The healthcare industry has undergone – and continues to undergo – traumatic changes. A combination of regulations like the Affordable Care Act and Mental Health Parity Act, screaming market pressures for price control, questions about consumer privacy, new payment models, and a need for more effective treatments has pushed the need for industry improvement into overdrive.
According to one healthcare executive, Donald Mueller, CEO of Chattanooga, Tennessee-based Children’s Hospital at Erlanger, the drive for improvement needs an additional change among the people who run organizations. Entrepreneurial leaders are necessary to address today’s problems.
Any industry can experience times where macro conditions require a particular type of expertise, whether an emphasis on supply chain control, finance, marketing, or underlying technology. According to Mueller, healthcare’s current need is for people who can operate within, and have a high tolerance for, degrees of chaos. Old approaches to running healthcare businesses are inadequate.
Take the move away from fee-for-service payment models. “You will no longer be able to crank up your volume to increase your bottom line,” Mueller told U.S. News. “Either hospitals will change the way they think and start being more innovative, or they won’t survive.”
The warning applies far more widely than hospital administration. Clinics, physician practices, labs, specialty service providers, pharmacies, and others all face the same pricing pressures. Add regulatory demands for more extensive services, popular outrage over expenses, and technology and privacy mandates, and business as usual doesn’t come close to delivering what is necessary.
That might explain why there has been some instability in top management at hospitals, to take an example. According to survey work by the American College of Healthcare Executives, CEO turnover hit a record high 20 percent in 2013. Although down to 18 percent in 2014, it was still one of the highest rates in the last 15 years.
“The continuing trend of consolidation among organizations, the increasing demands on chief executives to lead in a complex and rapidly changing environment, and retirement of leaders from the baby boomer era may all be contributing to this continuing higher level of change in the senior leadership of hospitals,” an organization statement quoted ACHE president and CEO Deborah Bowen.
The adjusted turnover rate by state, which also accounts for interim and acting CEOs – which would suggest unexpected or sudden departures and a lack of adequate succession planning – showed more graphically how unstable things can get. Top turnover states ran between 20 percent and 44 percent adjusted CEO turnover.
Successful healthcare leaders will have to balance the use of new technologies, business strategies, supplier negotiations, process improvements, cost reductions, and relationships with staffs and patients to meet the challenges. Experience and education with the latest knowledge and best practices will be necessary for people to support their careers.
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