10 Attributes of Successful Modern-Day Hospital and Health System CEOs
Ken Hanover, CEO of Beverly, Mass.-based Northeast Health System, entered healthcare management 38 years ago. He says titles like "superintendent" instead of CEO reflect a different culture from what we see in the hospital industry today.
"It was very much akin to a caretaker role," says Mr. Hanover. "Those were more stabilizing, managing types of positions rather than positions requiring dynamic leadership skills. Now you fast forward, and [hospitals] are much more diverse and complex in terms of their organizational and corporate structures and responsibilities."
Andrew Chastain, vice chairman of Witt/Kieffer, an executive search firm, has noticed a similar trend in his work. "One thing we're seeing is bifurcation: Big systems are getting bigger and small hospitals and systems are really struggling," he says. This distinction means there is no uniform "hospital CEO" anymore, if there ever was. There are executives who lead health systems and executives who guide hospital campuses, and those distinct settings call for different professional qualifications.
Along with adopting more corporate behaviors, hospitals and health systems have become broader institutions encompassing numerous care settings. Health information technology has become more advanced, sophisticated and expensive. Affiliations span throughout state regions, if not countries, for some systems. Physicians are taking on leadership roles, patients' opinions are influencing reimbursement and hospitals are taking on more financial risk as traditional payment models begin to phase out.
The CEO role doesn't exist in a vacuum. These internal and external changes are molding the men and women at the helm of our hospitals, demanding new skills and capabilities. Here are 10 skills, behaviors or leadership traits that have come to a head in recent years in the hospital industry.
1. Effective advocacy and political skills. "As the amount of dollars that flows into the institution from federal and state funding grows, knowledge of the political process and [familiarity with] people who are involved in that political process is absolutely essential," says Mr. Hanover. It is the CEO's responsibility to educate leaders about the organization and effectively advocate for legislative initiatives that will affect the hospital or system. These duties take on a higher level of importance and visibility if a hospital or system merges with another, as was the case with Mr. Hanover. He led Northeast through its affiliation with Lahey Clinic, the teaching hospital affiliated with Boston-based Tufts University School of Medicine, in spring 2012.
2. Zero tolerance for animosity toward physicians. Some hospital CEOs today still don't enjoy interactions with or addressing the concerns of their physicians. Many of these leaders believe physicians are often demanding, self-serving, and unreasonable in their expectations from management. As healthcare continues to become more integrated and physician-led, this type of management attitude will be a "non-starter" and completely unacceptable, according to Mr. Hanover. "Healthcare is all about delivering care. If you don't like dealing with physicians, you're in the wrong profession."
3. A firm grip on trends beyond the local market. It's valuable for CEOs to extend their strategic thinking beyond the metropolitan area or local marketplace, and understand the dynamics of other regions and systems. This is part of leadership development that calls for more peer-to-peer discussions — an interaction that goes beyond traditional mentoring.
One of the best ways for CEOs to expand this understanding and grow as leaders is through affinity groups, according to Mr. Chastain. "These are small, think tank-like environments where leaders can develop relationships with their peers and find out what is going on in other markets," he says. "Some candidates say that is the most important time they have away from their organization."
4. A focus on "how-to" thinking. The complexity within the healthcare and hospital environment has affected the decision-making process in the C-suite. With more variables to consider, the largest challenge facing many CEOs is not deciding what needs to be done, but how it will be done. This is the key difference between a sustainable plan and one that unravels prematurely. "The shortest distance between two decisions in healthcare is not always a straight line," says Mr. Hanover. "I spend far more time thinking about how to implement a decision than almost anything else I do."
5. Experience in maintaining independence. This trait is not universally appreciated, but is more attuned to independent hospitals or standalone campuses that are fiercely trying to remain such. "At standalone [hospitals], many boards ask us if [the candidate] has been successful at remaining independent," says Mr. Chastain. This comes as a direct parallel to the traditional and common request for leaders who are adept and experienced in mergers and acquisitions. To some hospital boards, a CEO who has led independent hospitals while maintaining fiscal health and autonomy is just as valued as a CEO who helps hospitals and/or systems through the organizational repercussions of a merger.
