COOs have seen their responsibilities shift and expand with changes in healthcare and growing demands on the chief executive
Added responsibilities may allow chief operating officers to rightfully assume part of the glory when their hospital or health network flourishes. But as the job continues to expand and evolve, the role also leaves the COO more vulnerable in case of failure. They're the ones increasingly being held accountable for overall outcomes at their organizations.
The level of scrutiny doesn't surprise John Haupert, the new CEO at Grady Health System in Atlanta. The system includes 689-bed Grady Memorial Hospital and six neighborhood health centers. He says COOs require the skills of a diplomat coupled with financial prowess and leadership skills as they navigate the needs of doctors, administrators and board members.
“As a senior executive in a large organization, part of what you signed on for is being an ambassador, a messenger for the organization,” says Haupert, who started this month as CEO. “Being at that level, you take the heat as well as the accolades, if there are accolades to be taken.”
Haupert knows a bit about sitting in the cross hairs. He came from Parkland Health & Hospital System in Dallas where, since 2006, he worked as COO. The CMS threatened to terminate Parkland from the Medicare program earlier this year, and the 672-bed public hospital reached a $50,000 settlement with HHS' inspector general's office for allegedly violating the Emergency Medical Treatment and Active Labor Act (Sept. 5, p. 16
). Haupert's mentor, Dr. Ron Anderson, will step down from his role as Parkland's president and CEO at year-end, a nearly 30-year tenure.
There's a varied set of expectations for COOs. Some depend on the CEO's workload, while other factors include the size of the organization and the area it serves. “It's different at every hospital,” Haupert says.
Haupert says he knew Anderson for 15 years before he began with Parkland, as they knew each other professionally while Haupert worked as executive vice president for the four-hospital Methodist Health System, also in Dallas.
When Anderson sought Haupert out for Parkland's COO post, he says he was the only candidate. Parkland went through a management reshuffling, Haupert says, with Anderson needing to fill several vacancies in the C-suite.
The established relationship proved critical as Anderson and Haupert made sure their roles were well-defined, Haupert says.
“I read a long time ago about how conflicting the COO can be if there isn't a clear understanding between the CEO and COO about the role he wants you to play,” says Haupert, who was tasked with focusing on certain areas of operations, both clinical and nonclinical, often acting as a bridge between the two. “He wanted an operator.”
To head off any potential conflict in his new role at Grady, Haupert says he plans to meet soon with his COO to outline his expectations for the job.
Haupert's days solving financial challenges at Parkland may prepare him for similar situations at his new job. Grady relies on county funding, which has dipped in recent years, leading to staff reductions. The last time Grady turned a profit was fiscal 2009. Former CEO Michael Young arrived in 2008, and for that fiscal year, the hospital posted a loss of $35.1 million, according to its financial reports, compared with a $33.3 million deficit in fiscal 2007. Grady has again budgeted for a deficit for fiscal 2011, according to the system.
The executives interviewed for this article all agreed that changes in the CEO position also dictate the COO's role, and much of that is being buoyed by healthcare reform.
The new emphasis on holding providers accountable for quality and safety is requiring CEOs to spend more of their time interacting with officials outside the hospital setting. That might mean dealing with legislative pressures that require them to spend more time on advocacy. It's also handling more outreach; responsibilities include attending community events, fundraising and forging partnerships.
Consolidating resources to save money has also increased sharing of duties between the CEO and COO, such as managing the increased number of doctors employed at hospitals and overseeing implementation of pricey information systems.
CEOs were already considered too busy reviewing day-to-day operations, but these added burdens often mean the COO has to take a much more visible role with staff. At many organizations, the COO is now the C-suite executive tasked with staff communications, such as explaining policy changes.
“What I've seen is a greater willingness of the modern COO to reach out to all the clinical areas and really understand and work with them,” says David Kanzler, a partner in the Chicago practice of Atlanta-based Tatum, a firm that recruits C-suite level healthcare executives.
Areas such as hospital-system alignment and clinical integration that previously fell under the CEO's domain now fall more squarely under the COO's jurisdiction, Kanzler says.
“Hospital CEOs have gradually been phased out of the day-to-day operations and more into the strategic issues,” he adds.
Gail Donovan serves as executive vice president and COO at Continuum Health Partners, a four-hospital system in New York City, having been appointed in 2001. She says ensuring that patients not only receive the proper medical treatment but also that they're treated well outside of the clinical setting is what drew her to the profession. She compares the customer-service aspect of a hospital to that of a hotel. She says her job takes her away from the clinical side, with much of her time spent on corporate responsibilities and interacting with board members.
“I actually miss being in the hospitals every day,” Donovan says. “I have always loved the hospital's incredibly diverse, fundamental, critical mission of taking care of people as a healthcare provider.”
Donovan served a stint as Continuum's interim president and CEO from January 2003 to June 2003. She also held executive-level posts with Continuum's 964-bed Beth Israel Medical Center and 711-bed St. Luke's-Roosevelt Hospital Center, both in New York City.
