UnitedHealth Group announced this month that it was reshuffling its executive office to better position itself for a “future state” that includes, among other things, continued aggressive moves into various Affordable Care Act-driven health insurance exchanges.
The announcement coincided with the resignation of Gail Boudreaux, the company's executive vice president and CEO of UnitedHealthcare, one of the country's largest insurers. Whether these leadership changes are ultimately successful, they show that UnitedHealth has done some shrewd assessment of where it needs to go strategically and taken steps to align its executive suite accordingly.
Too many participants in the new-look healthcare landscape are attempting to win this new game with yesterday's star players. Can insurers, providers and amalgamated networks “win” with their current executive teams? Certainly, but many organizations just don't know for sure, since they haven't prioritized executive talent assessment and succession planning as part of their strategic planning toward a future state.
Two years ago, my firm surveyed 200 healthcare CEOs over age 55 and found that surprisingly few—about 4 in 10—had engaged their governing boards in formal succession-planning processes. While most boards and executives see the wisdom of proactive succession planning, it often takes a back seat to seemingly more pressing operational challenges and strategic imperatives, even among executives approaching retirement. With all that healthcare leaders have to deal with today, it is understandable that identifying, developing and recruiting the next generation of leaders is not top of mind.
The way to keep succession planning top of mind, even ever-present, is to make it part of regular strategic planning.
Any strategic exercise (such as the drafting of a five-year plan) should take into full consideration executive talent and staffing needs. One brief example: Many growing health networks are hedging their futures with clinical integration and the incorporation of physician (or nurse) executives into critical roles—even that of the CEO. Not fully appreciated is the sheer challenge of recruiting those physician leaders, given that most accountable care organizations and assorted health networks nationwide are also targeting these individuals, and there is a dearth of clinicians willing and ready to assume mid- or senior-level administrative positions.
Whether or not they are physicians, tomorrow's healthcare executives will need a different skill set than today's. Trustee responsibilities are changing, too, and it's important to note that governing boards bear responsibility to conduct their own skills assessments and succession planning. Without it, boards risk becoming stagnant, jeopardizing the future state.
Succession planning takes on added significance today given that:
Exceptional talent confers a major competitive advantage. With healthcare in upheaval, vision and adaptability are at a premium. There is an art and science to identifying high-potential visionary leaders within one's organization (the first step) and then allocating resources to recruit difference-makers from the outside (the second step).
The executive talent drop-off is real. Five years ago, human resources leaders were warning of a “5/50” leadership crisis, that 50% of baby boomers would be retiring within the next five years. This figure may have been alarmist, and in healthcare, we have seen many older executives stick around to shore up their nest eggs as well as play a role in shaping the changing landscape. Still, we are experiencing a wave of retirements and scrambling to find an adequate replacement generation.
Leadership skills are being reshuffled, too. CEOs and other executives will still need to be leaders in the traditional sense, but they'll need M&A and business-development expertise; a relational, matrix-oriented mindset; a continuum-of-care focus; and more. In five years, there will be tales of healthcare players whose grand visions went unrealized for a lack of leaders with the right skill sets.
Once executive-succession planning is implemented, it needs care and nurturing. Progressive organizations develop meaningful metrics to evaluate executive management and its suitability for their future states. But for most hospitals, systems, insurers and other healthcare organizations, that is a long way off. The more urgent matter is undertaking succession planning in the first place.
