The past year saw a sizeable increase in leaders exiting the role.
CEO turnover continues to hit industries across the board and the story is no different in healthcare.
After 103 CEOs departed hospitals and health systems in 2022, this past year experienced a 42% rise in changes with 146, according to a report by Challenger, Gray & Christmas. The increase could be indicative of how the position is evolving, in addition to being a sign of a wider economic shift.
Of the 29 industries and sectors measured by the executive coaching firm, hospitals had the fourth highest number of CEO exits, behind only government/nonprofit (486), healthcare/products (189), and technology (173).
Several factors are likely causing the turnover growth at hospitals, with the current financial climate chief among them. Organizations are feeling the heat from thin margins and that in turn is putting significant stress on those at the helm.
In many instances, hospitals are choosing to install new leaders as they head in a different strategic direction, but some CEOs are voluntarily leaving to escape a pressure-packed environment.
"With all the pressures that the CEO faces, if there's an opportunity to transition out because we've had a very successful career over a long period of time and you feel that somebody is in a better position to serve the organization, that's a lot of it,” AtlantiCare Health System CEO Michael Charlton recently told HealthLeaders.
“The pressures have just gotten overwhelming."
The bigger impact
CEO turnover for all industries in 2023 hit a record high with 1,914, which represented a 55% increase from 2022 (1,235) and easily cleared the previous record of 1,640 in 2019. The figure was also the highest on record since Challenger, Gray & Christmas began tracking CEO exits in 2002.
“Historically, we’ve seen large economic shifts preceded by a surge in CEO exits,” said Andrew Challenger, senior vice president of Challenger, Gray & Christmas.
The previous record in 2019 was followed by economic instability, but that was largely spurred by the unpredictable COVID-19 pandemic and its far-reaching impact on every industry.
While healthcare has since stabilized in many ways, financial distress continues to plague hospitals, leading to closures and M&A.
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
Hospitals and health systems had 146 CEO changes in 2023, marking an increase of 42% from the 103 exits in 2022, Challenger, Gray & Christmas’ report revealed.
Among all 29 industries and sectors measured in the report, CEO turnover hit a record high of 1,914 changes this past year, comfortable passing the previous high of 1,640 in 2019.
The jump in CEO exits could be telling of where the economy as a whole is heading.