Weak finances, pared-down management and a lack of succession planning at U.S. hospitals and health systems have converged to create an alternative career for managers and consultants able to handle a crisis-as long as they're willing to travel.
The sudden departure of an executive or director can leave many strapped hospitals unable to fill the void internally and unable to continue without a replacement. It's a problem when finding the right executive can take months and finding a chief nursing officer in a nationwide shortage of registered nurses is frighteningly tough.
The solution: interim healthcare management, a niche market that has blossomed and attracted entrepreneurs, search firms, consultants and independent contractors.
Demand for the highly skilled healthcare temporaries is growing, many report, although data are hard to come by. Anecdotal evidence has shown a recent spate of early retirements among top healthcare executives, and the American College of Healthcare Executives earlier this year reported that hospital chief executive officer turnover was 14% in 2003. While that's down from a peak of 18% in 1999, it still allows some room for improvement, ACHE officials have said (April 5, p. 8).
Sandra Shelley, of Sandra Shelley & Associates in Western Springs, Ill., began placing in-terim managers with clients about six years ago. It now accounts for 40% of the revenue from her 12-year-old consulting firm's four service lines. Hospitals' and health systems' efforts to flatten management and insufficient succession planning have fueled demand, said Ilah Stolz, executive vice president of interim management at B.E. Smith, a recruitment firm. Stolz's division is the company's fastest growing service.
Chicago-based Navigant Consulting plans to expand its interim placements beyond the executive suites to include healthcare directors who oversee such operations as pharmacy or radiology, said Hank Wells, who leads interim management projects for the publicly traded company, which acquired the Hunter Group, a healthcare consulting and turnaround company, in 2002.
An estimated 15% to 20% of Navigant's healthcare consulting revenue stems from its interim business, which has become an increasingly strong and diverse service, Wells said.
Using an interim officer to steer a company through a financial turnaround is a familiar strategy, but it's not the only reason hospitals seek out a substitute. Turning around a company was once the main reason Navigant installed an interim executive at a healthcare company; now it's one-third of the firm's work. Hospitals also use temporary managers to fill a critical spot during a national search for a full-time replacement or when launching or closing a service. Or a seasoned manager is hired temporarily to coach and groom a full-time employee for promotion.
The latter is a recent development, recruiters and consultants said. Rio Grande Regional Hospital in McAllen, Texas, brought in a Chicago human resources consultant in late January expressly to coach Karla Puente, a recently promoted human resources director.
"We salvaged a director," said William Burns, CEO of the 201-bed hospital that is finishing a 110-bed expansion. Burns described Puente as sharp and knowledgeable with a strong grasp of labor and immigration law-too smart to benefit from further formal education. But Puente struggled with delegation and department organization, he said. "That's something you're not going to learn in the classroom," he said.
Burns selected and hired Jan Chirchirillo to mentor Puente from three candidates supplied by the Nielsen Healthcare Group, a 12-year-old St. Louis company that specializes in interim healthcare management. Puente and Chirchirillo worked in tandem at first, with the mentor gradually easing out of the picture and finally departing in May.
"It's a great resource," said Puente, who worked with Chirchirillo to revamp the organization's human resources and recruitment. "Those four months just flew by so fast. I couldn't get enough of her knowledge and expertise." Puente turned to Chirchirillo as a sounding board or to talk through a decision. Chirchirillo provided Puente with valuable-and previously unavailable-professional feedback and tips.
Bruce Nielsen, president of the Nielsen Healthcare Group and a former hospital CEO, launched his company after conducting a 1991 survey of 134 hospital executives in Indiana. Half replied, and of those respondents, 60% said they would consider using interim managers, particularly in finance, nursing, intensive-care, emergency, surgical, laboratory and imaging departments.
He made three placements the first year and 11 during the second year. Now the number of interim managers he places with companies annually is "nicely in the three figures," though he declined to give specifics. Nielsen draws business from the recommendations of group purchasing organizations and about a dozen state hospital associations whose members receive a discount on services.
The expense of an interim executive varies by company and service. Some companies charge a fee for finding and screening candidates; clients then hire the interim executive, typically at a salary slightly above that of a full-time counterpart. Other placement companies deploy their own employees or hire an interim to work for their company on a temporary basis, and then charge clients a monthly fee. Often contracts include housing and travel expenses but don't provide health or retirement benefits.
Sometimes contracts include clauses or fees that prohibit or discourage a client from hiring an interim employee. Such clauses minimize the potential for divided loyalties, said George Whetsell, a principal of Wellspring Partners, a Chicago-based consulting firm. Often, such clauses are unneeded.
Always on the move
Interim executives often have decades of experience and few demands to keep them at home Monday through Friday. However, few wish to relocate permanently.
In the past 16 years, Lowell Johnson has shuttled from one employer to another 22 times. It's a record most would consider suspect, but his varied and numerous employers merely prove the interim executive has skillfully cultivated his career of diving into severely distressed hospitals or unexpected vacancies in the top office.
"I've been able to work every day that I wanted to in the last 16 years," said Johnson, noting that he's worked all but four months during that time, and the four months off were for scheduled vacation time. Demands of the job can be grueling-he's handled layoffs and financially strapped hospitals. As an itinerant executive, his commute can be lengthy-for example, from his home in Seattle to Wichita, Kan., round-trip each week. "You've got to be willing to live the lifestyle," he said.
Johnson is not only willing, he enjoys his career as an on-call executive and prefers it to a full-time job. "I've learned that when things are going well, I get kind of bored," he said.
Jay Hoffman opted to start his own Carmel, Ind.-based business as a consultant and interim financial executive after holding accounting and executive jobs at a variety of hospitals and health systems. "I've been in the trenches as a staff accountant and I've been a CFO," Hoffman said. Sandra Shelley & Associates has 16 employees who are registered nurses and half hold doctorates, though not all work as interim executives, she said.
The approach to filling a management vacancy varies as well, but in almost every case, interim executives have the power to make changes, unlike consultants, who make recommendations or advise clients. It's a significant difference, said Shelley, whose com-pany does both.
Shelley advises clients to use interim managers to their full advantage. That means asking a temporary executive or director to handle difficult or unpopular jobs, she said. Interim managers have experience with complex endeavors-and they can take ill will with them when they leave. That gives a full-time hire a fresh start.
Johnson, who often steps into financially failing hospitals, agrees. "You're going to use up a whole lot of good will," he said, but that clears the way for an incoming manager. To combat rumors and be effective during his tenure at a financially troubled hospital, Johnson said he needs to establish his authority early, without alienating employees.
To do that, Johnson introduces himself the first day on the job at multiple companywide forums. He fields questions. He establishes a rumor hot line and sets up weekly question-and-answer meetings. And if the hospital's financial condition requires job cuts that can't be handled by attrition, Johnson said it's important to be straightforward.
It is possible to rely too heavily on an interim executive to turn around a distressed company, said Michael Rindler, president of the Chicago-based management and turnaround firm Integrity Hospital Co. Rindler said an interim executive alone cannot be responsible for reversing poor financial performance, often years in the making. There's often a gap in oversight and leadership on the board that needs to be addressed.
There's also a fear that interim managers take essential know-how with them. Shelley and others argue that coaching clients' full-time employees and leaving behind sustainable changes are crucial to a successful job.
Rio Grande's Burns said weekly meetings with Chirchirillo and a detailed final report kept the hospital's executives apprised of changes to its human resources department and prepared Puente and her superiors to continue with changes once their interim hire departed. "By and large, the expense was justified," he said.
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