Wanted: Hospital CEOs Without Health Care Experience

Hospital boards increasingly want an outside perspective, along with some different skill sets – and are willing to hire outside of the industry to get it.

Health care and hospital systems are increasingly seeking out C-Suite executives who don't necessarily have health care experience.

Health care and hospital systems are increasingly seeking out C-Suite executives who don't necessarily have health care experience.

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When Carlos Migoya was hired in May 2011 to run Jackson Health System, Miami-Dade County’s safety net hospital system, he had no health care experience. A career banker, Migoya took over a system that bled $428 million over the previous four years. “Our cash supply was in the six- to-eight -days range,” says Migoya, who came directly to Jackson after a one-year stint as Miami city manager. He found Jackson lacking budget accountability, expense controls and unable to collect on certain revenue streams. “Basically, there was no business plan going forward,” he says.

[MORE: Hospital of Tomorrow: How the Industry is Facing the Future]

Today, the county hospital system is in the black—its 2013 bottom line a handsome $45.7 million. The system is on the front end of an $830 million, decade-long renovation and infrastructure upgrade, and has cemented relations with University of Miami—whose doctors the nonprofit academic medical system depends on. Migoya also is revitalizing Jackson Health’s long-neglected community-based urgent care and clinics, a strategy required to survive under changing incentives brought on with the Affordable Care Act (ACA).

“The health care industry is going through major changes,” notes Migoya. “Sometimes, if you’re in the forest, you don’t see the trees.” Migoya is in the vanguard of a trend that appears poised to sweep through the hospital industry. Hospital boards increasingly want that outside perspective, along with some different skill sets – and are willing to hire outside of the industry to get it.

[READ: Staffing the Hospital of Tomorrow]

It’s expected that two-thirds of hospital CEOs hired this year will have little to no health care experience, according to Black Book Rankings, which last year conducted a poll of 1,404 human resource officers and board members of health care organizations. That’s up sharply from 19 percent in 2009.

As ACA ushers in fundamental changes, today’s hospital staffing needs have changed. Hospital demand for radiologists, anesthesiologists and other specialists a decade ago have been replaced by the need for primary care doctors, hospitalists, nurse practitioners and other physician extenders.These professionals are vital to keeping patients out of the hospital, which is essential as outcome-based payment replaces a fee-for-service system. The need for different skills seems to be hitting the C-suite, too.

“It’s about managing health now, not care,” says Doug Brown, managing partner of Black Book Rankings. Hospital board and HR directors are looking for non-industry productivity, business development and financial management experts with heavy technological expertise. “Communication is now more important than ever,” says Paul Esselman, executive vice president and managing principle at Cejka Executive Search. Whether or not a CEO comes from inside or outside of health care, Esselman says, “the absolute strength or key element in that leader has to be communication, particularly to the provider community.”

The average tenure of a hospital CEO runs less than 3.5 years, with a majority of those being involuntary exits, according to Black Book Rankings. When the CEO leaves, it’s common for chief financial officers, chief information officers and other top managers to leave soon after. “The big surprise is the high number of chief medical officers who are replaced (87 percent),” says Brown, adding they are among the senior managers making the quickest exit—most within two months of a departing CEO.

Esselman notes he detected the “sea change in health care” over the last couple of years, with "hospital boards raising the bar for delivering results.” While most newly recruited hospital executives still come with a health care background, Esselman notes that boards increasingly “are looking at leaders from managed care, the payer side or from finance or banking.”

For example, Mike Keating, CEO of Christ Hospital in Cincinnati, previously was an investment banker.;Robert Meyer, president and CEO of Phoenix Children's Hospital, came from the consulting world; and before he was appointed to lead Indiana University Health (then Clarian Health) in November 2002, Dan Evans was a law firm partner. Michael Fisher led Premier Manufacturing Support Services before becoming the president and CEO of Cincinnati Children’s four years ago.


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