There is an interesting and startling trend in career management.
Well, at this point, the word “trend” is more than a little generous as a description, but if the questionable healthcare industry consolidation continues, the trickle that we are seeing today could become a tectonic shift over the next five years.
Before you write this forthcoming prediction off, I want to establish, for the record, that I was the person who more than 18 months ago, after listening to the same old same old drivel of predictions from Community Health Systems (CYH) about
continued growth in earnings all the while discounting the impact of the Affordable Care Act on the inpatient side of their business, predicted that they would be toast sooner than later. I told a number of friends they should buy the stock, then trading around $60 a share, and short it.
Today it is trading after hours at $11.16 per share.
This new prediction is a little riskier but just as interesting because it involves career management. In a recent search for the CEO of a medium-sized community hospital, I had a lot of interested candidates coming from bigger systems, some still employed, others the victim of cost cutting or consolidation. One executive had two system hospitals sold out from under him. Most were in the mid-life of their careers — their kids were in college, or graduating soon — and they all had been making considerably more money than my client was able to offer. They didn’t seem to care.
“I want to go to an independent hospital, even if it is smaller than my previous facility, even I am paid less because I am tired of the corporate bureaucracy that is slow to decide anything and whose interests are not necessarily aligned with the needs or desire of my hospital.
“I got into healthcare to make a difference for the people I serve, not to be the puppet for someone who may, or may not, be all that competent. Based on my experiences with a couple of large systems that I have worked for over the past seven years, the brightest guys in the room were NOT at the corporate headquarters,” one candidate said.
One of the great consulting myths that continues to flow through the healthcare atmosphere is that if you do not have a big strategic “partner” you cannot survive. That is just not true. To peddle this as an immutable truth is as ridiculous as arguing that standardized standards of clinical care, spread across a wide variety of geographic markets and climates, will result in better outcomes, improved safety and lower costs.
Of the more than 50 candidates I spoke with in connection with this assignment, eight or nine were interested in the opportunity because of the organization’s independence, attractive market opportunities. There were no big competitors nearby and the for-profit hospital 30 miles away had some of the highest rates in a three-state area, and there was an engaged medical staff who embraced this independence.
“What I have learned from working in the big systems,” another candidate said, “Is that you may be the President of your hospital but you are not really in control. Even if you see an incredible market opportunity, there is a good chance it will be bogged down in the elaborate corporate matrix. You have all the accountability and very little of the authority. It is as if the System wizards believe they can pull the strings from a central office and it will all work out just fine, just like those people who want every doctor to treat every patient exactly the same, no matter where they practice.”
Good luck with that.
As the Centers for Medicare and Medicaid Services (CMS) continues to search for ways to lower reimbursements to extend the life of the dwindling Medicare Fund — now predicted to be insolvent in 12 short years — hospitals that inherited a shocking amount of corporate overhead when they sold their souls, will find it harder to be successful because the systems they thought would ensure their future security — are dragging them down.
There will be more and more hospital CEOs on the street looking for those independent hospitals, or even small systems, where they can make a real difference.
By the way, do you remember the CHS advertising campaign during the boom years for acquisitions — Promises Made, Promises Kept, or something like that. Well as Community fights to clean up its mess of a balance sheet and unloads more of those hospitals to offset their staggering debt and dwindling earnings, there are going to be some civic leaders across the country who thought they had a lifelong answer for their hospital when they sold out to a big national system. What could go wrong?
Good luck with that, too.
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