The changing nature of healthcare executive search
The past decade has seen tectonic shifts in the healthcare landscape that have dramatically changed what it means to be a successful leader in that field. With the move toward fully integrated healthcare systems and increased financial pressures at all levels, leadership in both hospitals and large healthcare systems today must bring an understanding of how to align the many aspects of a great medical center.
It has become essential-and increasingly challenging-to find and engage the right people for the job. Because the job is growing more complex and the required skill sets more difficult to find, identifying such leaders requires assistance from those who understand the health landscape and what makes a great healthcare leader.
Isaacson, Miller has been recruiting such leaders for 30 years. Over the past few years, the firm has completed the CEO roles for some of the largest and most prestigious medical centers in the country, including NYU Langone Medical Center, Penn Medicine, the University of California, San Francisco, the University of Minnesota, the Duke University Medical Center, Virginia Commonwealth University, and Washington University in St. Louis. These leaders have worked to garner market share, drastically improve margin, and move carefully but explicitly toward a value-based, risk sharing delivery system, as they chart the pathways of the evolving American healthcare system.
In a recent panel discussion, leaders in the firm's healthcare practice spoke about what the changing landscape of healthcare means for hospitals and healthcare systems with high-level leadership roles to fill and about what is required to make those searches effective.
Moderator: What are some of the unique challenges that hospitals and healthcare systems face today when searching for the right leaders to carry them into the future?
John Isaacson: Overall, the biggest challenge is how dramatically the healthcare world is changing, both on the economic and care delivery fronts. Usage of healthcare is increasing-because our population is aging and because the Affordable Care Act (ACA) is driving an increase in patient volume-and revenue per patient is decreasing. That creates strong pressure to reduce costs over time, or to bend the cost curve. In order to remain financially viable while still achieving their missions in this context, healthcare organizations will have to undergo major structural changes.
David Bellshaw:For academic medical centers (AMCs), these pressures create additional challenges because their work is so cost-intensive. Their multiple missions-clinical care, education, and research-are supported significantly by clinical revenue, so decreases in that revenue affect all aspects of their work.
Isaacson: Care delivery models are moving toward team-based care. The goal is to increase quality, by coordinating and streamlining care, and decrease cost, in part by maximizing the procedures allowed within each licensed class of providers. However, the healthcare system is still dominated by physicians and has not traditionally valued complex teams, so building such teams effectively will require a major cultural shift. Leaders are tasked with managing both the economic and the cultural shift. Specialty care is moving out of tertiary hospitals to community care in hospitals and ambulatory clinics in order to provide care closer to where the patient resides. Additionally, the ACA and payers are driving increased preventive care in outpatient clinics, which reduces visits to emergency rooms with preventable episodes, such as asthma exacerbations or diabetic emergencies. So as specialty care moves out of teaching hospitals and into communities and as revenue per patient falls, hospitals must find a way to both serve their patients and manage their margins.
Isaacson: In some cases, that means they have to either build or partner with primary care networks or community hospitals who do provide that specialty and primary care.
Bellshaw: It can also mean thinking about how to leverage other assets, such as technology, to provide or bolster care. For example, it's increasingly possible to provide care outside of the bricks-and-mortar facility, whether by diagnosing a child's ear infection via an iPhone photo, monitoring chronic illnesses remotely, or offering a video consult instead of a clinic appointment. Hospital leadership needs to think about how to adopt new techniques and, most importantly, make certain that their physicians, nurses, administrators, and staff are prepared to change the way they deliver care.
It sounds like the job of leaders in healthcare is expanding on all fronts.
Philip Jaeger: Yes, the healthcare organization's scale and mission are increasing dramatically and their traditional roles are expanding. They are delivering care-the right care in the right setting-in increasingly expansive networks, and even moving to add insurance products to cover an entire population.
Isaacson: We see a wide range of such experiments in risk taking, such as shared risk contracts with payers, bundled payments, and population health. Many providers are building information systems and bioinformatics capacity that will allow them to predict patterns of use, direct "value"-based care, and estimate cost for whole populations. As that predictive capacity increases, providers will have the option of taking over the "risk" portion of the insurer role. Today, here in Massachusetts, the largest teaching hospitals have 30-50% of their patients covered in risk-bearing contracts. We expect to see similar movement in the rest of the country.
This is a major change for organizations that traditionally defined themselves as providers, strictly separated from risk-bearing insurers. With these shifts underway, the leadership will need to incorporate a completely new set of skills and incentives into every part of their organization. It will give integration a whole new meaning.
