Carving Out a New CEO Model

Philip Betbeze, for HealthLeaders Magazine , November 12, 2009
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But that doesn't mean growth through acquisition and formation of new business models for hospitals has necessarily been squelched, according to Hackensack acting CEO Garrett, who says successful hospitals and systems will not only grow but will become more efficient.

"You can do both at the same time by growing your business in different forms," he says. For example, Hackensack is forging partnerships with its medical staff, whether it's through joint ventures or business relationships with other hospitals.

"Growth will come, but hospitals will have to work at it more aggressively than they once did," he says, adding that in the past, there was a lot of organic, bricks-and-mortar-style growth. "There will be less of that and more strategic relationship-building with physicians and other providers."

Hackensack has engaged several key physician groups to form partnerships through employment models under which physician practices are integrated into the health system with its community-based cardiologists, for example. Hackensack is in the process of putting together an employment model with cardiologists who, as employees, will run its heart and vascular hospital.

"That forges a very close relationship between them and the CEO, Garrett says.

Compensation at risk
At one time, hospital CEOs at many of the larger institutions in this country could count not only on generous salaries, but also on additional perks that accrued no matter how the institution was doing financially. Of course, fail spectacularly in the old days, and your days were numbered. But the consensus among today's CEOs and board members is that it took much less skill to survive then than now.

Further, more of CEOs' compensation is now linked to metrics for which the CEO previously probably paid no more than a passing interest, figuring outcomes and patient care metrics—other than those that affected financial well-being and legal matters—were the province of trained clinicians, not a "lay" CEO.

To a certain extent, an argument can be made that CEOs are focusing so much on clinical results now not only because their compensation—or their job—might be at risk, but also because the financial success of the organization is more at risk for bad outcomes and poor clinical quality measures.

"Increasingly, CEO compensation is at risk related to clinical results," says Foster.

That's because reimbursement is more closely tied to outcomes now, so boards simply can't afford to take a hands-off approach anymore.

"We're in a challenging position with the medical community in that we're being asked to be the enforcers on what Medicare and CMS core measures want to do," he says. "The ones that get it right have strong physician alignment strategies and a culture of working with docs."

While many CEOs may feel uncomfortable with it, this focus on metrics and putting compensation at risk leads to better performance and greater adherence to the heart of why many, if not most, people get into healthcare—to heal. It also leads to a crop of modern hospital CEOs who are much more in touch with their organizations and better equipped to unite silos that still exist in their hospitals or health systems under the goal of healing patients and relieving pain.

Still, "we have to be careful about comparing, too much, these CEO positions from one organization to another," says Pryor. "There's a big range of providers and these jobs are not all the same even though they carry the same title. The bottom line is that CEOs are getting increasingly better at their jobs, and that's going to continue if for no other reason that the jobs are so difficult that those who are unable to perform get weeded out over time."

Board education
Speaking of which, if you're not educating your board as to what is increasingly important to operating your hospital or health system, your board will probably soon be educating you.

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