Healthcare News & Insights

Why hospital CEOs getting the boot isn’t as bad as it sounds

What sort of situations lead to hospital CEOs getting booted from their facilities? And what can they do so the firings don’t affect their future prospects? 

78774388CEO firings are more typical than you might think. In fact, the percentage CEO turnover hit an all-time high last year at 20%, according to MedCityNews.

However, CEO firings often slide under people’s radars because they’re not presented as a typical “termination,” like you might expect at regular businesses. Instead, hospital executive firings are often framed in more appealing terms — such as “early retirements” or a CEO “going in a different direction” with their career.

Logical action

Many times, a firing is the logical action after it becomes clear over time that a CEO’s vision for his or her hospital no longer aligns with the goals of the hospital board of directors. But according to Christine Mackey-Ross, senior vice-president for a healthcare executive search firm, this process isn’t as dramatic as it might sound.

In fact, as Mackey-Ross told Becker’s Hospital Review, many good leaders are fired at least once, and a “firing” doesn’t necessarily mean that CEO’s career is shot to pieces.

Here are some common reasons why CEOs get let go, according to Mackey-Ross:

1. A huge screw-up  Most CEOs won’t have this problem. There are only a few, extreme circumstances that would lead to a CEO being automatically terminated from the position, as opposed to being “asked” to leave due to some sort of disagreement. Committing a felony, consistently offensive speech or behavior, insurance fraud or some other financial foul play are examples of what kind of circumstances would lead to an immediate firing.

2. A disconnect between the CEO and hospital’s directors board — If you’ve been leading your hospital for a significant chunk of time, you might feel like you’re the linchpin holding your hospital operations together. But your hospital’s board of directors probably doesn’t feel that way.

With government regulation and other factors changing the healthcare industry, boards and their CEOs may find themselves with different goals and priorities. Sometimes that split will occur over a facility’s future projects and operations, other times it might be due to planned mergers or acquisitions, financial performance, physician relationships or quality metrics.

But according to Mackey-Ross, there’s one red flag that signals a need for boards to speed up efforts to push out a current CEO for a new one: worker unionization. She says, “If you have a union arrive in your hospital, that’s a problem that causes the board to take a second look. It implies employees are disenfranchised from their leadership.”

3. A different vision of the future — Differences of opinion could lead the board to look for a CEO with more appropriate skills and experience to meet their goals and realize their vision for the hospital’s future. That means even previously successful leaders may also be “fired” to make way for a different candidate.

Most likely, these kinds of schisms will develop over time — CEO-board relationships are often complicated. That means, in these situations, the CEO’s firing or forced resignation will also be coordinated to a certain extent, giving execs time to plan their exits and maybe set up some kind of succession program that brings in a more suitable leader to meet the board’s needs.

As Mackey-Ross notes, since many times a CEO departure is planned out for a logical reason or purpose, former execs aren’t considered less qualified, talented or valuable as a leader. For her, the most crucial ability for execs to have to handle the firing is to be able to explain the circumstances that led to the CEO’s departure.

However, she warns former CEOs not to use the the default explanation, “I just decided to go in a different direction.” For her, this line doesn’t placate her worries about a fired CEO –it actually raises her suspicion about why the departure occurred. Instead, displaced execs should focus on building their case and explaining the situation thoroughly but concisely.

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