When it comes to the job market, the healthcare industry is not a bad one to be in. Nonfarm payroll employment declined by 2.6 million jobs in the past four months, according to February 2009 statistics from the U.S. Department of Labor. During that time, healthcare has added a little more than 100,000 jobs. But that doesn't mean that CEOs or any other senior executives should be sitting too comfortably. All one has to do is skim the healthcare headlines from this week to realize that the recession is still taking a toll on hospitals. Here's a sampling:
- St. Francis Hospital and Health Centers announced it has postponed further work on a $265 million project at its Indianapolis campus. This announcement comes roughly a month after rival Clarian Health said it would stop work on the $475 million Simon Family Hospital Tower at Riley Hospital for Children.
- Charlotte, NC-based Carolinas HealthCare System reported a net loss of more than $551 million for 2008, driven by significant investment losses and higher interest expenses.
- Atlanta-based Grady Memorial Hospital has announced 150 job cuts, in response to severe economic pressures and an increase in indigent patients. Among those who left was the head of the hospital's cancer center.
- The Mayo Clinic announced that it barely broke even in 2008, as expenses grew by 7.6% and revenue by 4.5%. The income from patient care fell by almost one third during the year.
- Mason City, IA-based Mercy Medical Center will eliminate 59 jobs as it restructures its home healthcare service and hospice program. It is also closing a clinic in Rockwell.
- Aurora Health Care Inc. has sold four Milwaukee-area medical office buildings to an investors group in an effort to reduce expenses. The buildings are being leased back to Aurora, which operates clinics at those locations.
- Atlanta-based Emory University is suspending its $1.5 billion medical expansion project, due to a general uncertainty about the economy.
- Eastern Connecticut Health Network has called off its plans to buy Johnson Memorial Hospital in Stafford Springs due to financial reasons. Johnson Memorial has falling patient volume and revenue and greater-than-expected capital costs.
No CEO is safe from being asked to tender his or her resignation in times as tough as these. It doesn't matter if you have been with the organization for 10 years and successfully completed major capital expansion projects or grew services or negotiated partnership deals with physicians. That was then. It's not the same industry today that it was when many of those deals were brokered. Trustees are looking for a leader who can reduce expenses and stop the bleeding right now. More than 50% of hospitals are in the red, according to a report from Thomson Reuters. So what can CEOs do to hang onto their jobs?
Be honest. Now is not the time to sugarcoat problems. Hospital trustees need the cold, hard truth. If they are caught off guard, they may start questioning what else they don't know about.
Establish detailed plans. Every action plan right now should have very specific goals, timelines, projected outcomes, and assignment of responsibility to specific parties. Rather than saying, "The hospital plans to improve days cash on hand," hospital leaders should be telling the board, "We plan to improve days cash on hand by this much, by this date. This person is spearheading the effort and this is what the result will be."
Hold people accountable. Perhaps you have the plan, and the details are there. But the goals just aren't being met. What are you doing about it? It is on the leadership to follow up on a regular basis with staff members and hold the responsible parties accountable.
Establish good relationships with the medical staff. CEOs should be developing as many one-on-one relationships with the medical staff as they can muster. That the CEO has a great working relationship with key physicians can't hurt as trustees evaluate you.
These practices aren't just good business in tough times—these are fundamentals that CEOs should already be doing. The difference today is there is absolutely no cushion for error. Operations need to be as efficient as possible. If, as the CEO, you fail on these elements, you may be the next hospital employee sent packing.
Carrie Vaughan is leadership editor with HealthLeaders magazine. She can be reached at cvaughan@healthleadersmedia.com.
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