What Does a Healthcare CEO Do?

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The answer is tricky

I recently asked the trustees of a major health system, “What exactly does a CEO do?” It wasn’t a trick question, and it turned out to be an insightful moment for the entire group – their silence spoke volumes as they realized they had no concise, clear, pat answer. (Five or 10 years ago, I think they would have.) The question begs different interpretations, two of them being:

  • What is the CEO supposed to do in today’s industry?
  • What can he/she reasonably be expected to do given the broadening expectations of the position brought on by the momentous changes taking place within the industry?

Let’s tackle the latter question first. What can a CEO, reasonably, be expected to do given the pace of change taking place in healthcare and the growing responsibilities bestowed upon one individual within health systems that are increasingly disparate and complex? The pressures upon the CEO – from four key directions: the board, the organization, major constituents, and external forces (payers, policymakers, and so on) – have mounted exponentially. Meanwhile, the key areas and assets that the CEO must oversee – for starters: balance sheet, facilities, technology, intellectual property, people and culture – have grown far too complex for one individual to grasp or guide.

The best CEOs are becoming those who understand their limitations and get help. They are capstone careerists and delegators as much as decision-makers. They are team players in addition to captains. They are communicators and coordinators rather than solo strategists. The most gifted CEOs have an appreciation for each of the key organizational functions (HR, operations, finance, IT, marketing, etc.) but their expertise is in how these functions integrate with one another to push the organization toward success. Chief executives need to have trusted advisors at their ready at all times and a well-oiled leadership team that collaborates, reaches consensus, and acts efficiently.
What can a CEO reasonably be expected to do? Be realistic about what one person can do and build a support system that, as much as possible, works in lockstep in generating vision, formulating strategy, and implementing initiatives.

A New Brand of Leadership

What is the CEO supposed to do in today’s industry? Fortunately, the answer is still, “Lead.” The CEO as the true chief executive and driving force behind the organization has not disappeared. The toolkit has changed. And today’s CEO must conceptualize his or her responsibilities differently than in the past. If I were to categorize the primary responsibilities of today’s system CEO, I would do so as follows:

  • Ensure quality. Quality is the name of the game in today’s healthcare marketplace (a good thing) and strategy, operations, and competitive advantage all derive from it.
  • Drive cultural development. Organizations need to change but won’t unless executives, trustees, and staff think and act differently than in the past.
  • Oversee financial planning. This is not new, but the CEO-CFO relationship must be seamless, and the board must bear more expertise and play a greater role in cost reduction, debt management, revenue enhancement, and other critical areas.
  • Develop structure to execute. Vision and change will stall without an organization (from leadership on down) that is adaptable and reconfiguring itself for the future.

The Board as Partner

In carrying forth these objectives the CEO, as noted, cannot operate in a vacuum. The executive team must truly be a team and, in contrast to the past, the board-CEO relationship must be close and collaborative. Like it or not, boards are much more active and proactive than they have been in the past; they are themselves under more pressure to perform and have more at stake. (“What does a board do?” is a rich question in itself, as boards are transforming themselves dramatically.) As such they must partner with the CEO in order to:

  • Set mission and vision. How can traditional patient- and community-driven missions be adapted to a new-look, expanded marketplace?
  • Formulate strategy. Trustees, with their varied credentials, provide essential context for strategic planning efforts orchestrated by the CEO.
  • Measure and incentivize performance. Quality and other forms of improvement won’t happen without meaningful metrics and milestones.
  • Determine risk tolerance. Different than risk management, how much tolerance should an organization have, and in what areas?

Today’s health system CEO is less autonomous agent and more creative influencer than in the past. As we like to say within my firm, great leaders today must excel at generating informal power. For most CEOs this requires a conscientious effort to develop one’s career. CEOs must also excel at finding opportunitites for mutual success with other organizations and, potentially, competitors. They must have short memories because today’s partner may have been yesterday’s competitor.

Every organization must answer the question, what does your CEO do? And it is critical that CEOs ask this question of themselves, and respond differently and more creatively than they have in the past. CEOs can do so many things – too many things – and so the challenge is to create an effective framework for the role that draws support from many players and works symbiotically with the board of directors, for the prosperity and sustainability of the organization.

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About Author

Andrew Chastain

Leader of the Healthcare practice at the executive search firm Witt/Kieffer. Based in Atlanta, he is responsible for ensuring excellence and exceptional service for the firm's healthcare clients nationwide. He also serves as treasurer of Witt/Kieffer's Board of Directors.

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