Becker's Hospital Review

10 Sign up for the COMPLIMENTARY Becker's Hospital Review CEO Report & CFO Report E-Weeklies at www.BeckersHospitalReview.com or call (800) 417-2035 says Mr. Hickman. A physician Mr. Hickman knows was hospitalized recently, and as a patient in a well-known medical center, he was "dumb-founded" by the amount of attention he received. "Someone would come in every hour and change a waste basket. Then someone would come in an hour later, and ask how he felt about the waste basket," says Mr. Hickman. "There is an absolute ton of waste in the system. We just need to be smarter about how we deliver healthcare." While layoffs may be necessary in some instances, it's also easier for hospitals to focus on the people rather than the structural problems in their industry. Ultimately, the United States is overbedded, says Mr. Hickman. "We're supporting an old delivery model that is stealing resources from other services that really need it," he says. Hospitals may pursue job reductions because they are easier to implement than say, closing a specialty wing or an entire hospital. "No community wants to hear its hospital or a unit is closing," says Mr. Hickman. "So many emotions and politics come into it instead of a rational approach." Also, as hospitals undergo more pressure to offer high-quality care and a top patient experience, some tend to turn to technology as a solution. Whether it's through a more robust EMR system or other technological program, executives may lapse in thinking more health IT will lessen the complexity at their organizations. Rather, Mr. Belokrinitsky recommended they consider "high-touch" initiatives that they can further through employee engagement. This includes the sense of pride and hospitality staff exhibits toward patients, which Mr. Belokrinitsky says is far from universal in healthcare. "They don't cost a lot but can make a huge impact in how patients perceive you," says Mr. Belokrinitsky. "Your employees are more important than the technology you have." 10. Executive turnover. CEOs are not only facing more demands, but many of the most seasoned leaders are deciding the time has come to hang up their hats. Although 71 percent of healthcare provider CEOs age 55-59 have said they have "no plans" to retire in less than five years, some of America's most prominent hospital and health system executives began their retirements in 2013 or announced them, effective 2014. Many of these men and women had worked in the industry for decades, and large organizations like Oakland, Calif.-based Kaiser Permanente, Roseville, Calif.-based Adventist Health, Memphis, Tenn.-based St. Jude Children's Research Hospital, Omaha-based Nebraska Medical Center and Tacoma, Wash.-based MultiCare Health System will say goodbye to their long-term chiefs. "Today we're seeing a lot more turnover driven by retirements, consolidation and, frankly, some leaders who are just less invigorated by wanting to lead in the new era," says Paul Bohne, managing partner of executive search firm Witt/Kieffer's eastern region in Burlington, Mass. He's found the recruiting process to be more challenging, as well. Executive candidates are more cautious about making moves, he says. "And to avoid surprises, they're doing deeper levels of due diligence about potential employers. For example, they want to make sure organizations have a strong market position and are changing with the times." Given the lengthy tenures of many hospital leaders, their nearing retirement plans may not come as a shock. But a 2012 survey from Witt/Kieffer found a noticeable lack of succession planning in hospitals and health systems. Of 200 healthcare CEOs older than 55, only 39 percent said they have worked with their boards to develop a formal succession planning process. Furthermore, only 29 percent said they have identified a successor who could step into their position. Some survey respondents said succession planning was not on their radar, despite knowing better. Others felt it was simply something "corporate" would handle. It may be easy to duck succession planning or push it to the back burner. However, management should work with senior leaders to identify potential successors, work with the board to develop a formal plan that can be enacted the moment the CEO does announce his or her retirement and delineate a communication strategy for internal and external stakeholders about the transition. Conclusion Most of the challenges facing hospitals in 2014 are interconnected, sometimes even hinged onto each other. But as experts here pointed out, hospitals have many opportunities to gain from these challenges. They can explore new care delivery models to improve access and better circumvent a physician shortage. They may resort to new governance bodies or strategies to strengthen organizational bandwidth and project management. Hospitals need to adjust for consumers who, through high-deductible plans, have more skin in the game, as well. This may very well mean more frank discussions about pricing, particularly in price-sensitive markets. Hospitals may also need to spend more time fine-tuning their missions, fundraising initaitives and succession plans this coming year. n Salaries for Health System CEOs Increase 4% in 2013 By Bob Herman T he recorded median base salary for CEOs increased 4 percent in 2013, up from a 2012 median of 3.2 percent and back in line with averages from 2011, according to the 2013 healthcare compensation study from Hay Group. Hay Group collected data from 99 integrated health systems and 40 integrated health subsystems, covering more than 1,100 total hospitals. Salaries for CEOs increased 4 percent on average, while salaries for other senior executives increased about 3 percent in 2013, according to the report. CEOs of independent hospitals garnered smaller salary raises, with a median of 3 percent. According to a 2013 Integrated Healthcare Strategies  survey, the median base salary of a health system CEO ranges from $539,000 to $750,000, depending on the size, revenue and ownership of the organization. Ron Seifert, executive compensation practice leader for Hay Group's healthcare practice, said in a news release the results of the survey represent an era of "temperance" for executive pay. "Even so, it's more critical now than ever that hospitals and health systems properly incentivize and retain their executive talent," Mr. Seifert said. "The environment has never been more complex: Systems are becoming insurers, insurers are partnering with health systems and CEOs are being charged with pushing the organization toward pay-for-performance and population health management. To succeed, healthcare organizations must have the right leadership guiding the ship." n

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