet only about half of hospitals said they regularly conduct succession planning for the CEO position or other top leadership roles, according to a 2014 study by the American College of Healthcare Executives (ACHE).

Hospital CEO Turnover Reaches Record High

The ACHE survey found that hospital CEO turnover reached an all-time high of 20 percent last year, the highest since that organization began monitoring the rate in 1981.

The Splitting of Healthcare Leadership Roles

An increasing number of healthcare organizations are splitting what was previously one leadership role into in two in order to gain the skills necessary to lead in a more complex environment, according to Cejka Executive Search. Today’s healthcare leadership teams must possess business acumen, clinical expertise, technology prowess, be analytically inclined, excellent communicators and innovative problem solvers – skills that are difficult to find in one person, thereby creating the need for a greater number of executives.

Shortening Retirement Window among Healthcare Leaders

With almost 50 percent of the members of ACHE over the age of 50, the window for retirement among healthcare leaders is shortening and creating a deeper void for talent. An analysis by Success Profiles published in Becker’s Hospital Review found that 26 percent of all healthcare leaders (executives, directors and managers) have less than 24 months until their retirement; and that figure increases to 38 percent for the executive-only level.

Not Enough Bench Strength

The analysis also found that leadership readiness for more complex roles had significantly dropped, including the years of development required before a person was prepared to fill an executive position. Whereas in 2008-2009, 60 percent of individuals were ready for promotion immediately, by 2012-2013 that number fell to 31 percent.

Time to Move Succession Planning to Front Burner

It’s understandable why succession planning often gets moved to the back burner, given the state of the health care industry. But with the average tenure of CEOs being less than four years, chances are most hospitals and health care systems will undergo a significant leadership transition very soon.

Succession planning is a critical activity to ensure health system longevity. Now more than ever, it is crucial for health care providers to be prepared with strong leaders capable of navigating the changing healthcare environment to ensure success in the future.

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