The way things are going, hospital CEOs are turning over at a rate only seen in retail or, dare I say it, the fast food industry.
That's not quite true, but it's really not that far off the mark.
According to the American College of Healthcare Executives, hospital CEO turnover reached 18% in 2009, a rate equaled only four times since tracking began in 1981, their survey says.
There's some interesting stuff in there. They track turnover rates by state, and much of the turnover seems to be in the west. ACHE attributes much of the rate to demographics—CEOs who are part of the baby boom generation are getting old and they're ready for retirement. But I don't completely buy it.
Our survey tells a slightly different story. According to the HealthLeaders Media Industry Survey, more than 88% of hospital CEOs are satisfied or very satisfied with their job, and only just more than 5% plan to retire during the next year. So what gives?
Well, partially, it's because the two surveys use a different sample of respondents, but there aren't that many hospital CEOs out there. And still, the numbers are pretty far apart.
So is there something more at work here. After all, some hospitals and health systems have been squeezed financially over the past 18 months as they haven't been in a very long time. In the past, some hospitals with big structural problems could solve or at least hide those problems through borrowing. Access to capital was much less constrained than it is now.
You can't borrow your way to prosperity by building a gleaming new patient tower to increase volume like you once could. Besides that, building success through volume is likely in its twilight, and as patients and future patients, we can all be thankful for that. Future success will depend on quality outcomes and developing a more lifelong relationship with the patient—not by "doing more" to patients.
Back to my thesis. I suspect some of the CEO turnover noted in the ACHE survey is because the boomer CEOs are getting close to retirement, but the picture is undoubtedly more complex than that. Boards are getting wise to the metrics the hospital c-suite should have been giving them over the years, and they're not putting up with pat explanations anymore. They're diving deeper, getting more educated, and if they don't feel their leaders have a viable pathway to get them back to financial stability and keep them there, they're showing them the door.
Frankly, the turnover rate isn't that far from the average of about 14% a year, so drawing conclusions on just these two factors is certainly not scientific. I'd love to hear what you think.