Hospital CEO turnover stays high in pressured new climate

The tough challenges facing hospital and health system CEOs as they steer their organizations through the shoals of rapid healthcare change have led to a high executive turnover rate.

Last year, hospital CEO turnover was 18%, according to the American College of Healthcare Executives.

While that rate was lower than the record high of 20% reported in 2013, it still ranks among the highest rates over the previous 15 years, according to the ACHE.

Hospital and health system boards want to keep up with the competition in areas such as telehealth, health information technology, population health management and financial risk contracts. And CEOs are expected to implement initiatives in those areas rapidly and effectively, said Thomas Giella, chairman of healthcare services at Korn Ferry, a Los Angeles-based executive search firm. Those who don't show enough progress may be forced out, he said.

This new climate is causing more C-suite reshuffling, with average CEO tenure now lasting less than four years, Giella said. In the past, hospital CEOs would typically serve 10 to 15 years.

One positive side effect of shorter tenures, Giella noted, is that health systems are more willing to hire older, more experienced executives who can produce results in less time. On the other hand, the faster pace of change also can lead to the departure of older CEOs, who may not have the desire to lead their system through a dramatic transformation, said Stephen Gelineau, executive vice president of GE Healthcare Camden Group.

The CEO or the hospital system may decide to have someone else lead such a major effort.

Another factor in the higher CEO turnover rate is simple demographics. Many hospital leaders are baby boomers headed into retirement, said Paul Bohne, senior partner and vice chairman of the healthcare practice at Witt/Kieffer.

Hospital consolidation also triggers more CEO turnover, Bohne said.