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June 18, 2015

What the hospital 'CEO of the future' looks like

Daily Briefing

For years, many hospital CEOs were able to run their organizations by using the same time-worn strategies and protocols. But to be a successful hospital CEO these days, leaders must master a series of new skills, Howard Larkin writes in a piece for Hospitals & Health Networks

"The CEO of the future will be someone who understands the continuum of care, from inpatient to physician offices to ancillary services to home health, pharmacy and nursing homes and is capable of bundling it all around providing excellent service at reduced cost," says Tom Giella, managing director of health care services for executive recruiter Korn Ferry.

And demand is growing for leaders who understand population health and accountable care and can transform their organizations from fee-for-service environments to quality-driven organizations.

But many CEOs have struggled to adapt.

In 2013, hospital CEO turnover rates hit an all-time high, breaking 20% for the first time. And over the past five years, the average turnover rate has hovered at about 17%, Larkin reports.

Just 20% of health care CEOs are ready to get rid of fee-for-service

Who is the CEO of the future?

According to Larkin, "ideal" CEOs have several key characteristics that will position them to succeed:

1. They do not fight change and always strive to learn: Leaders who have previously worked to implement new care models or technology are more likely to thrive in the transitioning health care landscape, and keep hospital finances afloat in the movement toward value-based payment systems.

In addition, such leaders must have "imagination and flexible thinking," says Newport Healthcare Advisors President Carol Geffner. They also should not be afraid to reorganize management teams or make other difficult decisions, Scripps Healthcare CEO Chris Van Gorder notes. And good leaders must be open to learning in any situation and quickly adapt, Giella adds. "You need someone who can take a new concept and run with it," he says.

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2. They use data to drive results: Health care data mining is becoming more important as providers use analytics to evaluate care quality and determine contracting and purchasing decisions. As such, CEOs must know how to read and analyze this information so they can make sound financial decisions, develop and communicate strategy change, and help others get on board, says Paul Keckley, managing director at Navigant Center for Healthcare Research and Policy Analysis.

3.  They are clinically competent: As coordinated care becomes the norm, the ideal CEO must be adept at understanding clinical operations to identify and address potential "gaps in the system," Larkin writes. But, he says, a physician background is not always necessary. If the CEO does not have this clinical experience, says Larkin, he or she should convene a leadership team that fully understands the concept and can help develop a program that supports the system's strategies. Enthusiasm and a strategic vision of how the health system will look in the future are vital, says Giella.

4. They are financially focused: A CEO must have a firm grasp on various financial facets of their system—such as bundled payments, dwindling reimbursements, and payment reforms under the Affordable Care Act (ACA)—and should understand how it could affect the system's ability to build an integrated network, VHA SVP of Physician Strategies Phil Dalton says. He adds that varying payment models have "strategic and operational implications that can't just be left to the CFO. It takes a team."

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5. They are skilled at resolving conflict: Leonard Marcus, founding director of the Program for Health Care Negotiation and Conflict Resolution at the Harvard T.H. Chan School of Public Health says resolving issues as they come up and identifying ways everyone's common interests can be met effectively are important skills for CEOs to have. Such leaders "can see the value of being part of the enterprise, and are able to guide and motivate activity toward being part of that value," he says.

6. They do not shy away from collaboration: CEOs should also understand how to work collaboratively—in a "matrix management" style—with peers and in reporting relationships to system experts. Says Geffner, "Hospitals have always been vertically organized into departments: cardiology, radiology, pathology," but "now that hospitals are becoming health systems," they should work to create "horizontal structures" too (Larkin, Hospitals & Health Networks, 6/9; Small, FierceHealthcare, 6/10).

The takeaway: The health system leaders of tomorrow will be skilled problem solvers, strategic thinkers, and collaborative workers who understand both the clinical and financial sides of health care, Howard Larkin writes for Hospitals & Health Networks.

Learn how we're setting health care strategic planners up for continued success

Most strategic planners' job descriptions are far more complex today than they were five years ago. That's why we launched Planning 20/20: an initiative designed to help health care planners master the business and leadership skills needed for continued success. 
Every other week, our strategic planning experts send out email memos with insights, tools, and resources to help planners manage their changing responsibilities and stay ahead of the market curve. Read on to preview the resources we're sharing in four areas, then subscribe to receive the Planning 20/20 memo.


Read up on our 'Lessons from the C-suite'

See the Daily Briefing's archive of must-read interviews with other top hospital and health system leaders, including:

  • Knox Singleton, the CEO of Inova Health System, offers his perspective on how he tries to build skills after being a CEO for 30 years, and why Millennials are "superior" leaders compared to Baby Boomers.

  • Lloyd Dean, the CEO of Dignity Health, discusses his unusual path from running a classroom to leading a boardroom, and what it's like to steer a health system as it's tranforming its brand.

  • Ernie Sadau, the CEO of CHRISTUS Health, talks about his journey from hospital patient to hospital CEO, how he's dealing with his top three challenges, and why he doesn't allow BlackBerries in the boardroom.
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