Executive search firms say the rapidly changing healthcare landscape is creating new types of job opportunities for senior executives. And search firms are working with their health system clients to establish more quality-based bonuses for chief executives.
The role of chief population health officer is so new that search firms have difficulty locating qualified and experienced candidates, said Abbe Ulrich, principal of healthcare practice at Los Angeles-based Korn Ferry. “There are not a lot of people that have been there, done that,” she said.
Shifts and redefinitions of roles are leading to increased CEO turnover, research shows. CEO turnover at hospitals hit 18% in 2014, an annual percentage that's only been matched four times since 1981 and surpassed only once, according to a March study by the American College of Healthcare Executives. Some movement can be linked to retirements and M&A activity, according to the study, but some executives step down because of the need to navigate a rapidly changing industry.
Turnover has forced firms to put more resources into placing executives. Demand for senior executives was high in 2015's first quarter, and B.E. Smith has increased the number of its healthcare recruiters by 10% over 2014, said Mark Madden, senior vice president of executive search at the Lenexa, Kan.-based search firm.
Compensation bonus packages that reward CEOs for hitting quality benchmarks such as patient and physician satisfaction are becoming more common. “All levels of management need to have that,” Madden said.
Companies began moving away from perk-based bonuses, such as country club memberships, about five years ago, said Kathy Noland, vice president of executive search at B.E. Smith. They received bad press for these perceived luxuries, she said.
B.E. Smith uses a four-pillar incentive plan in which 25% of the bonus is tied to performance on quality, workforce, growth/market share or company financial strength, Noland said. The quality metrics pillar, she said, takes into account a provider's results in CMS core measures, regulatory and accreditation results, and patient-satisfaction scores.