Executive search firms see demand for new roles, innovation

Executive search firms say their healthcare clients are generally offering leaders higher pay as they take on more responsibilities at increasingly complex organizations. But those running hospitals and health systems also continue to struggle with burnout.

A Modern Healthcare survey of 30 executive search firms found that growth in C-suite compensation is due in part to consolidation and health systems’ heightened competition for talent, especially in financial and operational roles. Survey respondents said higher pay and innovative benefits at competing organizations can also prompt leaders to consider a job change. 

Related: Which top jobs at health systems saw the biggest salary increases

Here are five key executive market trends the surveyed companies identified, based on their client experiences in the past year.

1. Compensation innovation 

More than half of the search firms responding to this year's survey have seen recent changes in health systems’ executive compensation packages, according to data from Modern Healthcare’s Executive Search Firm Survey. In addition to larger salaries, healthcare organizations are offering potential leaders perks like at-risk compensation, supplemental executive retirement plan contributions, additional continuing medical education opportunities, employee stock options, and more work/life flexibility.

While executive search was once mostly a local exercise, organizations are more often looking on a national scale for talent and have to think more competitively about compensation packages as a result, said Kathryn Sugerman, partner at Spencer Stuart, an executive search and leadership consulting firm. 

“There is a need to proactively and thoughtfully recruit executives who may not have even been thinking about making a change or a transition,” Sugerman said. 

In some cases, survey responses said employers have nearly doubled relocation payouts compared with two years ago, reflecting the changing housing market and adding another incentive for job hunters.

Organizations are also leaning on longer-term benefits to incentivize executive retention, including bonuses paid out over several years, said Donna Padilla, executive partner and healthcare market leader at search firm WittKieffer. 

Fifty-five percent of the search firms said their healthcare clients offer leaders bonuses based on company performance, 10% offer revenue growth bonuses, and 7% offer payouts if executives achieve specific care quality outcomes. 

Performance-based bonuses serve as a way to invest in healthcare leaders while prioritizing operational success, Padilla said. 

2. More responsibility, complexity 

Executive search firm leaders say healthcare CEOs have had to juggle more responsibilities in recent years, splitting their attention between initiatives like telehealth integration and ambulatory care expansion, while facing challenges such as containing expenses and competing with larger regional organizations and non-traditional providers.

Rising labor costs and declining federal reimbursement have been major issues for C-suite leaders, many of whom have adjusted their systems’ business models to offset such impacts to the bottom line, said Peter Blau, managing partner of global healthcare services and solutions at search firm DHR Global. Leaders are also managing larger, more complex organizations, he said.

Aside from overseeing operations and finances, leaders are also often expected to advance their organization's societal impact, fulfilling community needs through local partnerships and meeting internal diversity and equity goals.

3. Burnout still an ongoing challenge 

Leaders have experienced declines in their mental health, exacerbated by lingering difficulties from COVID-19. 

In the past year, rates of burnout and turnover among executives remained high, according to responses from Modern Healthcare’s survey. Among the firms' healthcare clients, 38% said executive burnout/turnover rates increased, and 48% said they remained the same. 

“These leaders aren't really caring for themselves, and many don't feel safe to talk about it,” Padilla said. “The general sense is, ‘It all rests on my shoulders. I need to care for everybody else's issues.’ ” 

Some executives have sought mentors who can help them focus on maintaining more of a work/life balance, Padilla said. For others, burnout has led to leaders pivoting in their careers or leaving healthcare altogether, she said.

4. Increasing focus on tech, equity roles

More systems are looking to hire for executive positions such as chief AI officer, chief digital officer, chief information security officer and head of data analytics to enhance cybersecurity efforts and accommodate the more dominant role technology is playing in healthcare delivery.

Another growing focus for health systems is having leaders who can bring a team together around diversity and equity, Sugerman said. More organizations are creating chief health equity officer positions to develop resources and create infrastructure for equitable patient care and community outreach, she said. 

In the patient care space, executive roles like chief virtual care officer and behavioral health leadership positions are also in higher demand as organizations work to align clinical services across inpatient and outpatient settings, Sugerman said.

5. Balancing clinical and financial acumen

Health systems are divided on whether to prioritize C-suite leaders with clinical experience, though most value executives who are used to working in public-facing roles with a broad set of responsibilities. 

Often, organizations have pursued executives with a clinical background as it can be beneficial to have leaders who understand the intricacies of patient care, Padilla said. Numerous training programs exist for physicians in particular to learn how to become business leaders and make the transition from clinical work to organizational management, she said. 

However, to sustain an organizations' viability, it is important to have executives with a strong understanding of how to manage healthcare operations and implement workforce strategies, Blau said. 

“Overall, our organizations are looking for leaders who are experienced, who have all areas of the health system in their purview, who have the ability to build strong board relationships, who can work with community leaders and who can influence legislators,” he said.