While managerial flexibility remains a key part of the skill set for COOs, having the discipline to withstand competing agendas is a necessary attribute, says Ben Breier, COO of Kindred Healthcare in Louisville, Ky. The investor-owned post-acute-care company operates 89 long-term acute-care hospitals as well as other facilities, including nursing and rehabilitation centers, across 28 states.
Breier, who has held the title since 2010 and was a Modern Healthcare Up & Comer
that year, says he feels the pressures of competing agendas particularly when reviewing capital expenditures. As far as the administrative staff, Breier calls the COO the last line of defense. Staff from various departments will make their cases for money, and as COO, keeping a friendly and professional rapport with staff is important. But friendliness sometimes takes a backseat to ensuring efficiency, he says, “And you've got to say no.”
Dealing with daily operations complicates matters for Breier, who also plays a leading role in developing the company's longer-term strategy. Breier describes the COO as more of a “free agent,” someone who is called on to juggle a variety of situations. In that role, he sees a huge benefit from developing relationships with staff in all departments. “I really can look across the entire organization and see what needs my personal touch today,” Breier says.
Acting as a liaison between Kindred President and CEO Paul Diaz, three division presidents, and the company's board of directors requires finesse, Breier says. When offering suggestions, the COO must take extra care to respect the various levels of expertise these hospital officials possess and show trust, he says.
“It's a complicated, political process at times,” Breier says. “You have to have great communications, great leadership skills, and I think, have to be a bit of a politician to work behind the scenes and get things done.”
So why should this responsibility fall on the shoulders of the COO?
“I guess no one else can do it,” Breier jokes.
Breier is proud of his previous field experiences. He worked as president of Kindred's rehabilitation division, Peoplefirst, for five years before being named corporate COO. He also was senior vice president of operations and vice president for operations at Concentra, now a division of Humana.
Breier says the breadth of his experience allowed him firsthand knowledge of various aspects of healthcare. “There needs to be a willingness to take on new responsibilities,” he says of COOs. “Some don't necessarily want to get hands-on experience. But you really need to get into the dirt to get out there and do the work.”
Listening closely to patients certainly helps COOs get things done. Haupert remembers talking to patients at Parkland who couldn't tell the difference between an attending physician and a resident. Hanging a large white dry-erase board in each patient's room marked with the names of staff and their positions provided a simple solution.
The typical COO's duties also include fiduciary responsibilities, with strong financial acumen still a critical part of the executive's skill set. Donovan says she developed her knack for numbers while on the job.
“And it's not just reading balance sheets,” Donovan says. The 1990s, when hospitals shifted more toward capitation, helped convince Donovan about how involved the COO needs to be on the financial side.
Donovan began her previous stint as COO at Beth Israel in 1994, a post she says was much more traditional, leaving her to focus on the operational side. She says she now finds herself spending more time working with the chief financial officer.
Meanwhile, for Dawn Anuszkiewicz, COO at 332-bed St. Louis University Hospital since 2008, strong interpersonal skills are crucial. Anuszkiewicz, who was a Modern Healthcare Up & Comer in 2008
, says she didn't expect to be deeply involved with human resources issues when she started as a COO. She says universities need to focus more on that aspect of healthcare organizations as prospective health administrators prepare for their careers.
“I think they didn't emphasize … the interpersonal relations that you have to make as a leader, whether it's physicians, whether it's your community, your staff, suppliers,” she says, which she now sees as a vital part of an executive's education.
Indeed, dealing with so many stakeholders, including physician executives, can make your head spin and make sticking to a vision difficult, says Kathy Noland, vice president of senior executive search for healthcare executive recruiter firm B.E. Smith in Lenexa, Kan.
Finding the right pace while implementing a new service or business plan is key, Noland says. If you rush too fast, the new program may flop, she says. The COO must make sure plans aren't compromised by outside pressures to implement a program quickly. That's easier said than done in a results-based atmosphere, she adds.
Gail Donovan, center, COO at Continuum Health Partners in New York, cites a variety of skills needed to do her job.
“But they have to stay true to the mission—the vision of the organization— while being flexible enough,” Noland says of healthcare COOs.
The COO still holds the traditional No. 2 role in terms of succession plans at hospitals and health networks, after the CEO, Noland says. But she says her firm is also noticing more chief nursing officers being groomed as potential replacements for the COO, with an increased number of nursing officers reporting to COOs.
Noland also sees a need for executive creativity as healthcare providers deal with budget cuts, including reduced reimbursement at the state and federal levels. “It really is pressure to take these challenges and history—what has worked well—and pull that together,” she says. “Problem-solving with new innovations comes through embracing technology and information management, especially.”
In the past, the industry simply didn't have the proper tools or resources to measure outcomes in a way that could be used to improve care, but Donovan says that has changed. Healthcare reform's increased focus on metrics—with future reimbursement rates being tied to quality measures—also gives COOs a larger role in delivering better patient care, she says. “We are being held accountable and responsible for quality in a demonstrative way.”