Friday, December 20, 2013

Health Care Experience? - Hospital CEOs Don't Need No Stinkin' Health Care Experience

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 technological expertise.

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 Black Book™.

In addition,

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 the community.

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.

Health 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

 productivity issues

long term strategic growth

business vitality

revitalizing your brand


cost saving


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.


Judy B said...

Bravo, again!

Anonymous said...

I have found that hospital care has gone from bad to worse with the CEOs now running them, CEOs who could not get in to medical school because they were not sufficiently capable intellectually.


Benita Blocker said...

As a former Carolinas Healthcare System employee who was laid off, I can tell you that even lower hospital management is hired without healthcare experience. Literally, supervisors and managers of the frontline "hands on" staff are being hired without any healthcare experience at Carolinas Healthcare System. It is "who" you know versus being best qualified. I worked there for seven years. I saw the decline.

Anonymous said...

The terms 'productivity issues, long term strategic growth, business vitality, revitalizing your brand, efficiencies,cost saving, profitablity etc.' are all strikingly of a merchant-mindset.

In school, the brightest went into medicine and law. Those who went into merchant careers were, it can probably be said, not in the top third.

Merchants running hospitals, plus other pressures on clinical people, will push the best and brightest clinical people to abandon ship or retire. the best and brightest will no longer go to medical school to replace them.

What will be left is a hospital run by merchants, and staffed by low functioning pseudo clinical 'extenders' and an inferior quality of docs.

How much can we expect from those who were, at best, merely average in the first place?

Not a pretty picture. Any patient who is hospitalized already needs a 24x7 bodyguard/quality assurance expert.

Afraid said...

Oh you are worrying these CEO folks are not like you docs or like us patients. They are the rightful kings, better in all ways than us an deserving of great wealth to match their great contribution to saving us all!!

Steve Lucas said...

I have to disagree that only the best and brightest enter medicine and the law and that some how a person choosing to be part of the “merchant class” is lacking in ability. Choosing medicine requires many personality traits beyond just intelligence and many realize, or are not interested in, a medical career.

Personal situations also play a role such as existing school loans and family obligations.

What is lacking in this discussion is humility. While still in my teens I was made a supervisor, not because of my skill, but being the college kid I was good at the paperwork. I realized this and treated the people I supervised with the respect they deserved. I understood the work, they did the work. I had a different skill set.

Medicine has attracted people who are often very interested in structure. Doctors slam administrators and administrators use their authority to marginalize doctors. Young people today are quick to tell you what they deserve and they have a right to displace you and what you have accomplished over a lifetime. This attitude and lack of maturity has become the norm in many parts of our society.

We have lost the old concept of doctors working with administrators and administrators realizing they are there because they can do the paperwork. IT has added another group that sees its role as with holding information in order to preserve a power base.

Bill Gates and others have found their skill set better suited to other endeavors. What has been lost is the above mentioned humility and respect. Respect for your co-worker and often respect for the patient.

Steve Lucas

InformaticsMD said...

Steve Lucas said...

Respect for your co-worker and often respect for the patient.


The operative words for healthcare leadership ills are: healthcare doesn't need any sociopaths of any specialty (busines or medicine) in leadership roles, and even less needs leaders who suffer from the Dunning-Kruger syndrome.

Here's an example of problems when profit motive prevails over medical ethics, from a Sixty Minutes investigation:

Dec. 2, 2012 - Steve Kroft investigates allegations from doctors that the hospital chain they worked for pressured them to admit patients regardless of their medical needs

-- SS

Steve Lucas said...


You are absolutely correct. A good example of this in my community is we have one hospital that was found guilt of unfair business practices and just promoted a very young person from within, with no outside experience and an education that was done locally, to the position of CEO.

The other hospital also has recently hired a new CEO who is older and has held positions in a number of different hospitals, of different sizes, around the country. It is not hard to imagine which CEO will do the better job of integrating doctor and patient needs with the needs of the institution.

The young man on the fast track will believe he can do no wrong while the older man should have dealt with a variety of personalities and gained experience within the medical field to achieve the balance needed to succeed in this position.

Roy is correct when he states we need leadership that is sensitive to the mission of medicine, not just number crunchers.

Troubling to me is the rise, and even celebration, of the psychopath highlighted in such books as Snakes in Suits, which I first learned about on this blog. We will soon see the year end list where CEO’s are typically number one.

The sense of entitlement and overconfidence by those who are not qualified has made meaningful dialog almost impossible in fields well beyond medicine. The Dunning-Kruger syndrome seems to be much more common that any of us would like to believe.

Steve Lucas

Anonymous said...

I'm not sure bringing in outside experience at this juncture is a negative. While the best leaders in our and all industries are rigorously respectful of customers and staff, they are also productively focused on being faster, better, cheaper.

We aren't. We see our customers through clinical and regulatory lenses that make us far less aggressive than (and increasingly uncompetitive with) non-hospital providers in focusing on serving our patients faster and better and certainly cheaper.

The "mission of medicine" as we've pursued it as an industry in this country - as if it's some morally elevated pursuit exempt from and beyond the understanding of its patients, suppliers and financiers - is bloated, priced beyond the financial reach of most citizens and, compared to our peer nations, only mediocre in its results.

Maybe people who know how to accomodate our customers' buying behaviors and needs can help. We sorely need disruption.We're way too insular.

Roy M. Poses MD said...

Anonymous of 30 December, 2013,

I have trouble following your comments. Maybe you would like to clarify them?

Many health care professionals would define the mission of medicine as putting the care of the individual patient ahead of self-interest, and other considerations. I would argue that by putting financial concerns ahead of patients, the implementation of health care may indeed become "bloated." But what you mean by your assertion that the "mission of medicine" itself is bloated is not exactly clear.

Further, you seem to imply that medicine/ health care ought not to be considered a "morally elevated pursuit." Again, I suspect most health care professionals, and others, including the Pope Emeritus (see: would argue that medicine/ health care is calling which does have a special moral dimension.

Further, I suspect most people who have been sick, or have seen a loved one experience a severe illness realize that being a patient is a whole lot different from being a customer.