More Hospital CEOs Are Leaving Their Posts
The number of CEO changes across industries is rising, with healthcare being hit particularly hard compared to last year.
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By - Hospital chief executive officers (CEOs) are stepping down or leaving their positions more than last year, according to the latest data from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
Hospitals announced 18 CEO exits last month, according to the report. Combined with last month’s tally, hospitals announced 41 CEO exits so far this year, which is 58 percent higher than the 26 announced through February last year.
More CEOs are leaving their posts so far this year, with the report counting 167 announced exits in February 2023 and 112 announced exits in January 2023. But February’s count is the highest monthly total since 219 CEOs stepped down in January 2020, the firm reported.
Additionally, 279 CEOs across US companies have exited, nearly matching the 276 exits that happened within the first two months of 2022.
US companies across industries are preparing for significant change, prompting more leadership switch-ups than normal, says Andrew Challenger, leadership expert and senior vice president of Challenger, Gray & Christmas, Inc. Hospitals, in particular, are facing a new normal.
“We will likely continue to see increased CEO exits in hospitals as they recover from the pandemic, consolidate, and respond to both worker shortages and increased costs,” Challenger explained in the report.
The latest “National Hospital Flash Report” from Kaufman Hall found hospitals are still operating on negative margins, with last month’s median year-to-date operating margin index coming in a -1.1 percent. However, the index dipped just slightly from January 2023’s index of -0.8 percent, suggesting some stability for hospitals.
Experts at Kaufman Hall said the relative stability seen over the past few months might spur hospitals to redefine what it looks like to operate a successful hospital in 2023.
Amid these changes, many CEOs are taking a step down. The Challenger Gray report found that 47 CEOs are becoming Board members or transitioning to another C-level role. Meanwhile, 68 CEOs have retired so far this year. CEOs tend to be the oldest executives within a company, with an average age of 59 years across industries. They also have the longest tenure in the C-suite at about seven years.
Hospital CEOs, however, seem to step down sooner, according to data from the American College of Healthcare Executives (ACHE). The average tenure for a hospital CEO is about five years. Additionally, ACHE found in a separate report that hospital CEO turnover has remained steady at about 16 percent in the last couple of years.
“Hospital leaders have played, and continue to play, a critical role in our recovery from the COVID crisis, and the value of strong, capable leaders has never been more evident,” said Deborah J. Bowen, FACHE, CAE, ACHE's president/CEO. “While continuing to address immediate patient needs, healthcare leaders have long been looking beyond the pandemic to position their organizations for the future. This includes succession planning and a focus on developing a pipeline of leaders equipped to address the challenges of tomorrow.”
