The trend of CEOs being hired with business development and financial management expertise but no healthcare experience has spurred much discussion in the healthcare community.
While experts in the healthcare industry seem cautiously skeptical, many aren’t against the idea of “outsiders” taking healthcare CEO positions either. Healthcare Finance News talked to some “insiders” to get the pulse of what’s being talked about.
[See also: Job growth continues in healthcare despite decline in online ads for jobs]
“I think the concept is generally well received because many people in our business recognize that fresh perspectives and innovative ideas that have worked in other industries might help solve some of our problems,” said Randy Slack, CEO of Memorial Medical Center in Livingston, Tex.
The chatter began on social media after a poll was released by Black Book Rankings in December. The poll included input from 1,404 healthcare provider organizations’ human resources officers and board members. It estimated that two-thirds of CEOs hired in 2014 will have little to no healthcare sector experience. According to poll respondents, only 39 percent of CEOs hired in 2013 came from another hospital CEO position, down from 79 percent in a 2009 Black Book survey.
The Black Book poll was followed by a Modern Healthcare Custom Media survey released at the beginning of January. The health industry executives who took part in the survey said the top three outside industries the next generation of healthcare leaders was most likely to come from would be finance (92 percent), the hospitality industry (55 percent), investment (40 percent) and the pharmaceutical industry (33 percent).
[See also: CEO compensation is business strategy]
Many respondents also indicated they are cautious about whether a non-healthcare CEO could be more successful than an industry veteran. The majority of respondents (59 percent) said they believe an outsider would be less effective, while 17 percent said a non-healthcare CEO would be equally effective, and only 9 percent thought an outsider might be more effective.
“Healthcare executives can be quite provincial in their thinking. There is a tendency to believe that one must be born and bred within the industry in order to understand its nuances and complexity,” said John Leifer, president of the Leifer Group, a healthcare consulting company. “I believe that this thinking is fundamentally flawed. The challenges facing healthcare executives are undeniable – all the more reason why we should be casting a broad net when seeking out innovative thinkers who can bring transformational leadership to our industry.”
But bringing in an outsider is not without challenges, Slack added. They may bring in potentially effective and creative ideas, only to quickly find out that these plans would never follow through due to the many legal and regulatory barriers within the healthcare industry, for instance.
“I imagine outsiders could bring some positive changes in the areas of process design and patient safety,” he said. “I could also imagine a high failure rate for outsiders who don't quickly learn the nearly schizophrenic relationship between the government, patients, payers, physicians and providers. It is a strange dynamic with many counter-intuitive and counter-productive rules and processes.”
While the idea of a non-healthcare CEO bringing in fresh and new ideas might be appealing, there are other major factors to consider, said John Olmstead, director of surgical and emergency services at the Community Hospital in Munster, Ill.
“In the healthcare world, we can’t work in silos anymore. You need someone that understands the big picture,” he said. “And I don’t see how someone without healthcare experience can get that big picture.”
A CEO with just financial management experience, for example, may work out well for very large healthcare institutions where they might be farther removed from day-to-day hospital activity, but someone without healthcare experience would be less effective in the majority of hospitals, which are small, community organizations.
“We are a fairly large hospital, and as a director of surgical services and the emergency department, I spend a lot of time communicating important information to our CEO. While I may have to translate certain information when it comes to technology, because our CEO already has a lot of basic healthcare knowledge, I don’t have to spend as much time translating every bit of information I have to communicate to him,” he said. “We can spend time talking about the major issues at hand instead.”
[See also: CEO compensation heart and soul]