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As CEO Turnover Rate Drops, So Does Job Satisfaction

 |  By Philip Betbeze  
   March 18, 2011

Numbers have a strong power to influence. In persuasive arguments, either Benjamin Disraeli or Mark Twain once said that there are three types of lies: lies, damned lies, and statistics -- statistics, by Twain's reputation, presumably being the most potentially fraudulent of the three. Statistics, however, can be useful and enlightening nevertheless. The lie is not usually in the statistics themselves, but in how they are used to support or detract from an argument.

In that vein of thinking, I have information from two surveys to share with you this week about hospital CEO turnover rates and job satisfaction, and I'll try not to lie in my interpretation of what they might mean.

First, in a report released by the American College of Healthcare Executives this week, hospital CEO turnover was found to have decreased slightly in 2010, at about 16% nationwide, down from a historically high rate of 18% in 2009.

Before that, according to the report, turnover fluctuated between 14% and 16% between 2001 and 2008. Thomas Dolan, the president and CEO of the organization, calls the 16% number "still too high."

Well, that's a matter of opinion and perspective. Certainly, turnover among the highest ranks of such complex organizations can be disruptive, but that's not necessarily a bad thing. Sometimes, such disruption, especially if the CEO is not effectively leading the organization to growth and higher quality care, can be an exceptionally positive thing.

However you feel about CEO turnover, one metric in our HealthLeaders Media Industry Survey 2011, might better explain part of the story. In short, CEO job satisfaction has shrunk significantly the past three years we've been tracking it. Indeed, since 2009, when our survey was first conducted, the percentage of CEOs who rate themselves as "very satisfied" with their overall job satisfaction has shrunk from 49% in 2009, to 45% in 2010, to 37% in 2011. That's certainly not a good trend line.

What's happening?

A number of factors are conspiring against CEO job satisfaction. Certainly, running a hospital is becoming more complex and demanding, and many pundits say that nonprofit CEOs--about 80% of hospitals are classified as nonprofit—are overpaid. That would be news to many of these people who could earn substantially more in a for-profit setting, but certainly, the job is getting more complicated, not less.

Simple math tells us that the majority of hospital CEOs are heading standalone community hospitals. They face a particularly difficult slog in the coming years as reimbursements are ratcheted back, and as many of the requirements of accountable care seem to favor large institutions with the infrastructure, expertise and, let's face it, investable capital to make a margin on what many see as a declining overall revenue base for hospitals in the foreseeable future.

Many of those hospitals might be squarely in the crosshairs of an acquisition or merger with a larger, multi-hospital system. If job security is a big part of job satisfaction, that's certainly a reason for the pessimism.

My point is that leadership is needed, and it's a frustrating time to be a leader of an organization that is in the midst of perhaps the biggest transformation in history—the movement from volume-based growth to growth based on quality and value. It's a necessary transformation, but it's got to be difficult to digest, especially for proud executives of proud institutions that might be on the eve of disappearance as independent entities.

A turnover rate of 16% might indeed be too high, as the ACHE president opines. But if the numbers from our survey are to be believed, we might see a 16% turnover rate as a pretty low number in years to come.

Philip Betbeze is the senior leadership editor at HealthLeaders.

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