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CEO turnover up
Reform, retirements expected to fuel movement

By Melanie Evans
Posted: March 2, 2013 - 12:01 am ET

Turnover for top hospital executives edged up to 17% last year from the prior two years' rate of 16%, the latest snapshot from the American College of Healthcare Executives shows.

The movement may continue as the industry reacts to health reform and baby boomers continue to age out of the workforce, said ACHE President and CEO Thomas Dolan. (Dolan is scheduled to retire in May, but he will remain with the association as president emeritus.)

The average turnover rate for the past 32 years was 16%. During that period, the rate has not exceeded 18%, a peak most recently reached four years ago. The lowest turnover rate, 13%, was last reported in 1990.

The results are based on the top executives reported annually to the American Hospital Association for more than 4,500 hospitals.

Changes in healthcare delivery have fueled interest in closer integration of hospitals, insurers and medical groups, Dolan said. Hospitals may increasingly seek to recruit executives with insurance experience and expertise, but in doing so, governing boards should also be sure to support outside recruits with a team that knows healthcare delivery.

Experience with accountable care and bundled payments is in growing demand as hospital governing boards consider CEO candidates, said Dennis Kain, president of healthcare executive search firm Tyler & Co. And governing boards that once looked only at financial performance are also now reviewing CEO candidates' performance on quality and safety scores, he said.

Boards increasingly look for candidates with the relationships or networking skills needed to close deals that will give hospitals greater market clout or new physician allies, said Andrew Garman, a professor of health systems management at Rush University in Chicago and CEO of the National Center for Healthcare Leadership.

Last year included a few notable hospital and health system CEOs who made an exit or announced plans to do so, including Dr. Patricia Gabow, CEO of Denver Health, and Kaiser Permanente's George Halvorson, who is scheduled to retire by the end of the year. Bernard Tyson, Kaiser's president and chief operating officer, will succeed Halvorson.

Judith Johansen, who chaired the search committee to replace Halvorson, said board members vetted potential successors on seven essential criteria, including strategic agility, which “rose to the top” during interviews, she said. Upcoming changes under health reform and in the healthcare market made strategic agility particularly important. “The sands are shifting so fundamentally and so rapidly that you need someone who can see through that and help identify where we need to be in order to continue to serve our mission, Johansen said.”

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