Avoiding succession drama: How hospitals can find the right CEO

Rick Gundling of HFMA says hospitals can avoid problems in choosing new CEOs by planning ahead, nurturing talent, and being open about the process. (Photo: HFMA)

When it comes to choosing the next chief executive, hospitals and health systems don’t want the drama and acrimony displayed so marvelously in the HBO television series, “Succession.”

The show, which airs its series finale on Sunday, May 29, focuses on a family scheming to succeed a media tycoon, and it has been lauded for its darkly comic observations of the ultra-rich and billion-dollar corporations.

Hospitals can avoid conflicts and controversy by planning properly, says Rick Gundling, senior vice president of content and professional practice guidance at the Healthcare Financial Management Association.

Gundling spoke with Chief Healthcare Executive® about choosing the right leader, developing talent, and planning for the future.

Healthcare organizations should be having regular conversations with their CEOs about their future plans, including how long they expect to lead the organization. In searching for new leaders, hospitals can embrace an opportunity to reimagine the system’s future.

“Everybody has strengths and weaknesses,” Gundling says. “There's no perfect person. And so it gives you a chance to at least consider, and then prioritize: What are the most important attributes we need?”

(See part of our conversation with Rick Gundling in this video. The story continues below.)

Talk with the CEO

The chief executive should be giving sufficient notice to the board about future plans, including thoughts on retirement.

“There's a balance of having enough time to recruit an ideal candidate, and then also not keeping the organization in flux too long,” Gundling says.

At the same time, Gundling says the CEO also may want to hold off giving too much notice so the executive can carry out plans and complete key projects. A CEO may have trouble getting support for a three-year plan if the organization knows a new executive is coming in two years, Gundling says.

While there’s probably no universal answer for the right amount of time, Gundling says nine months to a year is generally appropriate to give organizations time to prepare.

While hospitals have to undertake a rigorous search for a successor, Gundling says organizations should seek input from the outgoing CEO. “I think that the search committee should always interview and get the perspective of the outgoing CEO,” Gundling says.

It doesn’t mean the departing leader gets to anoint or sign off on the successor, but the system should get his or her thoughts. If hospitals don’t solicit the perspective of the departing executive, “it would be a waste of an opportunity,” Gundling says.

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Developing internal talent

After three years in the COVID-19 pandemic, Gundling says healthcare organizations are starting to engage in more long-term planning. Health systems are starting to look at the leaders in the organization and are focused on giving them more opportunities to grow and thrive, which Gundling says is a smart move.

“I think organizations are back, and saying, ‘How do we grow the people we have, instead of always trying to find new people?’ Because they may not be there,” he says.

Part of that means looking at the organization’s goals and the system’s direction in the next five or 10 years. Gundling also says organizations need to be talking with their leaders about their own aspirations, and if they can align those individual goals with the organization’s plans.

Gundling says organizations should ask, “How do we develop the talent internally, to get them there, and to get them into the positions and knowledge and skills that they're going to need to carry out the strategies?”

• Read more: How women can improve their chances of becoming CEOs

Cast a wide net

Hospitals must engage in a broad search to find a new CEO, even if the health system has a promising leader, or a candidate viewed as a natural successor.

“It's part of a board's due diligence to see who is out there,” Gundling says.

If an organization has a strong leader in the “number two” role, the system should candidly explain that they’d be shirking their responsibilities if they didn’t conduct a search.

Larger hospitals and health systems typically engage in nationwide searchers, Gundling says. But he says more small hospitals and systems are also looking at candidates around the country. Hospitals can set up initial interviews via video with candidates in other states or regions, so they can have a first conversation to assess candidates without flying hopefuls in for an early conversation.

Hospitals also are increasingly conducting more aggressive searches to include women candidates and members of minority communities, as health systems are facing increasing pressure to reflect the diversity of their communities.

“I think everybody wants to make a deliberate effort to make sure that they're not closing off candidates that are there, to make sure that they, you know, have an opportunity to, to interview and be heard,” Gundling says.

Dealing with disappointed candidates

Candidates who fall short in their quest to be CEO are undoubtedly going to be disappointed, but Gundling says hospitals can find ways to hold onto leaders they don’t want to lose.

Executives and boards should have honest discussions with candidates who didn’t get the top job. Hospitals that are looking to retain those executives should look at offering expanded roles that could offer new challenges and signify their value to the organization. Even if the move is more lateral in the system’s leadership chart, “they may be able to take on greater responsibilities,” Gundling says.

Some executives may simply be looking for opportunities to be a CEO, and that means they may be leaving the health system, Gundling says. But that doesn’t have to be a negative. Hospital leaders can discuss opportunities to prepare them for new challenges, even if they lead to another system, Gundling adds.

If a well-liked leader leaves for an opportunity to be CEO elsewhere, Gundling says, “You have a great advocate out there at another organization saying, ‘Hey, XYZ Health System is wonderful.”

Health systems can enhance their reputation as a place for nurturing great leaders, which other candidates elsewhere could notice.

Stakeholder feedback

As health systems look at CEO candidates, they need to consider some perspectives outside the C-suite, Gundling says.

Hospitals should get some feedback from physicians and nurses about CEO candidates. Health systems can also solicit perspectives from their community groups, patient advocates, or volunteer groups.

Health systems should also solicit feedback from staff on the attributes they’re looking for in the system’s chief executive.

“I think that that should be incorporated as well,” Gundling says. “To have listening sessions, Q&A sessions about it, I think is really, really important.”

Course correction

Some hospitals may be looking for new leadership beyond a CEO’s retirement. They may be searching for a leader to turn around a struggling system.

Systems can embrace that opportunity as a chance to show the staff and other stakeholders that they’re working to improve.

“I think that can be a very positive thing,” Gundling says. “Employees know if the organization is in a rough spot.”

Hospitals can explain to staff that they’re looking for a leader with specific skills to help turn around the system. And if they find the right leader, health systems should explain why the new CEO is well-suited to steer the system back on course, especially if the new leader has a track record in transforming a declining organization into a vibrant hospital.

“We picked this person because they have turned around XYZ Health System,” Gundling says.