Healthcare's provider sector has seen a lot of consolidation in recent months. Several major acquisitions and mergers were announced just this past summer, such as Franklin, Tenn.-based Community Health Systems' plan to acquire Naples, Fla.-based Health Management Associates, and Dallas-based Tenet Healthcare Corp's plan to buy Vanguard Health System in Nashville, Tenn.
Centralization comes along with the consolidation trend. Upon merging, health systems are centralizing functions that were previously handled by individual hospitals — like human resources, finance, marketing and even service line management — to one regional division or system location. The system takes on many responsibilities that were traditionally handled by individual hospitals and their CEOs; therefore, the traditional role of a hospital CEO is undergoing some change.
"With centralization, the [site hospital] CEO role changes from overseeing specific functions to being a liaison," says Donna Padilla, senior partner at Witt/Kieffer, an executive search firm. Leadership roles become more matrixed and integrated in a centralized environment, meaning reporting lines become more complicated. "It's a lot more team managing than we've seen before," she says. Hospital CEOs are still the lead at their facility, but must communicate with and report to system leaders on many functions.
Necessary traits
Even though centralization and leadership involvement at the system level has increased, there is still a role for hospital-level CEOs — it's just different than in the past. Hospital-level CEOs in a centralized world need a well-rounded resume, according to Ms. Padilla.
"Search committees look for experience at a local hospital but also system experience," she says. Usually, leaders with experience at the system level know how to work with the system and individual hospitals in a seamless way. "[Systems] love to see folks move from hospital leadership to system leadership and back."
If an individual doesn't have experience in a system-level leadership role, that by no means translates into an unsuccessful hospital CEO — as long as he or she can work well with others. "They need to be able to play in a bigger sandbox," Ms. Padilla says. The ability to collaborate with system leaders will be crucial for hospital CEOs' success during consolidation and in a newly expanded system with centralized leadership.
Tips to handle change
For many CEOs whose hospitals recently joined a system, the changes associated with centralization can seem daunting. Transitioning into a matrixed, centralized leadership role can no doubt be difficult. "It's not always intuitive. There can be tension between control and accountability," Ms. Padilla says. A hospital CEO is accountable for the results at his or her organization, but much of what happens may be managed by someone else at the system level.
CEOs can ease the transition into the centralized healthcare world with these two tips:
• Build a relationship with the system. Connecting with system-level leaders will help hospital CEOs understand the larger system's goals and the broader plan to reach those goals, according to Ms. Padilla. The goal of centralization is not to make hospital CEOs miserable, she says, so CEOs need to find out the system's real intent. Clear and open lines of communication are essential.
• Reach out to mentors or peers. Many CEOs have gone through this type of change in the last few years, as the trend of consolidation spreads throughout the industry. She urges CEOs to reach out to trusted peers who have been in matrixed leadership roles longer. "Find out how they evolved their leadership style," she says. Any tips gleaned from peers in similar positions can make the transition smoother and easier for everyone involved.