High CEO Turnover, No Succession Planning Plague Hospitals

"The last one is the Baby Boom retirement. The average hospital CEO is approximately 55 years old. That is the median and clearly a number are older than that and they are heading into retirement," Dolan says. "I expect that 16% to stay constant and maybe creep up in the next few years."

Dolan says it's hard to put a price tag on the cost of this leadership flux. "But I can tell you that when there is a vacancy at the top things don't happen," he says. "Partnerships are not made. New people are not hired. Sometimes senior people might start looking for other positions. Medical staff may defect. Whenever there is a vacuum in that top leadership position, there is a tendency in that organization for push back until a new leader is appointed."

Hawaii, Puerto Rico, and Wyoming led the nation with hospital CEO turnover rates of 35%, 30%, and 29%, respectively, in 2011. However, Dolan warns against reading too much into one year of data. "Hawaii and Puerto Rico, for example, have relatively small numbers of hospitals. So, one or two random changes could affect them disproportionately," he says. "What are more likely to affect turnover are highly competitive areas, low reimbursement states, things of that nature."

Along with the high turnover, Dolan notes, 58% of hospital CEOs have been on the job less than five years, and that also has the potential to create problems in continuity of leadership.

"We pretty much know from the management literature that if you go in and make positive changes in an organization, if you aren't there for at least five years to make sure those changes aren't woven into the fiber of the organization, oftentimes organizations will go back to what they were doing in the past," he says. "You might have a great CEO who makes a lot of changes, but if she or he leaves in a few years oftentimes the organization will revert to its old ways."