It looks like the complete takeover of health care by generic managers is nigh.
Who Are Now Candidates to be Hospital CEOs?
On PRWeb is a summary of data about what sort of CEO candidates hospitals’ boards of trustees are seeking:
A Black Book Rankings poll of 1,404 healthcare provider organizations’
human resources officers and board members revealed the developing trend
affecting the way headhunters will seek candidates. Black Book
estimates that two-thirds of CEOs hired in 2014 will have little to no
healthcare sector experience, in favor of non-industry productivity,
business development and financial management experts with heavy
From where are the new CEOs coming?
Among survey respondents, the most intriguing new hospital CEO
candidates are emerging from the Venture Capital, Private Equity
industry (idealized by 42% of survey participants), Finance and
Accounting (40%), Banking (32%), Technology (22%), Marketing and Sales
(19%), Not-for-Profits ( 14%), and Pharma/Biotech (12%).
Note that the CEO candidates did not seem particularly intimidated by running a hospital without any relevant experience, knowledge, or possibly values.
94% of new CEOs without extensive hospital backgrounds indicate they do
not believe healthcare expertise is required for replacing other senior
leadership team members after a management overhaul.
Why Are Health Care Naive CEOs Increasingly Common?
What is causing the attractiveness of candidates without background in, knowledge of, to particular agreement with the values of health care?
‘An outside hire will not have developed hospital management skills
from within or understand an organization’s unwritten rules at first,
but that’s not a bad thing either as more hospitals face fresh ideas to
avoid bankruptcy, expedite smoother consolidations, conquer payment
reform, and productivity issues,‘ said Doug Brown, Managing Partner of
A new CEO’s first decisions are often distruptive to a hospital’s staff,
particularly the incumbent management team. ‘An outsider’s perspective
on hospital operations will be controversial but often credited in
several facility turnarounds for bolstering organizational financial
stability, and ultimately profitability,’ noted Brown.
It is not just Mr Brown’s opinion,
89% of board members hiring outsiders agree that broad business
operational expertise and singular vision pays off with fresh
perspectives on efficiencies, value, cost savings, and the goodwill to
What particular circumstances might prompt hospital boards to look for health care naive CEO candidates?
‘Hospitals facing stalled growth or new competitive challenges need
fresh thinking. Hiring internal candidates with the same norms and
values as your current team will not meet the long term strategic growth
needs of the hospital organization. Relevant outside thinking makes a
valuable contribution, enhancing business vitality, longevity and
sustainability. Staying contemporary, revitalizing your brand, enhancing
products and expanding into new markets all begin with the next person
you interview and add to your senior leadership team,’ added Brown.
By the way, similar surveys suggest the same trend affecting other parts of health care,
Payers, chains, ancillaries, ACOs, support firms, vendors, medical
product manufacturers and pharmaceutical firms are tapping other
business’ top talent, a major shift from the ‘healthcare industry
experience only’ mindset for executive placement that has prevailed
since the 1970’s, according to corresponding Black Book 2013 surveys.
In 1988, Alain Enthoven advocated in Theory and Practice of Managed Competition in Health Care Finance,
a book published in the Netherlands, that to decrease health care costs
it would be necessary to break up the “physicians’ guild” and replace
leadership by clinicians with leadership by managers (see 2006 post here).
Thus from 1983 to 2000, the number of managers working in the US health
care system grew 726%, while the number of physicians grew 39%, so the
manager/physician ratio went from roughly one to six to one to one (see
2005 post here). As we noted here, the growth continued, so there are now 10 managers for every US physician.
care went from being controlled by clinicians to controlled by a
growing volume of managers. Most of these managers were generic, in
that they had little if any knowledge of, experience in, or sympathy to
the values of health care. These generic managers have used the same
techniques advocated for the management of supermarkets or automobile
manufacturers to manage health care organizations, despite all the
obvious differences in context, goals, values, and people involved. They also have been trained in theory of maximizing shareholder value (even though non-profit health care organizations have no shareholders), which actually means maximizing short-term revenue (financialization), and then using that revenue as an excuse to plutocratic pay packages for management.
The survey results above say the takeover is nearly complete. The majority of top hospital management recruits are now generic. It appears that the majority of top management recruits in health insurance, medical device, pharmaceutical, and other health care corporations are also now generic The reasons for their recruitment suggest that those exerting stewardship over hospitals are completely abandoning interest in improving health care, patients’ outcomes, clinical practice, or anything related. Instead, look at the wording (highlighted in color thus above) reflecting their concerns.
This is all about
long term strategic growth
revitalizing your brand
Nobody is talking about quality of care, improving practice, patients’ outcomes, public health, or about honesty, integrity, and particularly not about putting patients first.
Instead, it is now going to be all about the money.
So of course the US has the most expensive health care (non) system in the world, and that system manages to at best be mediocre by nearly every measure of health outcomes.
I say once again that true health care reform would put in place leadership
that understands the health care context, upholds health care
professionals’ values, and puts patients’ and the public’s health ahead
of extraneous, particularly short-term financial concerns. We need
health care governance that holds health care leaders accountable, and
ensures their transparency, integrity and honesty.
But this sort of reform would challenge the interests of the generic managers who are getting very rich off the current system. So I am afraid the US may end up going far down this final common pathway before enough people manifest enough strength to make real changes.