by John S. Lloyd

Aug. 29, 2001 - As CEOs leave healthcare leadership - prompted by retirement, new opportunities or ineffective performance - governing trustees struggle to identify new leaders. Today's trustees need leaders with traits and skills that will drive a hospital's or system's cultural integration, enhance financial performance, and articulate vision and strategic objectives for healthcare's new challenges. Healthcare appears to be losing executives faster than new leaders are ready to replace them.

Industry analysts call this leadership-gap phenomenon a "war for talent." They estimate there exists a 40% gap between the talent supply and demand in healthcare. That gap could grow in the future. There are predicted to be 15% fewer leadership candidates in the critical 25-44 age range by 2006. Furthermore, training programs for these up-and-coming leaders are sorely lacking.

Few of today's healthcare executives plan to work in the "pressure cooker"of healthcare until age 65, a situation that compounds the talent gap. If CEOs who direct the top 40 healthcare systems nationwide follow recent patterns and retire on or before age 60, healthcare will need as many as 28 new leaders by 2006. Based on my personal contacts with these people, the leadership transition will happen sooner rather than later. Where are their replacements? Why is it so difficult to identify new leaders to fill their shoes? Here are some thoughts on the subject.

• Healthcare organizational flattening has eliminated some leaders.Over the past 15 years, many integrated systems have trimmed the COO position - so fewer executives with a breadth of management abilities are ready to move into the CEO role.
• Unlike other industries, where management tracks include experience in production, marketing, finance and operations, healthcare executives lack such training programs. Healthcare CEOs overwhelmingly agree there exists a lack of top management training. Physician executives rarely have broad financial responsibility; patient care executives have few responsibilities in external marketing; and when was the last time a CFO had responsibility for nursing? When a CEO vacancy occurs, the next-tier executive frequently lacks broad experience that is needed at the top level of the organization.
• Few healthcare organizations, unlike industry at large, have developed "fast-track" training programs for young executives with the greatest potential. Healthcare chooses to view all young management recruits in an egalitarian fashion, with a belief that the "cream will naturally rise to the top." However, commercial businesses provide extensive in-house management training for their "up-and-comers." Why not healthcare?
• Physician executives with MBAs lack broad management experience that most trustees see as essential to lead major systems. Even though the American College of Physician Executives and graduate schools of business report increasing numbers of physicians completing management courses and advanced degrees, physicians are slow to enter the executive suite at the top level. Even fewer have been successful in top management roles.
• Mentoring is critical to the success of the next generation of leaders. But on-the-job challenges prevent many CEOs from devoting time to mentor successors or young executives who can become future leaders. CEOs say there just is not enough time.
• Thoughtful succession planning is the responsibility of trustees and CEOs. In fact, many current healthcare CEOs believe they and the board should jointly choose the CEO's successor. But succession planning is often a "knee-jerk" reaction used only when a valued executive is being recruited elsewhere.
• Women and minorities infrequently attain top positions in healthcare. The healthcare sector fails to adequately mentor such executives who often need more mentoring since they have not had appropriate role models earlier in their careers. Qualified women and minorities are available, but healthcare decision-makers often fail to look for them in the right places. It also appears that some women executives may choose to sidestep CEO roles and place more emphasis on quality-of-life issues. Organizational and individual resistance to women and minority executives still are barriers to overcome.

This excerpt from the original article has been reprinted with permission from HealthLeaders.com. John S. Lloyd is vice-chairman of Witt/Kieffer, a leading healthcare executive search firm based in Oak Brook, Ill. He focuses his practice on assisting clients in finding senior-level leaders for hospitals, health systems, academic medical centers, physician group practices, long-term-care facilities and related healthcare entities.