6. Appreciation for business savvy. Hospital and health systems' demands for physician leaders are not slowing down — that is an issue of supply not meeting the high demand. But simultaneously, a refined appreciation for leaders with business and financial backgrounds is also emerging, according to Michael Abrams, author of Healthcare at a Turning Point and co-founder, vice president and managing partner of Numerof & Associates, a strategic management consulting firm.
"I've seen a growing trend in healthcare delivery: to hire people from other industries with the expectation that their experience with marketing or analytics on the business side will translate in the healthcare environment," says Mr. Abrams. In other words, some organizations may find it is worth the time and investment to teach an executive about healthcare in exchange for solid and prominent business expertise, and Mr. Abrams expects this practice to persist in the years to come.
7. An enterprise frame of mind. When it comes to leadership development, Mr. Chastain says COOs do not necessarily ensure success as a CEO. This may be a common progression in healthcare, but it should not be an assumption. COOs hoping to assume the CEO post should be ready to demonstrate a range of skills and the ability to drive the less-tangible aspects of an organization. "Being able to run operations efficiently doesn't translate to running an entire enterprise effectively," says Mr. Chastain. "If you are a COO, you have to convince a board that you have the capabilities to lead strategic development, balance sheet management, physician development and other aspects of the enterprise."
8. Staying three steps ahead. It speaks volumes when a CEO candidate can demonstrate how they pushed an organization to continually innovate itself. This is a trait that jumps off the page, according to Mr. Chastain. "It shows they're not just reading the latest publications and trying to implement those [ideas], but are doing critical thinking in their organization [and asking], 'How do we get ahead of healthcare changes and define what we will be rather than being defined by others?'"
It's important to note the distinction that CEOs are not necessarily responsible for the infrastructure or detailed aspects of the planning, but are tasked to create an environment where such innovation can occur. "As CEO, you aren't a chief innovator. But you establish the culture where the innovation happens," says Mr. Chastain.
9. Involvement in regulatory and compliance matters. One of the most common critiques of the Patient Protection and Affordable Care Act is the multitude of regulatory demands it places on hospitals. The American Hospital Association has loudly voiced this criticism, saying "the flood of new auditing programs…is drowning hospitals with a deluge of redundant audits, unmanageable medical record requests and inappropriate payment denials," wrote AHA President and CEO Richard Umdenstock. Aside from audits, hospital leaders also have to dedicate more time to ensure their physician integration strategies comply with Stark Law and the federal Antikickback Statute.
Given this intense environment, regulatory compliance has shifted front and center for many hospital CEOs. "You have to be very thoughtful and knowledgeable about [compliance], or else the organization can end up paying millions in fines," says Mr. Hanover. Less-experienced CEOs may delegate regulatory responsibilities to managers who aren't equipped to deal with the broader issues auditors are concerned with, according to Mr. Hanover. Frustratingly, the most effective way for leaders to prepare for regulatory challenges is through real-life experience. "Young CEOs need many diverse experiences leading their institution, so they can comfortably know what they can delegate and not delegate," says Mr. Hanover.
10. Maximizing return of assets on mission. One of the key differences between a hospital and health system CEO is the latter's focus on managing the organization's assets to maximize the return of its mission. "[CEOs of big systems] are really managing a corporation," says Mr. Chastain.
"Boards are looking for CEOs to leverage the health system's assets to deliver the maximum benefit of its mission. As systems grow, the CEOs must delegate many of the functional and operational leadership efforts to their team," says Mr. Chastain. "With consolidation and the growth, regions and divisions of the very large systems are larger than many stand alone systems in the past. The CEOs of these organizations must delegate effectively. They can’t be overly involved in the day-to-day operations."
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