The more things change, the more they stay the same.
Hospital chief executive officers made an exitvoluntarily or notat nearly the same rate last year as 2005.
And 2004. And 2003, 2002 and 2001.
Figures published yearly by the American College of Healthcare Executives show little change to the 2006 turnover rate among hospital CEOs, 15%, from the 14% to 16% reported during the prior five years. The rate, which has not dipped below 13% since the association first tracked turnover in 1981, has long been called too high by industry insiders. Lower executive turnover limits the expense and turmoil that often go along with a change in leadership, experts in governance and management contend.
Executive recruiters and Thomas Dolan, president and chief executive officer of the ACHE, said there is little on the horizon to change the unwavering rate anytime soon. Dolan, who has repeatedly called for turnover closer to 10%, conceded that the recent 14% to 15% churn among top hospital executives may not budge for some time.
Earlier in the decade, turnover dropped as hospital finances improved and governing boards gained an understanding of the heavily regulated industry, he said.
Directors and trustees have grown less likely to oust chief executives over fallout from federal policy, as was the case after cuts to Medicareoften hospitals single-largest customerled to upheaval in the late 1990s, he said. CEO turnover hit a 10-year high in 1999 at 18%.
In this decades final years, Dolan said two factors could prompt hospital CEO turnover to rebound. Far-reaching healthcare reform, already an issue in the 2008 presidential campaign, could trigger another hike if significant changes prompt some chief executives to reconsider their careers, he said. Baby boomers could also trigger an uptick, though its unclear if the generation will choose the typical retirement age, he said. Thats the biggest wild card for the future, Dolan said.
Industry response to the chronically double-digit turnover rate appears to be mixed. Financial incentives to retain executives have grown more widespread and sophisticated, said Jim Nelson, a managing director in Clark Consultings healthcare division. The incentives, or golden handcuffs, typically pay out 20% to 50% of an executives salary in a bid to stop rivals from stealing a CEO. Nelson has seen more so-called special-purpose retention incentives in the past three years than in all prior years, he told healthcare insiders at a New Orleans conference in March.
Nelson said a desire to curb disruptive turnover has fueled interest in the packages that tie payouts to goals or a certain date, also called pay-to-stay deals.
Hospital chief executive turnover appears on par with other industries. Fourteen percent of S&P 500 companies had a newly appointed chief executive in 2006, according to recruiting firm Spencer Stuart.
Turnover among North American CEOs rebounded to 16.2% in 2005 from 12.9% a year earlier, according to the most recent research by Booz Allen Hamilton. The 2005 figure is the highest turnover among U.S. and Canadian CEOs reported since 17.9% in 2000, figures show. Booz Allen Hamilton does not break down U.S. and Canadian CEO turnover by industry because the limited data makes figures unreliable, said spokesman Michael Bulger.