As healthcare changes, systems need to broaden search to find disruptive CEOs

Critics say today's health system CEOs haven't proved willing or able to shift their business model to meet the demands of consumers accustomed to rapid, high-quality service in other industries.

But that's not always true. Four years ago, Dr. Rod Hochman, CEO of Providence Health & Services, hired Aaron Martin away from Amazon to head strategy and innovation. Martin's team has spun out several new products to better engage consumers between episodes of care, then found venture capitalists to turn them into businesses.

One is Xealth, which enables physicians to “prescribe” a wide range of nonmedical products or services for patients directly through the electronic health record, including apps, articles, Lyft rides and health-assisting products.

Martin said what Hochman hired him to do—build deep digital engagement with consumers—is taken for granted in other industries but is brand new in healthcare. Still, he doesn't think he would ever feel comfortable moving into the Providence CEO role himself.

Instead, he urges more healthcare CEOs to learn from Hochman. “I think you need people with clinical or healthcare operational backgrounds working elbow to elbow with folks like me,” said Martin, now Providence's senior vice president and chief digital officer. “It's getting into the lean startup mindset.”

With healthcare changing rapidly, hospital CEO positions turning over at a high rate, and baby boomer senior executives eyeing retirement, some hospitals and health systems realize their next leaders will need a different set of experiences and skills to successfully navigate that new world. For example, these leaders may have to figure out how to run a “health village” rather than an acute-care hospital, a shift recently announced by Ascension's Providence Hospital in Washington, D.C.

Being a hospital CEO has always been a grueling job requiring long hours, high public accountability and the ability to accommodate multiple demanding stakeholders. The new operating environment will require an even greater openness to change, willingness to listen to customers and front-line staff, and courage to radically redesign systems to improve quality and reduce costs.

At the same time, however, hard-charging innovators must understand that healthcare is different from tech, retail and other economic sectors in that the stakes—for life and health—are greater and the tolerance for error is lower. New products and designs must be tested and rolled out more rigorously.

“Unlike Starbucks, you can't remake the drink,” Kocher said. “Healthcare needs to be much more reliable than other consumer products. People sometimes arrive with hubris and think it's not that complicated. They need to learn from people who know healthcare so they don't make naïve mistakes.”

Another issue in attracting talented leaders with valuable experience from other industries to the largely not-for-profit hospital sector is money. “Hospital systems are community assets to serve the community, not to get rich quick,” Korn Ferry's Giella said. “People coming in from for-profits don't have the potential for a big equity payout.”

In addition, it may not be easy to find health system CEOs who have both a head for tech innovation and transformation and a hands-on passion for unglamorous health promotion programs in their communities, which are key to the population health approach.

A leader in the latter camp is Jacquelyn Whitten, the newly appointed interim CEO of Advocate Trinity Hospital on Chicago's South Side, who helped develop several community health programs over the past few years as the hospital's chief nurse executive.

The programs she spearheaded include sending community health nurses out, in collaboration with lay health workers, to help patients manage their chronic conditions like diabetes and hypertension, and working with community organizations and a nearby junior college to train underemployed workers for higher-skill jobs. The hospital also works with the college to train certified nursing attendants.

“These programs decrease our readmission rates, make it easier for us to recruit and retain staff, and increase employment in our community,” Whitten said. “I see CEOs leaning in with those kinds of stakeholders to have an impact on population health.”

University graduate programs in healthcare management are scrambling to reshape their training of future leaders to meet the changing profile of the CEO role. “Every graduate program is wrestling with the question of how you prepare students to work in what is essentially an unknown future,' said Douglas Anderson, director of the Master of Health Administration program at George Washington University.

“The era of the leader being one perfect person with all the knowledge and announcing the direction of the organization is over,” he said. “Now, half of it is knowing what you don't know and giving everyone a voice, including patients and the person who refills the water jugs. They bring knowledge about improving the care experience, and they have to be part of the conversation.”

CareMore's Jain agrees that health systems need to find ways to disrupt traditional notions of hierarchy and inject fresh thinking into their organizations. That includes putting early-career innovators into positions where they can have higher impact, as Silicon Valley firms do, rather than making them wait decades for top positions.

“You need to create a balanced organization that's full of people with wisdom and experience as well as people with high levels of energy and passion,” he said. “Both are needed for successful organizations today.”