High CEO Turnover, No Succession Planning Plague Hospitals

John Commins, for HealthLeaders Media , March 12, 2012

Even with more than a decade of relatively high CEO turnover, Dolan says a large majority of hospitals still have no succession plans in place.

"We did a survey on this a few years ago and only about 20% of hospitals have a CEO succession plan," Dolan says. "When we prod them and ask 'why don't you?' the most common response is 'we just hired a new CEO.' We come back and say 'the median hospital CEO tenure is only four years.'"

While succession planning is the primary responsibility of the hospital board, Dolan says that CEOs should be active partners. "As soon as a new CEO is hired the board and the CEO should agree to develop a succession plan and start working on it immediately," he says.

"First of all they have to determine whether they can groom people from within," he says. "In a very small hospital you may not be able to. Then you have to make sure that you have somebody who can fill in on the interim as you recruit somebody from the outside."

Larger healthcare organizations may have the luxury of grooming several internal candidates for the top spot. "If the CEO leaves, then hopefully you are promoting from within, supporting that individual with on-boarding and coaching their first year because it's always a big change moving to No. 1 even if you've been No. 2 in the organization," he says.

Whenever possible, Dolan says, the new CEO should be promoted from within. "The evidence from the industry is very clear that the most successful companies promote from within," he says. "Their returns are better. Their stability is better."

John Commins is a senior editor with HealthLeaders Media.

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