Lawyers: The new player emerging in the health system C-suite

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Amid the shift to value-based reimbursement and an increasingly stringent regulatory environment, more hospitals and health system leaders have installed in-house legal teams to support compliance and transactions with other systems. As healthcare organizations increasingly seek lawyers to serve in roles beyond general counsel, many are even recruiting attorneys into the C-suite, recognizing the strategic value of chief legal officers and other senior executives with legal backgrounds.

"Gone are the days where CEOs could afford to say, 'I hate lawyers,' or, 'I don't want to deal with lawyers,'" says Werner Boel, principal and practice leader of legal services at executive search firm Witt/Kieffer.

The current healthcare era is characterized by rapid consolidation, as rising standards for quality and value under the Affordable Care Act have spurred many hospitals and health systems to pursue mergers and acquisitions to maintain a competitive advantage and remain financially viable. At the same time, heightened vigilance by regulators in detecting privacy breaches and violations of Stark Law, Anti-Kickback Statute and other laws, has created a more challenging environment to operate in as a healthcare executive.

In particular, it is imperative for senior executives to re-evaluate the important role of compliance as it pertains to the hospital's business. "If [senior leadership] can tell us what their goals are, we can provide them a legal structure to get there," says Mr. Boel. "There is enhanced screening right now from regulatory bodies, including the OIG, FTC and CMS. [Legal counsel] can help them navigate that level of oversight."

Building a strong in-house legal team
While smaller, critical access hospitals may not have the financial resources to invest in an in-house legal department, many larger healthcare systems already have high-functioning legal teams, according to Mr. Boel. As organizations continue to evolve under the ACA, more hospitals and health systems that did not traditionally have legal teams will begin building them from the ground up.

In today's complex healthcare environment, hospitals' in-house legal teams can no longer be a one-man show, according to Mr. Boel. To really be a valuable asset, legal teams must emphasize the "team" element and include diverse players, especially those who specialize in transactional and regulatory law.

"Every organization faces unique challenges," says Mr. Boel. "The more creative and broad-minded the legal counsel team, the more effective they can be helping CEOs and governing boards navigate uncharted healthcare waters."

In addition to recruiting lawyers to serve on the hospital's legal team, it is important to ensure senior leadership is receptive to the legal team's ideas, concerns and assessment of the organization's needs.

"We have seen an evolution, from the time when legal counsel got called in after the fact to now, when leaders with legal backgrounds are brought in early in any discussion," says Mr. Boel. By engaging the legal team early on in setting the organization's strategy, executives have the ability to incorporate a legal perspective and address any compliance or regulatory concerns from the start, opposed to identifying them later and at a greater cost.

Seeking executives with solid legal backgrounds
Understanding the regulations that shape healthcare organizations' strategies is critical to success. While business acumen will always be a primary competency in the hospital C-suite, adding individuals with legal background to the senior executive team can be extremely valuable.

"Legal experience is no longer limited to a general counsel role. Instead, organizations are looking to members of the C-suite to have the legal background to deal with the current healthcare environment's steady stream of new regulations, consolidations and joint ventures," says Mr. Boel. "As health systems and senior leaders begin to embrace legal counsel, the future of senior leadership is going to look dramatically different."

While many organizations are establishing law offices in house, others seek to elevate attorneys to serve as compliance officers or even CEOs.

Legal training and business acumen are two distinct skill sets, but those who demonstrate strong ability in both are uniquely positioned to lead healthcare organizations through this complex period of change. Many chief legal officers, recognizing the potential to emerge as more strategic leaders, are beginning to pursue MBAs or take on more operational roles in the health system, according to Mr. Boel.

Whether or not a hospital is prepared to invest in its own in-house legal department or promote an attorney to CEO, the reality is hospitals and health systems must be privy to the ever-changing rules and regulations enforced by federal and state agencies. Embracing attorneys as strategic partners can be a determinant for thriving under healthcare reform.

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