Healthcare leaders are continuing to leave their jobs in droves, according to the latest CEO turnover rate report from Challenger, Gray & Christmas Inc.
Despite their high salaries, the research shows that healthcare CEO's comprised the biggest chunk of July's 128 CEO departures with 34 changes, 17 of which came from hospitals and hospital systems.
Challenger has tracked 729 CEO changes across all industries so far this year. The report reveals that healthcare continues to lead all sectors in CEO turnover with 151, 7.8 percent more than the 140 recorded through July 2012.
Retirement, such as the recent announcement by Craig Hendrickson, president and CEO of the Overlake Medical Center, a 349-bed nonprofit, non-tax-supported medical center based in Bellevue, Wash, was the most common reason given for the departures, followed by resignations.
"Some companies saw their fiscal year come to an end on June 30. So, it is not unusual to see some volatility as organizations reassess leadership and make changes, based on financial performance over the previous year. Chief executives are particularly vulnerable when the fiscal year‐end results are not very positive," said John Challenger, CEO of Challenger, Gray & Christmas.
The high turnover of hospital CEOs is especially disconcerting as it may make it harder for systems to attract investors for its bond offerings, reported Phillips, DiPisa & Associates earlier this month. Hospital CE0 turnover was at 17 percent in 2012. The latest figures indicate it is already at near-historic highs and "may continue to increase," says Thomas C. Dolan, former president of the American College of Healthcare Executives.
A significant risk to investors right now is leadership instability, said the Phillips announcement. "A successful CEO helps define the culture and strategic direction of an organization," says Mark Melio, founder of Melio & Company LLC, a financial adviser to not-for-profit healthcare institutions. "Mergers and acquisitions in healthcare are currently at an all-time high. Investing in innovative ways to improve outcomes and quality of care while managing expenses will continue for the foreseeable future. A capable CEO's leadership in navigating these challenging times and making critical decisions has never been more important."