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Stepping In or Stepping Up

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CEO succession planning can be a balancing act.

Hospital CEOs with deep experience are tough to find in the candidate pool. Maybe that's because everyone wants to hire candidates who have presumably gone through their growing pains on someone else's dime. But with experienced healthcare CEOs aging, the available talent is growing smaller.

Perhaps the good news is that searching for a new CEO often isn't a rush job. Unless the prior CEO has done something illegal or destroyed his or her working relationship with his board, his physicians, or both, finding a replacement CEO is often an orderly process. Still, unexpected departures often come, and the right steps need to be taken to ensure the next leader is as dynamic as the one who's going out the door. Either way, the responsibility rests squarely on the board of trustees.

"It's a fresh opportunity for the board to get reengaged," says CJ Bolster, vice president of the Hay Group in Atlanta. "You want to mesh the transition to the new CEO."

John Hillenmeyer, president and CEO of Orlando Health, a seven-hospital system with 1,780 beds, is leaving the organization, but he won't do so until the end of 2010, and his board has known for the past year about his departure from his 26-year career at the organization.

"I gave the board the luxury of time to do it right," he says. "That allowed them to build a transparent, open process and send the message to the community that this is a normal progression. It also ensures the C-suite team as much certainty and stability as possible."

Because he's retiring, the transition to the new leader should be orderly. Orlando Health has two internal candidates, and Hillenmeyer has been involved over the past year looking critically at their experiences and skill sets. He's also reorganized some responsibilities for the two to give them exposure to different capacities. But at the same time, he's divorced himself from the decision.

"In the end, this is the board's decision," he says. "It's not my job to pick my replacement."

A two-year timetable to find a new CEO isn't often realistic, he admits, saying that Orlando Health has always had backup plans within the board's compensation committee or executive committee "that designate who I would choose if something suddenly happened to me. That gives them some flexibility."

Still, the earlier the better. Dennis Vonderfecht, president and CEO at 14-hospital Mountain States Health Alliance in Johnson City, TN, isn't retiring anytime soon, but says he plans to leave the organization in three to five years. In 18 to 24 months, he'll decide on an exact date, which will leave about 24 months to identify a successor.

"The first six months of that 24 will be an evaluation period for the internal candidates," he says. "I would assume the board will still want to do a broad search for outside candidates. So a year before I depart, that person will be identified, and then they'd have six months with me around. We've had a lot of success in our organization, and the board wants that to continue in the future."

Philip Betbeze

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