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Our new year is bringing ample challenges to the healthcare industry, from strategies to deal with the Affordable Care Act, to the realities that deficit reduction will require additional cuts in Medicare reimbursement to providers.

Congress is still in denial about the biggest problem with deficit spending – Medicare, but healthcare executives should not draw any hope that they will somehow escape the pain. 

Cuts in payments inevitably will spark conflict on a national basis, as various healthcare groups bicker over how to divide the smaller financial pie.  These “who wins and who loses financial conflicts” will almost certainly “trickle down” to local relationships between hospitals, physicians, and other providers.  When money is involved, there will always be tension, and tension will lead to conflict.

This tension, and the conflicts that surface, will be the second biggest contributor to CEO turnover during the next five years, after the Baby Boomer retirement effect.  Today, annual hospital CEO turnover is about 17 percent.  I predict that will escalate to more than 20 percent in that five-year timeframe. 

As I considered these probable developments, I began to rethink my beliefs regarding the competencies and ideal characteristics of the senior leaders who run hospitals.

As I thought about this over the holidays, I realized that the leadership characteristic that kept moving to the top of my list was courage.  Yes, communication and relationship management, industry knowledge and business skills are all critical, as is integrity, but I think courage is very important.

These next several years will produce unprecedented change.  This change, in addition to concerns about finances, will produce enormous unrest as we redefine how healthcare must be delivered.  Hard choices, very hard choices, will be the norm.

These tumultuous times will require leaders who are smart, who possess a deep understanding of healthcare operations who are proven performers, and who are excellent communicators.  But more importantly, these men and women must have the courage, the courage to promote innovation and change.  They must possess the courage to do the right thing when, career-wise, it would be easier to take the easy way out.

© 2012 John Gregory Self