"The Ronan Report" provides insight about the activities at the Western Maryland Health System in Cumberland, Maryland, and about the changes taking place in healthcare today from a CEO's perspective.

Wednesday, March 6, 2013

Is It Time to Go?

In this month's issue of the Harvard Business Review, I read an article on the tenure of CEOs.  The article, "Long CEO Tenure Can Hurt Performance," reported that the optimal CEO tenure length is 4.8 years according to a University of Texas professor and two of his doctoral students.  They studied 356 US companies from 2000 to 2010 and examined human resource aspects vs. magnitude and volatility of stock returns.  They wrote that CEOs early in their tenure focus on what's happening inside as well as outside the organization.  As time goes by, they turn their focus internally and focus more intently on employee relations and issues related to operations vs. the marketplace. 

I am in my 14th year as CEO of WMHS (who would have thought that) and although the focus of the article was not health care, there are aspects of the article that can't be ignored by me or any other CEO.  First of all, this is why you have a Chief Operating Officer who can focus on internal operations; they are looked at as the great motivators.  The CEO has to be a motivator but also be the marketplace strategist and the visionary.  I like to think that such strategies and visions brought us our affiliation sixteen years ago, our independence from Ascension Health in 2008, a new state- of-the-art hospital in 2009, a new payment methodology in 2010 that is the future of health care and in 2013 potentially a new alliance between three health systems looking to preserve low-cost, quality health care in their respective communities. 

According to the article, Boards need to provide the necessary oversight to ensure that the CEO is still focused on the internal but also external strategies.  Since I serve at the pleasure of the Board and I have been doing so for over three times the optimal length of CEO tenure, I hope that it is safe to assume that my approach to the position of CEO remains on target.  If it turns out that isn't the case, I'll hear about it.

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