Turnover among hospital chief executive officers abruptly dropped in 1997, hitting its lowest level since record-keeping started in 1981, according to statistics compiled by the American College of Healthcare Executives.
The summary of hospital CEO turnover, released exclusively to MODERN HEALTHCARE, shows that 12.1% of the country's community hospitals and major medical centers changed CEOs last year. Excluded from the survey are federal and specialty hospitals.
That's a sharp drop from the 16% turnover of 1996, which was the highest since 1991 (March 24, 1997, p. 8).
"My guess is two things," said Thomas Dolan, president and CEO of the ACHE. "First, we have seen a slowdown in the amount of consolidations and mergers. I also have the sense that both boards and CEOs are holding tight right now. There's so much turbulence in the field that people are a little reluctant to change -- the board to change the CEO or the CEO to change facilities."
According to MODERN HEALTHCARE*'s survey of 1997 hospital consolidation activity, the number of hospitals involved in mergers or acquisitions fell 18% from its 1996 rate, which was itself a decline from the year before (Jan. 12, p. 40). About 12% of the country's 5,200 nonfederal hospitals changed hands in 1997, a drop from 15% in 1996.
The percentage figures closely resemble the executive turnover percentages, but they don't necessarily directly reflect one another.
Dolan said he worries about the impact of Medicare cuts. As Medicare tightens the screws, declining financial results may induce boards to blame their CEO, and that could lead to renewed turnover, he speculated.
The number of hospitals included in the 1997 survey was 4,873, the smallest ever. In 1981, 5,687 hospitals were included in the CEO turnover statistics, and that number has been declining ever since. Last year there were 41 fewer hospitals than in 1996.
If 12.1% of those hospitals lost or acquired a CEO, that means 590 of them changed administrative leadership last year.
The ACHE also ranks states by CEO turnover. In 1997 the top five states for turnover were Arizona, California, the District of Columbia, Michigan and South Dakota. The five states with the least turnover were Connecticut, Maryland, Nevada, New Hampshire and Rhode Island.
Connecticut and Maryland made the most-stable list for the second year in a row. No state in the least-stable top five was a repeat from 1996.
Dolan cautioned that the number of turnovers in individual states "can be fairly small, so you have to be careful in the interpretation." He said he doesn't really see any state patterns.
A full report with analysis will appear in the May-June issue of Healthcare Executive, the ACHE's magazine.