Hospital CEO Turnover at All-Time High

In a March 10 press release, ACHE reported that CEO turnover occurred at one out of every five hospitals in the US during 2013. The 20% figure is the highest turnover rate recorded by ACHE since they started reporting the annual data in 1981. For 2013, ACHE reported 4,546 total hospitals in the US, which included general medical, short-term and non-federal hospitals.

President and CEO of ACHE, Deborah J. Bowen, said, “The increase in the turnover rate may be indicative of a combination of factors, including an increased number of baby boomers seeking retirement, the emerging trend toward consolidation in our industry and the complexity and amount of change going on in healthcare today.”

On its website (link below), ACHE provides a state-by-state list showing the percent of CEO turnover. States are ranked by high-turnover, medium turnover, and low-turnover. Among states with the highest turnover rates are Oklahoma (33%), Arkansas (30%), Virginia (29%), Florida (27%) and Louisiana (27%). States with the lowest rates include New Jersey (10%), Oregon (13%), Pennsylvania (14%), Wisconsin (14%) and Minnesota (15%).

In 2013, Black Book Market Research reported that the average tenure of a hospital CEO is less than 3.5 years, and that involuntary termination accounted for 56% of that turnover. Other findings reported by Black Book include the following:

A) 87% of Chief Medical Officers are replaced within two months after a change in CEO.

B) 94% of new CEOs who come into their position without extensive hospital experience say they don’t think healthcare expertise is needed when replacing other senior executives during an overhaul of management staff.

C) 89% of board members involved in hiring an “outsider” indicate that “broad business operational expertise and singular vision pays off with fresh perspectives on efficiencies, value, cost savings, and the goodwill to the community.”

Commenting on the accelerated rate of hospital CEO turnover, Ms. Bowen remarked, “The increase in the rate reinforces the need for healthcare leaders to work with their boards to ensure appropriate succession plans are in place.”

The complete list of state-by-state CEO turnover rates is available at:
http://www.ache.org/pubs/Releases/2014/hospital_ceo_turnover_rate14.cfm