To hear it from the people who make their money in healthcare headhunting, hospitals and health systems are longing for leaders.
Unlike other industries, where executives often can move from one type of company to another, most who run major healthcare organizations are industry veterans. They started in healthcare, or moved into it early in their careers. Despite their insider perspective and experience, however, current leaders are not doing much to train, develop and mentor the next generation of chief executive officers.
That problem is rapidly diminishing the potential crop of new healthcare leaders, as concluded in a recent survey by Oakbrook, Ill.-based healthcare recruiter Witt/Kieffer. According to the preliminary results, which were released exclusively to Modern Healthcare, 75% of the CEO respondents said they agree or strongly agree that executives miss or ignore opportunities to mentor effectively. Some 67% said healthcare executives create short-term management roles but not career paths for promising future leaders.
Though most healthcare officials contacted for this article agreed the industry could do a better job mentoring leaders, the degree to which corporate surveys serve as true barometers of industry trends is debatable. Just 11% of the 1,600 CEOs to whom Witt/Kieffer sent its survey replied at all. While officials are confident Witt/Kieffer's analysis still reflects a clog in the leadership pipeline, the relative weight of the research depends on whom you ask.
The Witt/Kieffer survey "is only suggestive. One has to be very careful when interpreting results with such a low response rate," said Thomas Dolan, president and CEO of the Chicago-based American College of Healthcare Executives.
Dolan agreed that hospitals may not be doing enough or the right kind of mentoring, but he was cautious about characterizing the problem in the same light as the survey did. "With the financial challenges facing healthcare organizations, it's more difficult for people to mentor," he said. "We have to change our models of mentoring."
For the recruiting firms, the challenge of finding strong healthcare leaders has translated into a raft of business. As recruiters in other areas such as information technology have struggled through recent downturns in the economy, the healthcare industry continues to register as a bright spot. Large recruiting firms saw a 23% to 40% drop in their business last year while healthcare firms-and healthcare-focused segments of larger firms-saw their business jump 3%, according to Hunt-Scanlon, a Stamford, Conn.-based market research firm.
Placing healthcare executives in hospitals and systems "is not going to give you the same returns as financial services or technology did year over year, but it's viewed as a recession-proof industry to be in," said Brian Lee, Hunt-Scanlon's chief market strategist. Lee and others said it is difficult to determine whether recruiting firms like Witt/Kieffer use surveys to identify valid trends or to bolster their own business with alarming statistics. From Witt/Kieffer's perspective the survey-which is the first of its kind the firm has done-provides valuable industry intelligence.
"Part of the rationale for this survey is a way to give back to the industry by providing information, knowledge and insight," said Michael Doody, a Witt/Kieffer senior vice president and co-director of the firm's central region in Oakbrook, Ill.
The survey will work to the company's advantage, competing recruiters said.
"The reason for surveys is to bring attention to the fact that (Witt/Kieffer) does staffing," said Mark Yowe, managing partner of the global healthcare practice at Chicago-based Heidrick & Struggles, a publicly traded executive search firm that posted $35 million in healthcare industry revenue last year, up from approximately $24.5 million the previous year. "Whatever the answer is, it benefits them. Their numbers may be right, they may not be, but it doesn't matter."
Witt/Kieffer performs about 85 CEO searches per year-the vast majority of them in the healthcare industry-representing about $6.5 million in annual revenue for the firm, up 10% to 15% over last year.
Heidrick & Struggles' senior partner Richard Gustafson, who works primarily with healthcare provider clients, said his company is "really happy Witt/Kieffer did the study. We need to focus on this issue for the field."
As one of the Witt/Kieffer study's two researchers, Doody said their work largely confirmed that the industry is a tough one to navigate.
"We in healthcare tend to be short-term, intermediate thinkers because of the dynamic of change and the complexity and economic constraints," Doody said. "Maybe we haven't done enough sitting back and saying, `What does this mean for us in terms of future leaders?' "
Some human resources managers who are on the front lines of healthcare recruiting agreed it is a priority to more effectively mentor future leaders. Some have adopted new approaches to cultivating leaders. At nine-hospital Memorial Hermann Healthcare System in Houston, 110 employees are enrolled in a year-old program to groom them to move up in the organization.
Though its program is too young to have proven successful, "five years down the road we'll have 60 or 70 people better prepared to assume greater leadership roles than we have today," said Doug Beckstett, Memorial Hermann's vice president and chief human resources officer.
As the debate over how best to groom healthcare executives continues, some industry veterans-including Henry Ford Health System President and CEO Gail Warden-have gotten involved, forming the National Center for Healthcare Leadership. The group hopes to better align management education with industry needs (April 29, p. 6).
Having participated in some of the planning for the new association, Heidrick & Struggles' Gustafson said he is an "active member" of the group.
Demonstrating the leadership group's increasing prominence, the Association of University Programs in Health Administration recently added an NCHL-sponsored session to its upcoming conference in Washington, Eleanor Deleon, the AUPHA's director of meetings and membership, confirmed.
DHR International, an executive search firm based in Chicago, is developing a survey similar to the Witt/Kieffer study. DHR officials hope their survey, which will be sent to hospital CEOs, will explain the degree to which the industry needs to improve its mentoring of future leaders. As even not-for-profit healthcare organizations operate more and more like corporations, leaders who can weather those challenges will be in ever higher demand, said Fred Halstead, executive vice president of DHR. Halstead said he hopes to determine whether the next generation of leaders is learning what it will take to run tomorrow's hospitals.
"There is a question of whether younger CEOs have that training and ability," he said.