The instability gripping the hospital industry is taking its toll on the executive suite. The turnover of hospital chief executive officers jumped markedly from 1997 to 1998, hitting the second-highest total since the American College of Healthcare Executives started tracking that turnover in 1981.
In 1998, CEOs changed jobs in one of every six U.S. hospitals. That rate, 16.9%, was the highest since 1988, when turnover hit 18.4%.
The 1998 rate was a 4.8% increase from 12.1% in 1997. To figure the rate, the ACHE surveyed 4,838 general, nonfederal acute-care hospitals. Turnover was almost one full percentage point higher in 1998 than in 1996, when it was 16%.
"Clearly the one-year increase jumped out at me," said Thomas Dolan, president and chief executive officer of the ACHE, "but if I look at the context of the last few years, the increase was not that great."
The Chicago-based ACHE represents almost 30,000 executives.
The rise in attrition isn't surprising considering the number of hospitals tightening their belts, Dolan said.
"Two-thirds of all turnover is voluntary, (with) the individual going to a new job. We're most concerned with involuntary turnover," he said.
Many hospitals across the country are blaming payment cuts by health plans, Medicare and Medicaid for their precarious financial positions and staff and service reductions.
"When times get tight, the person to be blamed is the CEO," Dolan said.
Mike Broscio, an outplacement consultant with Scherer & Paulick in Chicago, said consolidations have turned hospital management staffing into a game of musical chairs. "Someone makes a move, and the chair gets pulled out. It's forcing CEOs to redefine their future and how we might define success in healthcare."
In 1998 the number of hospital merger-and-acquisition deals slackened somewhat from the torrid pace of the mid-1990s, but 687 hospitals changed hands, the third-highest volume on record. Almost 14% of the country's 5,058 nonfederal community hospitals were involved in consolidations, according to MODERN HEALTHCARE's annual survey (Jan. 11, p. 48).
Among Broscio's clients in the past year, one former CEO went to work for a healthcare alliance. Others joined healthcare management companies or specialty hospital firms. Some others went into consulting.
At the ACHE annual congress in Chicago in early March, more than 600 executives attended a program about how to get into health consulting, making the session one of the best attended.
Jerrold Maki is a hospital system CEO who bailed out in 1998. He is now a partner in the Peterson Network, which provides interim executive leadership for hospitals and healthcare organizations. Maki was CEO of Mercy Health System West in Springfield, Ohio, from 1995 to 1998. Before that, he was CEO of Mercy Medical Center in Springfield.
"I decided to leave my CEO position to try something I'd always wanted to do," he said. "I went into business for myself with a guy named Mike Peterson. We formed the Peterson Network, (and) we're trying to capitalize on the turnover statistics."
Maki, 51, said that Peterson's associates include people who have left positions "either voluntarily or involuntarily, and are in transition themselves and willing to do transitional work.
"The neat thing about interim work (is) you go in and have the support of the board and medical staff," he said. "There are things they want changed, and you can get them changed in that interim period. Sometimes they're messy changes, so when the next person comes on board, they don't have to deal with that."
ACHE statistics show that New Mexico had the most turnover, with 45%; followed by Hawaii, with 35%; Tennessee, with 34%; Delaware, with 33%; and Puerto Rico, with 33%.
Neither the District of Columbia nor Rhode Island experienced any turnover. Other low turnover states were Utah, with 8%; Kansas, with 10%; and Nevada, with 11%.