1. Assess the problems with the departing CEO. If your CEO is departing on bad terms, Mr. Troutman says you really have to take a much different approach than if the separation was mutual. “First of all, the board and medical staff has to do a good assessment of where the departing CEO was strong, and where their problems were,” Mr. Troutman says. “What needs to be changed for the next CEO?” For example, if your CEO and medical staff clashed because your outgoing CEO was a hothead, you might want to look for candidates who are more thoughtful, analytical and calm. If your CEO was bewildered about how to address the hospital’s financial or regulatory issues, you should look for candidates who can discuss clear objectives and plans for the hospital’s future.
Talk to your hospital executives to gather this information, but don’t forget about the medical staff. Physicians can often offer a perspective that hospital executives lack, and if the CEO is leaving in part because of bad relationships with the medical staff, those opinions are essential. Your board probably already has physician members, so solicit their feedback. Invite department heads to contribute their opinions on the outgoing CEO, while keeping the search process as confidential as possible.
2. Decide whether the CEO is the only executive who needs to leave. Sometimes the issues that prompt the departure of a hospital CEO mean the departure of other executives too. “If a hospital has financial problems, maybe the new CEO has to also come with a new CFO,” Mr. Troutman says. “If that’s the case, you’re not necessarily going to want a lot of input on the recruitment process from your outgoing CFO. The same thing would be true if you have quality of care or clinical issues, and you need to get rid of your chief nursing or chief clinical executive.” While you don’t want to freeze an executive out of the process completely, you should make sure their opinions aren’t carrying too much weight with the other members of your selection committee.
3. Select a strong interim CEO. If CEO is leaving involuntarily, he or she probably won’t stay around the hospital too long to train the new CEO. In this case, you need to appoint an experienced interim CEO who will keep your hospital stable until you find a permanent person for the position. Generally, hospitals appoint an interim CEO one of two ways: they either search for a CEO outside the hospital, or they choose a respected hospital executive to fill the position. Mr. Troutman says that both methods have their downsides. Choosing an outside interim CEO can be difficult because the candidate will take longer to learn the hospital’s processes, but choosing an internal interim CEO may give the candidate the impression that they are on a “trial run” for the permanent position.
“You want to think about the interim CEO’s motivations,” Mr. Troutman says. “Are they going to be more willing or less willing to deal with difficult problems? Are they going to try and put those off, or are they going to take chances you wouldn’t want them to talk because they’re trying to make an impression?” In order to get the best possible work out of your interim CEO, Mr. Troutman recommends choosing an outside hire and making it clear that the position is temporary. If you don’t have the luxury of hiring outside the hospital, make sure your internal interim CEO — whether the former COO, CFO or another executive — understands that they will eventually return to their original position.
4. Figure out which issues need to be dealt with immediately. When a hospital ends a troubled CEO relationship, it’s likely that there will be other issues too, whether they are related to finances, patient safety or physician relationships. No matter who you choose as an interim CEO, you should find other people in your organization you can turn to during that interim period. “Talk to trusted employees about what’s really happening at the hospital,” Mr. Troutman says. “Which issues are going to have to be dealt with immediately, and which issues are ready to bubble to the surface?”
When dealing with those immediate issues, you want to identify department heads who can talk to the medical staff, reassure them about the transition and talk over any issues — patient safety, for example — that need to be dealt with. On the hospital board, identify a few tenured members who can work with the interim CEO to get him or her up to speed on hospital problems and identify a few immediate solutions.
Don’t stop there: read 3 Ways to Transition Between CEOs When the Outgoing CEO is Leaving on Good Terms.
