Faced with a potential mushroom cloud of new regulations and new business models, interim leaders can quickly take the reins and make difficult decisions.
Dennis Millirons is retiring. Sort of.
Millirons has spent the past year as a vice president at Fargo, ND-based Sanford Health, a 39-hospital system that is on a growth spurt. His previous four years at the health system were spent as president of Sanford Medical Center Fargo, where he was instrumental in integrating the system's 2009 merger with MeritCare and where he played a key role in the design of the new $450 million hospital campus now under construction in Fargo.
He'll retire in June, but he's not necessarily finished with his career.
The 28-year veteran healthcare industry leader plans to take advantage of a blossoming opportunity for experienced senior executives who can bring a track record of experience in coping with dynamic change to an industry that needs to make tough decisions.
In short, he's interested in interim leadership opportunities.
In the upheaval that characterizes today's healthcare environment, margins are small, cash flow is low, and the future is uncertain. Temporary leaders can help with projects, evaluate turnover, or stabilize a critical situation.
Not only are more executives gravitating toward the temporary option for their own careers, but there are certain advantages from the institutions' perspective as well. They're using temporary leaders to more quickly adapt in a time of great change and uncertainty as organizations move forward under a variety of options to transform their business model.
Fresh Eyes on Hard Decisions
There are other reasons the days of the career executive leader in healthcare may be waning. The trend is partially driven by demographics. Some experienced senior leaders, like Millirons, are semi-retired and aren't looking for long-term engagements. What's more, the sought-after skill sets for top leaders in healthcare have become very specialized because the challenges they need to tackle are so complex.
One other reason: It's often difficult for entrenched senior leadership to make the tough decisions required to ensure the survival of the hospital or health system.
"When leaders in the president and CEO area become well established, it might be more difficult for them to make the hard decisions," Millirons says. "In that situation an interim can feel less attached, stick to the facts, and be fair and appropriate, but make some hard decisions that may be more difficult for an established leader to make."
Millirons says the use of interims has grown significantly because healthcare is an industry in such turmoil and under great pressure to reduce costs and provide higher quality care. Those who can't navigate this transition while keeping revenues, admissions, and particularly margins relatively strong, will be forced to make difficult decisions.
If they can't, those decisions will be made for them. Millirons says that's a perfect opportunity for an interim turnaround artist.
"Most of the time, interim leaders are pretty seasoned people who have experienced a lot of different situations," he says. "Sometimes they even get the opportunity to become the permanent leader, but sometimes it's best for them not to be, because they made those hard decisions."
Finance, Consolidation Skills Key
Millirons has found plenty of good reasons to use interims himself in the past.
One was a situation at a former employer in which he was surprised by the unexpected departure of a valuable chief financial officer while the system was in the middle of a bond issue and other significant projects.
"I really didn't have anyone in that area who had the skills I needed," he says. "I was able to get a former 'Big 5' accounting firm partner who got us through that period."
In another situation, Millirons discovered improprieties on the part of another CFO whom he had to quickly terminate.
"I had to take quick action," he says. "I wanted someone with fresh eyes to come in and take a look above and beyond what we'd already done in terms of the investigation so that we could be aware of anything else that might've been going on." In both cases, the interim executives excelled, he says.
With the amount of consolidation the industry is currently experiencing, an interim president and CEO may be able to lead integration with a larger organization with greater skill and purpose than an entrenched president and CEO who is used to operating on his or her own, without corporate oversight.
Skills for interims are many, but the top one, according to Millirons, is financial. Right behind that are skills associated with the successful consolidation of organizations.
"These include knowing how to carry forward the development of relationships with a larger organization, and how to properly get the organization you lead to fit into the larger organization successfully," he says.
That means the interim needs the ability to quickly assess the leadership skills of people below his or her management level, supporting and encouraging those who are strong to stay with the organization, and making, in some cases, key terminations.
"One more that might be most important is working with boards," he says. "Making sure there are no surprises for them."
A Little Distance Helps
When senior leaders become entrenched, they get their own set of biases and opinions, Millirons says, which may not reflect the current business environment accurately. Sometime those biases are accurate and sometimes they're not, but they can inhibit judgment for a legacy leader.
"Someone stepping in from outside taking a fresh look at the situation can recognize options that should be exercised," Millirons says. "Maybe there's something that needs to be divested and that [legacy] leader was part of building it."
The interim's performance is critical, he says, because for a senior position search, it can take six months to a year to identify a permanent replacement. Six months in today's healthcare business environment can be critical transition time lost. Millirons feels ready to tackle that challenge, even if he's never personally done it before.
"But I have done a lot of turnaround work," he says. "I'm very familiar with that process and I think I could be useful."
Philip Betbeze is the senior leadership editor at HealthLeaders.