News

Hospital CEO Turnover Rate Hits Record High

By Ryan Mcaskill

In 2013, 20 percent of 4,546 hospitals studied across the U.S. experienced CEO turnover.

- For any hospital, having strong leadership is a major component to success. Aside from making the decision on hardware, software, personnel and services, the right leadership can motivate a staff to be better, instill a single vision and help a hospital stay updated with industry and regulatory trends and ahead of the competition.

Losing a CEO is not always a bad thing, but without the proper protocols in place and a plan of action, the loss of leadership can cause any hospital to experience additional challenges. In an ever-evolving healthcare landscape, moments like this can be turning-points for an entire organization. A study found that these moments are occurring more than ever before.

According to a report from the American College of Healthcare Executives (ACHE), 2013 experienced the highest increase of hospital CEO turnover rate since the organization started keeping track in 1981. ACHE obtains and analyzes the CEO turnover rates reported by the American Hospital Association. A total of 4,546 hospitals were used for the 2013 study and 20 percent of them replaced a CEO during the year.

The number of hospitals examined has dropped slowly, but consistently since 1981 when 5,687 shared information but the percentage of CEO turnover has fluctuated between 13 percent and 18 percent. This is the first time it has surpassed 20 percent.

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  • “The increase in the turnover rate may be indicative of a combination of factors, including an increased number of baby boomers seeking retirement, the emerging trend toward consolidation in our industry and the complexity and amount of change going on in healthcare today,” said Deborah Bowen, FACHE, CAE, president and CEO of ACHE. “The increase in the rate reinforces the need for healthcare leaders to work with their boards to ensure appropriate succession plans are in place.”

    Alaska topped the list of all fifty states, Puerto Rico and the District of Columbia with the highest adjusted CEO turnover rate at 37 percent. Oklahoma (33 percent), Arkansas and Puerto (30 percent) rounded out the top of the list. The opposite side of the spectrum saw Vermont and Rhode Island with the lowest turnover (0 percent) with New Jersey and West Virginia (10 percent) coming in second.

    CEO turnover can negatively impact a hospital or health system in several ways. Abrupt or poorly planned leadership changes could disrupt the leadership model, affect the culture and thereby threaten the organization’s overall performance and ability to achieve its long-term goals. These changes can also impact the revenue cycle as a lack of direction can impact operations and disrupt collection and billing practices.

    As a result, the ACHE has urged leaders and boards to ensure appropriate succession planning is in place. This will prevent any hangups during the transition period and ensure that systems continue to more forward.