New Hospital CEOs Tend to Be Outsiders, Were Rarely CIOs

Earlier this year, the American College of Healthcare Executives released its annual report on hospital CEO turnover rates. At 20 percent, the rate is the highest it’s been since the organization started analyzing those numbers in 1981. (ACHE gets its data from the American Hospital Association.)

ACHE attributes this to a combination of factors – retiring Baby Boomers, hospital consolidation and increasing complexity. In addition, healthcare is struggling with meaningful use and other technology initiatives, preparing for ICD-10 and adapting to rapidly changing business models. Such high hospital CEO turnover, then, shouldn’t be too surprising.

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It does raise a question, though: Who’s replacing the departing CEOs?

To answer that, Billian’s HealthDATA and Porter Research looked at announcements of executive moves tracked in the first seven months of 2014.

The resulting study examined more general hospital C-suite trends, as CEO moves accounted for only 53 percent of the 384 personnel announcements. Several points stand out:

• Sixty percent of C-level executives came from outside the organization. For CEOs specifically, the figure was 58 percent.
• A “good portion” of the placements came with “interim” tag, says Jessica Clifton, marketing director at Billian’s. This reflects the transition in the market as, for example, facilities merge and consolidate roles.
• New COOs came from outside the organization 27 percent of the time. In addition, COOs were the most likely internal candidates for a move to CEO, receiving that promotion 44 percent of the time. Clifton says this could be because COOs take a multifaceted approach to their work, building relationships with “multiple wings of the hospital.”
• Chief nursing officers (CNOs) were the most likely executives within an organization to be promoted to COO. This occurred in 17 percent of cases.
• In all, women comprised 28 percent of new C-suite or director-level hires. CEOs made up the plurality, at 38 percent, followed by CNOs (26 percent) and COOs (13 percent).

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The research is also notable for what it didn’t find.

For starters, only 3 percent of hospital C-suite hires came from outside the hospital or health system environment. Clifton expects this number to increase. Market forces leave today’s hospitals to compete for patients – who, when comparing rising healthcare costs to declining travel costs, can be more discerning consumers than they have been.

“Patients have so much more flexibility than they used to,” she says. This should drive innovation in areas such as patient engagement; here, Clifton says, hospitals that bring in executives with hospitality and customer service experience will be at an advantage.

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In addition, only one of the 384 personnel moves thus far in 2014 involved the promotion of a CIO to the role of CEO. This isn’t necessarily because CIOs can’t handle the top job but, rather, because of the importance in building healthcare IT infrastructure, Clifton says. The CIO is “a key role to have in place.”

Finally, Billian’s saw little activity regarding healthcare CISOs and CSOs, though Clifton says this will likely change as hospitals segment their technology roles. The same was true for clinical informatics roles, she adds, but that’s due in part to the multitude of titles used to describe that particular role.