Gaffney: The more traditional skill sets are still essential, though. For example, leaders will need to manage increased competition among AMCs for research success. For nearly a decade, funding from the National Institutes of Health - a primary source of support for medical research - has been flat or declining, at a time when fundamental biological science research has created immense opportunity for success. We have powerful research enterprises that are starved for funding. That means that AMC leaders are expected to have a very strong research portfolio themselves or a very strong track record of having mentored and grown research in their enterprises. They want to see a lot of collaboration between basic science and clinical research and a rare skill in building alternative funding for research, from industry or philanthropy.
With so many major changes affecting the healthcare landscape-economic changes driven by the ACA, changes in care delivery, shift toward population health and providers taking risk, and decline in federal funding for research-what skills must a successful healthcare leader have today?
Jaeger: Healthcare leaders must be able to drive and manage all of these changes effectively: They need to reduce costs, keep quality high, serve more patients, take insurance risk, and drive culture change toward team-based care.
Bellshaw: Experience with change management is essential. And in an environment where economic pressures can quickly trump the mission, it is also essential to have leaders who can focus on and balance both, without distortion. Only that balance can propel mission-driven organizations forward.
Today's leaders must truly understand and believe in what the organization is trying to accomplish. Because the mission is what brings talent to their organizations, leaders can only manage change if they are able to galvanize their workforce to that higher purpose. When they talk about increased efficiency, for example, they must do so in the context of a more global, universal goal: working to improve the human condition.
Do these changes mean that health systems are willing to look outside traditional pathways for candidates?
Jaeger: Healthcare organizations are increasingly sophisticated, and the industry has worked hard to create new pathways for leaders. Still, the stakes are high, so in evaluating candidates, our clients are rigorously seeking people who are already innovators-who know the history, can see the future, and have begun the work.
Stephanie Fidel: So in that context, then, would a candidate be less attractive if they haven't spent their whole career in healthcare?
Isaacson: Yes. Healthcare is increasingly sophisticated, and the field has invested enormous intellectual energy to master its own limitations. The country has great research and experimentation with new models. If someone does not know that work they will not compete effectively. The best candidates will be people who are mission driven, are intellectually sophisticated about both care and economics, and have a track record of innovation that has built a high-"value" system.
Jaeger: Exactly. Although the pipeline for traditional CEOs is large, these leaders need to do so much more than that. For example, a new leader would need to merge the traditional silos of cardiology and cardiac surgery, which are usually two separate departments, into a single service line. They need to think comprehensively about a much larger population than a hospital may have historically thought of serving. That requires a different, and more scarce, set of skills than hospital leaders used to need.
Given all of those elements, what would you say is the key to successful leadership in this field?
Gaffney: In an AMC, the health system and affiliated schools must be incredibly interconnected and integrated: The health system often supports the schools. If we want to see a vibrant, research-driven healthcare sector, with all the scientific innovation that implies, we will need to see an equally successful clinical enterprise that can sustain it.
Isaacson: As Denise explained, in these increasingly interdependent, integrated systems, the physician and hospital side must collaborate and be totally aligned, both economically and culturally. That means that leadership at the most senior levels must be focused on the whole integrated system-or, in the case of a standalone hospital, must approach the role from the perspective that it may become part of such a system.
Our work with AMCs allows us to approach a search for that kind of leader from a particular perspective: They must understand how to align a great medical center's missions and goals. That alignment will produce a bend in the cost curve in the direction of population health and the redesign of care, all of which are crucial to prosperity in the next generation.
Fidel: That seems like a very particular skill set and perspective, and one that people have not specifically trained for in the past. Where do we find people with that ability within healthcare?
What makes a search firm effective? Or, more precisely, what is required for a successful search?
Bellshaw: Much like the leaders you are looking for, you have to really understand and be committed to the mission of these organizations in order to find the right people-the ones who understand the motivations of their workforce and who can effectively balance mission and economic pressures. Finding the right leader takes time and investment, and the ability to appropriately "disrupt" a successful potential candidate's life to get them to think about the potential of a new opportunity.
Gaffney: As the criteria become more stringent and the competition for top candidates more intense, organizations feel strong pressure to accelerate a search. There is a drive to narrow candidate pools earlier and move to a finalist rapidly-sometimes too rapidly, considering the amount of referencing and due diligence required. This is a tension in these searches, and we have to manage it carefully.
Jones: That intensity means that, to conduct these searches successfully, it is essential to engage a full staff of professionals -- from consultants to logistics experts to reference and background checkers -- who understand today's healthcare context. We know what it takes to succeed in that context, and we know how to find the people with the skills, knowledge, and experience to become the great healthcare leaders of tomorrow.
Bellshaw: Our placements are the people who will defend and strengthen the organizations involved in these mission-driven activities. This work is not for the modestly talented or the faint of heart; this is tough stuff. And finding the right leaders can help organizations thrive. This is what we do.
Thank you all for your time and insights into this process.