Leadership Crisis in Healthcare

 “If you want to improve the performance of the organization, then you need to improve the leadership of the organization.” ~John Maxwell

Of all industrialized countries, the U.S. ranks last when it comes to preventable mortality. Poor clinical outcomes occur despite the U.S. spending 16% of its Gross Domestic Product (GDP) on healthcare. In response to this untenable situation, significant changes are underway. These changes include new legislation, most notably, the Affordable Care Act, and the movement from a volume-based payment system to a value-based payment system.

Hospitals must adapt to survive.

And when it comes to adaptation of an organization as complex as a hospital, leadership matters.The quality of an organization’s leadership is directly related to its performance and ability to adapt to changes in the healthcare environment. A study completed by Vaughn et al., in 2014 found that high-performing hospitals had effective leaders who conveyed a vision of quality care, along with creating a culture that supports quality improvement.

Under the best circumstances, transformation of an institution is a difficult process. According to McKinsey, 70% of Transformation Programs Fail. In healthcare, there is a leadership crisis that is making a timely and successful transformation even more improbable.

5 signs of this leadership crisis:

1. High Executive Turnover:  Hospital CEO turnover is 20% according to the American College of Healthcare Executives (March, 2014) which started measuring  in 1981. The average tenure for a hospital CEO is 43 months (about three and a half years), not nearly long enough to establish the vision and culture necessary for transformation.

2. Lack of Succession Planning: According to a study by the American Management Association in 2011, fewer than 7% of healthcare organizations are well-prepared to deal with the sudden loss of a key executive team member. In fact, nearly one third of healthcare organizations are “not at all prepared” for the loss of a management team member. The same study reported that 40% of survey respondents believe the industry’s supply of future leaders is inadequate.

3. Lack of Leadership Development: According to a 2012 Healthcare Talent Management Survey from Pepperdine University, hospitals do not encourage staff and leadership development. As a result, these facilities spend more time and money looking for and training new employees and executives. In fact, hospitals spend four times as much for recruitment as they do on development for their existing employees.

4. Ineffective Governance Structures: While hospital boards are responsible for hiring and supervising the CEO, establishing the vision for an organization, approving budgets, and ensuring quality and patient safety, most boards are ill-equipped to do so.  The majority of non-profit hospitals still follow some a version of the philanthropic governance model, meaning many of the boards’ members are volunteers from the community.

Board members often do not have a solid healthcare or executive-level business background, and typically lack the knowledge and expertise to drive the organization’s transformation. Boards are also reluctant to spend money on their own education and development. Since most board members are volunteers, taking additional time for education can be problematic. Physician representation and diversity are also lacking, to say the least.

This ineffective governance structure results in a lack of involvement in the critical tasks of governance, including defining key performance indicators, organizational re-structuring, succession planning, and personnel development. Perhaps most disturbing is the lack of focus on quality of care. A study by Jha and Epstein identified this as a major issue and also found half of hospital board chairs did not see quality as a top priority. This points to a difficult road ahead.

5. Siloed Thinking and a Disconnect Between Leadership, Clinicians, and Staff: Clinicians, staff, and hospital leadership are often at odds regarding patient care and managing the business of the hospital. Front-line workers’ perceptions vary greatly from those of executives and board members. Vaughn et al. found “significant perceptual differences regarding quality improvement and patient safety initiatives.”

recent article in Forbes Magazine also highlighted the ineffective communication structure that exists in most hospitals. Information is controlled by a few at the top of the organization and is funneled down to frontline workers, leading to a dilution of the original message and a lack of dialogue. Without a clear understanding of the big picture, frontline workers are left to focus only on their specific roles or functions, creating a silo affect within the organization that discourages innovation and results in burnout. This structure is indicative of poor leadership that lacks the vision and drive necessary to move an organization into the future.

In summary, strong leadership is necessary to transform the healthcare system and the organizations within the system. Until organizations are willing to create systems that allow for good leadership while making a commitment to leadership development, education, and employee retention, transformation efforts will be hindered. In many cases, hospitals will fail.

Now it’s your turn. What is your organization doing to address the leadership crisis in healthcare? Share your thoughts and ideas below.