"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.

Tuesday, February 11, 2014

Private Sector CEOs Becoming Hospital CEOs En Masse

I read an article in Chief Executive magazine on the change that is occurring in hiring hospital CEOs. According to the article, hospital and health system boards are now pursuing replacement CEOs from private industry rather than experienced members from the hospital C-Suite.  They say that they want an outside perspective with the move away from a fee-for-service environment.  Sorry, but I am not buying it.  

With the changes occurring in health care today, there may be a unique situation whereby someone with a certain background is deemed to be well suited for a particular health system, but as a rule of thumb, no way.  The article cites a banker taking over a struggling health system in Miami.  They cite four additional examples where a consultant, a university president, a lawyer and a supple chain executive became hospital CEOs.  How many of them were hospital board members who thought that they could make the transition from oversight through governance to running the hospital, a business that Peter Drucker has called the most complex industry to run?  Again, there may be unique situations requiring a unique set of skills but the two-thirds of replacement CEOs expected this year coming from outside of health care ain't gonna happen.  

If CEOs from private industry think that there are too many regulations in their respective industry, try 122,000 federal health care regulations that health system CEOs have to be responsible for in their everyday work lives.  That doesn't include State regs, OSHA, IRS and list goes on.  They also have no experience in working with physicians unless you are the university president who could draw on his or her experience in dealing with faculty, which requires a different set of skills.  You just don't tell physicians that this is way it's going to be done so just go out and do it because I said so, as I have heard my business colleagues suggest from time to time.  

Now, I have seen an increase in the number of physicians being asked to become CEOs of a hospital.   If you have a physician who is a champion of the changes that are occurring in the health care delivery model, who embrace the triple aim of health care reform, who understand quality-based reimbursement, who are in tune with population health and is an adopter of evidence-based medicine, then you may have the right person for the job.  Taking someone from the private sector may work in certain circumstances, but not as the solution stated in the article.

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