Identifying and recruiting a top CEO for a rural/community hospital is one of the toughest jobs a governing board will undertake. It is also a decision that can easily be categorized as “make or break” for the future success of these facilities.
For more than eight years I served as a senior executive with one of the largest not-for-profit health systems in the nation as a general manager and later as the Senior Vice President of Business Development. During my tenure, and subsequently, I have led or participated in numerous executive searches for these and similar facilities. While I would not describe myself as the authority on the subject, my experience in collaborating on shared services, conducting operational/management assessments and serving from time to time as an interim CEO, positions me ahead of most search consultants in this particular market segment.
I have seen some wonderful outcomes that propelled a hospital to new levels of success, and observed from a distance more than a few bad outcomes that resulted in the closing of hospitals which led to a loss of jobs and a long-term downturn for the community’s economy.
These successes and notable failures to find the right leader were not solely based on whether the board sought outside counsel or did the work themselves. This has led me to believe that the secret to success is more about the quality of the board, their familiarity with issues confronting their particular hospital and an obvious passion for its success as well as a deep determination to invest the time it takes to identify and screen the right person. Done right, it is a very time consuming process.
Here are five critical factors that are key to success:
- Committed, Informed Board – A great CEO cannot succeed with a bad board, that is to say a group of community leaders who have not taken the time to expand their knowledge regarding the art of governance, current and near-term challenges arising from changes in regulatory and reimbursement reform, or the importance for self perpetuating boards avoiding the appointment of new board members with personal agendas (read: ax to grind) based on an their established point of view about how the business should run. For example, board members with a public disdain for physicians based on preconceived beliefs about income or work schedules, a not-so-uncommon reality for numerous rural/community hospitals across the country, make it harder for a CEO to succeed or for the hospital to thrive. There are a host of other board dysfunctions in varying degrees that can cripple a hospital. Education is an important tool to mitigate these issues but, unfortunately, there are many board members who have no interest in attending conferences or educational workshops, even when they are held locally. Boards must own this part of the relationship. This does not have to be a terminal illness. There are numerous advisors who can help a board get better.
- The Right Perspective — It cannot be about the ego of the board or the CEO. It must be about common goals — the mission of the hospital and a passionate commitment to ensure their organization is meeting the healthcare needs of their service area. My-way-or-the highway CEOs are just as destructive as board members whose lack of knowledge or outsized egos that prevent them from collaboratively charting a course that will ensure the long-term future of the hospital. Boards that “govern” from one monthly financial report to the next, or members who play “gotcha,” can dig a deep hole for their hospital if they are not careful. Without a balanced perspective based on mutual objectives, and a laser focus on serving the community the hospital can, and probably will, face unnecessary crises.
- It Is All About Relationships – The Board, collectively through the CEO, and individually as community servants, must listen to their constituents and the stakeholders of the hospital. The challenge is not to overreact; some of the time that feedback can be shrill and may, or may not, be based on facts. Respectful listening with follow-up, even when a complaint is ill-founded, or the suggestion not practical, is more critical than ever. That is essential for positive engagement.
- Pay Attention to Your Market – As healthcare reform takes hold, and as insurers exert their influence on how and where patients are treated, it will be more important than ever for the CEO to have a good working relationship with every business leader/business owner in the community. Rural and community hospitals have always been at risk from the market interventions of the powerful regional medical centers whose appetite for patients will only grow. Attending the Lions, Rotary or Optimists club meetings is important but that weekly event is no substitute for regular one-on-meetings. If local businesses lack confidence in their physicians or hospital, they will become prime targets for insurance companies who will want to redirect patients to other facilities for their own financial purposes. Medical tourism is not some remote international concept. It is alive and well in the US and the rural and community hospitals are potential victims.
- Put the Hospital First – Hospitals are a valuable community asset. Communities that lose their hospitals, especially those in isolated areas — more than 30 to 40 minutes from another facility — generally suffer unintended consequences. Over time it becomes harder to attract new businesses, young families with kids or quality teachers. Over time, you will see a death spiral emerge and the town eventually will become just another preverbal wide spot in the highway. Boards must be honest with themselves when it is time to recruit a new CEO. Do not be penny-wise and pound-foolish. If you do not have the time, the energy or the know-how, seek outside counsel, preferably someone who will do more than just send you resumes after one perfunctory “screening” interview. If you need support for the recruitment, find someone who will care about your hospital as much as you do and then who will backup the quality of their work with a decent placement guarantee. It is not unreasonable to ask the recruiting consultant to come to your hospital and learn about the organization and the community it serves. It is hard for them to “really care” about the outcome when your connection to the consultant is exclusively limited to telephone calls. But most of all, don’t settle for a CEO who is just experienced. Find the right experienced candidate through formation of a robust selection criteria and the development of specific performance expectations, employ multiple interviews, conduct in-depth reference inquiries that are tied to the needs of your organization and undertake a comprehensive background investigation.
You cannot afford to do less.
Friday: Qualities to look for in a rural/community hospital CEO