A trend has been emerging in the healthcare marketplace where C-level executives are resigning or simply leaving without notice. There are a number of reasons why mid-level managers and below leave jobs without notice, including hostile work environments, unsafe work conditions, illegal corporate activity, and finding other employment during company layoffs. However, most of these don’t make logical sense for upper-level executives.
Becker’s Hospital Review published a list of 57 hospital or health systems’ CEOs that resigned by the first half of 2018. This list does not include planned CEO resignations or retirements.
By the end of the first quarter of 2018, 56 healthcare executives had either left or had announced pending resignation. Becker’s indicates that one of the reasons why could be a simple mentality shift of executive tenure. Whereas baby-boomers generally stayed with organizations for decades, later generations of executives offer four to five year tenures before moving on.
There are several other reasons why top healthcare executives may be resigning in record numbers, including an increase in mergers and acquisitions in the healthcare market space, a growing number of alternative opportunities that offer career growth, reported tensions between organizational boards and their healthcare affiliated staff, and exposures of financial and quality-control issues.
Mergers & Acquisitions
One of the largest M&A’s of 2018 was CVS Health’s $69 billion acquisition of Aetna. CVS Health predicted that there would be $.75 billion in savings by the second full year by streamlining operations and eliminating duplicative senior roles. Severance packages were also promised. So, it came as no surprise that CEO Mark Bertolini announced his resignation post-closing of CVS Health’s acquisition, and Larry Merlo of CVS Health assumed the CEO position of the combined companies.
Career Growth Opportunities
Many high level executives are leaving cushy corporate jobs to start their own healthcare ventures. The risks are great, but the payoffs, professionally and mentally, can be very rewarding. Take, for example, Stephanie Tilenius, co-founder and CEO of Vida Health. She was a former VP of Commerce and Payments at Google, senior vice president at eBay, and vice president at PayPal. Tilenius is also a co-founder of Planetrx.com and focuses on building businesses from the ground up.
Politics at Play
In February 2018, more than 20 providers issued a no-confidence statement to administration at the Mon Health Medical Center of Morgantown, WV about Darryl Duncan, now former president.
Concerns stemmed from low employee morale, transfer of patients out of West Virginia, lack of communication between the administration and physicians and the overall direction of the hospital system.”
After Duncan officially resigned his position, he allegedly began sending email letters of harassment to his former employer and his successor. The interim CEO, Dottie Oakes, assumed the position but resigned within two months. According to an internal hospital memo, she had come out of retirement to assume the position and requested that the hospital executive team run the hospital until a replacement was found. A trial date is pending against Duncan.
QA & Financial Issues
Late into the fourth quarter of 2018, the Tampa Bay Times reported on the alarming mortality rate in Johns Hopkins All Children’s Hospital’s heart surgery program. Between 2015 and 2017, the rate had tripled. On December 11, 2018, the paper reported the resignation of Dr. Jonathan Ellen, CEO and two other top executives — VP Jackie Crain and cardiovascular surgeon Dr. Jeffrey Jacobs. The hospital had stopped all open heart surgeries pending investigation as of October 1, 2018 and issued the following statement:
The leadership transition announced today marks a new chapter as we work to earn back the trust of the children, families and community we serve. We are devastated when children suffer. Losing a child is something no family should have to endure, and we are committed to learning everything we can about what happened at the Heart Institute, including a top-to-bottom evaluation of its leadership and key processes. The events described in recent news reports are unacceptable.”
While it can be agreed that some healthcare organizations fare better without the problematic executives in charge, it is costly, disruptive, and time-consuming trying to find the perfect healthcare leader. In a report published by Acadia Associates, What does a Bad Executive Hire Cost YOU?, the financial impact is estimated at 5 to 15 times the salary of the leader in question, but five other areas of the organization are also affected — performance, replacement, separation, waste, and reputation. Morale can decrease, turnover can increase, trust can be broken, and work production can falter. Finding the right fit, the first time, is thus a priority..
Rather than looking immediately for external candidates, organizations should first focus on their own internal goals and keep an open mind. The Harvard Business Review shares four tips for selecting the right CEO for any organization.
Considering some of the major reasons why C-level executives have been resigning in alarming numbers, and laying out the steps to ensure the next candidate is a much better fit for the job, here’s to hoping that 2019 produces higher retention rates of quality healthcare executives.
About the Author
Carevoyance contributor Sarah Pike, M.B.A., is a freelance marketing copywriter based in San Diego. She enjoys writing about business, fashion, food, healthcare, leadership, motivation and technology.