If you are in charge of a hospital or health system these days as chief executive officer, you have my sympathy.
A recent study out of the American College of Healthcare Executives shows that your average job longevity for hospital chiefs (about 16% annually), is flat compared with last year and down from 18% in 2009. It approaches the shelf-life of the average college football coach (roughly 20% annually). The difference: In most cases, they get paid a heckuva a lot more than you do—and their job is easier.
Of course, measuring turnover can be a tricky thing. It can be voluntary or involuntary, but it's a glaring statistic that shows the difficulty of meeting the often-conflicting priorities of the healthcare CEO's major constituencies.
More to the CEO Job Than Maintaining Margin
It used to be that if the CEO managed relationships with the medical staff effectively and maintained that conservative 4% margin, he or she was safe. Conflicts with the medical staff once were once the major reason CEOs lost their jobs involuntarily.
Now it's no longer necessarily so. In fact, I can see a day coming when coddling the medical staff to the detriment of other priorities might be just as likely to get you fired as any other reason.
Not that physicians don't still seek clinical autonomy, which, by the way, is a slippery thing to define. But depending on what they mean, that desire can often stand in direct conflict with many of the quality improvement techniques sought to implement standards of care, for one example, or to optimize the supply chain, for another.
Doctors are naturally (and rightly) suspicious of anything that claims to improve quality and cut costs, so your job is difficult enough just make a case with them on those issues—and you'd better be able to prove it.
Pressure to Cut Costs, Boost Quality
Your priorities are changing. Boards, if they're paying attention, want quality improved and costs cut. Employers, payers, and even individuals are focused more on cost directly. But they don't just want cost cuts, they want value for their high expenditures on healthcare. According to a recent note from Deloitte, spending will reach 24% of the total federal budget, 21% of the average state's budget, and 20% of the average household's discretionary spending in 2012.
Your board wants you to demonstrate (that is, prove) that you have high quality and lower relative costs than your competitors. And they don't just want you to cut costs. In many cases, your customers want you to be responsible for the health of the patient following the care, and let's face it, you have very limited control over that.
It's almost too much to digest, and it's certainly a long way from the old model, which paid you a certain amount for installing a new hip, for example, whether the patient did well or not.
I understand why you're under so much pressure, and to be sure, your salary in relation to mine reflects that, but I also don't want your job of figuring out how that calculus works.
Pervasive Uncertainty
Despite all the efforts to date, the disparity between growth of healthcare costs (about 6%) and economic growth (about 2.5%) is still expanding. Who's the most visible center on which all of that pressure rests? You.
This week I talked with Paul Keckley, the executive director of the Deloitte Center for Health Solutions and co-author of the note I referenced previously. We chatted primarily about a completely different topic, but we got to talking about his recent project, which included in-depth interviews with 25 CEOs from a range of hospitals and systems across the country. The main theme: uncertainty.
You know you have to change your business fundamentally, based on how you're going to be reimbursed in the future. The worst part: No one really knows what that reimbursement scheme will ultimately look like, or even if there ever will again truly be a system that you might hate (fee-for-service) but can count on for its structural rigidity.
CEOs don't have a clear path to emerge from healthcare reform because of its continually shifting sands, and I'm not just talking about the impending decision on the constitutionality of the healthcare law due in June.
Speaking of which, "if all of this uncertainty results in accelerated bundled payments," says Keckley, as an example, "then you have docs and hospitals fighting over standards of care, how you cut the money, and who's responsible for various outcomes…It puts more pressure on hospital CEOs than I've seen in my career."
Almost makes you long for a profession where your job security rests on the shoulders of 18–22-year-old kids, doesn't it?
Philip Betbeze is the senior leadership editor at HealthLeaders.