Healthcare CEOs haven't been bolting under the weight of #MeToo accusations at nearly the same rate as other industries, but the sector is not immune to surprise exits.
Athenahealth co-founder and CEO Jonathan Bush, for example, left swiftly in June amid allegations of physical abuse and sexual harassment. But there are other reasons, too. The CEO of PinnacleHealth, currently UPMC Pinnacle, stepped down suddenly last year, reportedly to “seek an alternative career path.” In Ohio, Summa Health CEO Thomas Malone resigned last year, shortly after hundreds of physicians and staff members expressed displeasure with his leadership. And many industry insiders were surprised last week when Cerner Corp. President Zane Burke announced he would leave the company on Nov. 2 after five years in the role. John Peterzalek, Cerner's executive vice president of worldwide client relationships, will take on Burke's duties and become chief client officer.
A number of governance experts say the current environment—in which CEOs can leave without notice for behavioral or performance reasons, an illness or injury, or if they're plucked away by a competitor—highlights the importance of having two succession plans: one for a typical departure, such as a planned retirement, and another specifically for a surprise vacancy in the top spot.
Summa Health officials declined to comment. A UPMC official said having “deep bench strength” bolsters the organization's succession planning, both long- and short-term but declined to offer specifics.
“Boards are certainly aware now that sudden departures—they're not ordinary course—but they can happen,” said Michael Peregrine, a partner at the law firm McDermott Will & Emery. “And I think clearly the #MeToo environment has driven that home.”
But experts say a surprisingly low number of not-for-profit health systems have emergency succession plans, even if they have a plan that covers departures under typical conditions. It's more common at for-profit hospital chains, which are under greater pressure from investors to have such plans in place.
It's not an issue that's studied often, but the data that exist paint a grim picture. Only 17% of healthcare CEOs said they had a successor who was prepared to step into their role, according to a study from Witt/Kieffer.
Only 31% of CEOs said their succession plans had been updated within the past two years, and the frequency of such updates had declined between 2011 and 2014, according to the most recent data available from the American Hospital Association.
It's perhaps understandable why so many hospital and health system boards don't have emergency succession plans—it's not an easy subject. It's kind of like having an end-of-life conversation, but—like it or not—that's the job directors signed up for, said Jamie Orlikoff, whose consultancy specializes in healthcare governance.
“A number of boards are in denial,” he said. “They don't want to think about it … and don't plan for it. It's a fundamental abrogation of the governance responsibility.”
There can be a fear of offending the CEO or of an awkward situation. Some boards mistakenly think if they bring up the subject, the CEO will consider leaving, said Steven Berkow, an executive director of research at the Advisory Board Co.
“The closer you get to the CEO, the more awkward people feel about having this conversation,” he added.