The increasing complexity of healthcare, beginning in the 1970s, brought a new type of executive to the helm of the nation's hospitals: one with strong interpersonal, leadership and business skills. To reflect this weightier role, the job of administrator was renamed at most hospitals, to president and chief executive officer.
Several forces reshaped the top job at hospitals. Medicare and Medicaid forced hospitals to become directly dependent on federal and state funding. As a result, hospitals needed leaders who could effectively lobby for higher reimbursements. That trend accelerated with the introduction of Medicare DRGs in the early 1980s, the beginning of the federal government's ongoing attempts to rein in spending. The intense focus on costs and the growth of managed care heightened the demand for financial and managerial expertise.
More physicians also became executives in order to fill the job of director of medical affairs, which reflected a growing emphasis on quality. And the rising importance of technology elevated the role of the chief information officer.