CEO turnover was low during the pandemic, but that may not continue

Hospitals and health systems experienced the lowest turnover rate for CEOs in nearly a decade as top executives put off retirement or other reasons for a job change during the pandemic.

According to its annual look at CEO turnover, the American College of Healthcare Executives found that 16% of CEO positions changed hands last year. That compares to 17% in 2019 and 18% each year from 2014 to 2018. The highest turnover rate in the last decade was 20% in 2013.

The pandemic seemed to play a major role in hospitals delaying leadership transitions.

“[CEO’s] reluctance to leave their positions seemed to come from a sense of duty and a sense of care to their organizations and not wanting to disrupt leadership in the middle of the pandemic,” said Jordan Shields, a partner with Juniper Advisory.

Another reason for the lower turnover rate could be because of companies experienced large cash constraints and hiring freezes, limiting their ability to hire new employees, said Ge Bai, associate professor of Health Policy and Management at Johns Hopkins Bloomberg School of Public Health.

Recruitment is undoubtedly slower and more challenging in the middle of the pandemic, said Bruce Siegel, CEO of America’s Essential Hospitals, especially without in-person board meetings and interviews.

“I really don’t think many health systems will hire a CEO virtually,” Siegel said. “They are going to want to actually meet the person and spend time with them.”

Bai said there was also likely to be less forced turnover as boards recognized the pressure the pandemic put on operations and finances.

“During COVID, it is very challenging for the board and the shareholders in general to evaluate executive performance because of the huge noise and uncertainty,” Bai added.

ACHE’s report shows that out of all the states, Washington D.C., had the highest turnover rate at 40% and Rhode Island had the lowest at 0% turnover.

While the turnover rates were lower overall in 2020, there is speculation that moving forward, leadership changes will increase again due to executive burnout and what may continue to be a challenging operating environment.

Health systems struggling with long-term financial damage will likely drive more turnover, Siegel said, as well as healthcare leaders rethinking their personal aims and goals.

Hospital executives also took on a lot of stress in trying to make important decisions that affected their employees, communities, and health systems during the pandemic, said Rick Kes, healthcare partner at RSM US.

In a statement, ACHE President and CEO Deborah Bowen said it is important that hospitals be ready to transition and continue on in the event of leadership turnover.

“To ensure the strength and viability of the organizations in advancing health for patients and communities, boards and senior leaders need to remain vigilant in ensuring their succession plans and their development practices are relevant and up to date,” Bowen said.

The American Hospital Association, in its 2019 National Health Care Governance Survey Report found that around half of hospitals boards do not have a formal CEO succession plan.

Shields said the pandemic is accelerating the trend of a new generation of hospital executives in their 40s and early 50s taking on senior positions.

Moving forward, Siegel said everyone will be looking for leaders who are more collaborative, who understand population health and public health, and who are able to pivot and enact rapid change.

Increased turnover in the coming months could lead to new ideas, new and diversified talent, and new strategic vision for health systems, Kes said.

“What types of acquisitions they’re going to look to make, or the culture that they’re going to try to kind of create within the health system … those things are going to be how executives move the needle,” he said.


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