November 11, 2016 – Talent management as the U.S. healthcare industry transforms is a high priority. In addition to grappling with a shortage of physicians and other clinicians, healthcare organizations must also fill new and expanding leadership roles to carry out strategic initiatives in response to current reform efforts, and whatever changes may come its way as a result of President-Elect Donald Trump taking office in January.
In a recent interview, Cejka Search president John Gramer and executive search SVP Paul Esselman, explore the challenges healthcare search firms face in recruiting physician and leadership talent in one of the most resource-constrained, complex and evolving market environments in decades.
Cejka Search is a national search firm that has focused on placing physicians and healthcare leaders for more than 35 years. John has been in the recruitment industry for 30 years, serving in healthcare and other professional niches, including finance and accounting, technology and legal services. Paul leads the executive search practice of Cejka Search and consults with healthcare boards, committees and senior leadership on C-level search engagements and assists with organization development and succession planning strategies.
Can you both discuss the tremendous transformation occurring in the healthcare field, vis-à-vis population changes and increased talent demand?
Gramer: The U.S healthcare system has undergone the most dramatic reform in over three decades, shifting towards a team-based care model driven by value-based reimbursements and capitated contracts for population health management. As a result, healthcare organization are undergoing major clinical, operational and technological transformations, causing organizations to re-evaluate the kind of business and clinical leaders they need to successfully deliver care in this new environment. At the same time, the U.S. is facing increasing demand for healthcare services, thanks to the aging population and surge in the newly insured, and not enough physicians to meet that demand. So, healthcare organizations are looking for expanded skill sets in one of the most resource-constrained employment markets in decades. The result is fierce competition for top healthcare talent, and growing demand for organizational design, succession planning and search services to help define and build the healthcare leadership teams of the future.
What are some of the challenges that firms like yours face in identifying talent in the healthcare field?
Gramer: We are in one of the most competitive and complex healthcare employment markets in decades. Both healthcare leaders and practicing clinicians have greater career choices than in the past. Healthcare reform has created additional opportunities for healthcare leaders to oversee care coordination, utilization management, employee health, and population health. Traditionally for clinicians, there were two primary career paths – working for a hospital or private practice. Whereas physicians and advanced practitioners today have a growing number of settings available to them – from independent to employed arrangements, and from health systems and medical groups to a growing number of ambulatory and commercial settings. They are an increasingly diverse group, more multi-cultural, multi-generational, with distinct work preferences and motivations. Also, career choice drivers are evolving. Growing numbers of baby boomers and female residents are more apt to seek work life balance, part-time or flexible work. All of these factors make the recruiting market even tighter.
What can you say about the sorts of new skills now in demand?
Esselman: Healthcare reform has increased demand for new types of skills in physicians, who now have to work as part of a care team and communicate effectively with patients, as well as healthcare leaders. Healthcare leaders must be able to work in an increasingly matrix environment, sharing decision making and responsibility for broad-reaching initiatives. For example, today’s initiatives are so all-encompassing that they are often led by a team of executives, including CEO, CMO, COO, CFO, CIO. Physician leaders are playing an increasingly important role, as physician engagement (among physicians both inside and outside of the organization) is critical to success. For both physician and non-physician leaders the ability to manage through influence rather than direct authority is an increasingly important skill. This requires proficiency in communication, rapport-building, and conflict resolution. In addition to these ‘soft skills’ the ability to gain an understanding of process reengineering, automation through information technology, data integration & data analytics, contract negotiation and financial planning are essential to preparing organization for accountable care, population health management and other emerging reimbursements models.
As a result, sourcing and identifying the right healthcare candidates requires tremendous marketing expertise, extensive healthcare industry experience and ingenuity. Once qualified candidates are identified, a challenge for recruitment firms is encouraging clients to be efficient and decisive in the interview and selection process, and to be creative in designing employment packages that are market competitive but also tailored to individual’s unique career goals, to the extent possible. Competition for talent has grown as well. As the industry consolidates, we are seeing some of the large health systems with deeper pockets investing in creating a consumer brand, but also an employer brand. This means investing in areas that make an organization more attractive to potential job candidates, such as state of the art facilities, awards and recognition, centers of excellence and philanthropic involvement; But also investing dollars to promote these attributes, through marketing and public relations, especially in the digital and social space.
Beyond the difficulty in locating talent, is retaining people for long periods of time the great challenge since opportunities in such a dynamic field are likely to continue deep into the future?
Gramer: Our research has shown that physician turnover averages about 6.8 percent a year, peaking in years two and three at almost 10 percent – so 20 percent on aggregate. This is explained by doctors newly out of residency, who are figuring out what type of employer best suits them. After five years, turnover stabilizes at about four to five percent, but the portion of these doctors who voluntarily leave are arguably a significant loss to the organization. For senior healthcare executives at large health systems the average tenure is about three to five years, which is consistent with senior executives at large organizations in other industries (Challenger Grey reported average tenure of 4.6 years for CEOs at Fortune 500 companies in 2012). These executives are either being recruited away because of their success or boards are not seeing adequate progress and have decided to make a change. Turnover for healthcare executives in 2014 was 18 percent, close to the record high of 20 percent in 2013, according to research by the American College of Healthcare Executives. The added complication with CEO turnover is the domino effect it has on other leadership positions. Most CMOs (87 percent) are replaced within two months of a new CEO being appointed, and half of CFOs, COOs and CIOs are replaced within nine months.
The first step in retention is making the right hire in the first place. To ensure the right fit you must have internal clarity on the role and requirements, use behavioral interviewing, interview in a variety of settings including social and informal, and conduct thorough reference checks. Once on board, assign a peer as a ‘mentor’ and a person to whom questions can be directed to help with the assimilation. Create a support structure not only for the physician or executives, but also for relocating family members. On a long-term basis, our studies have shown that giving healthcare professionals and physicians a voice is essential to retention and engagement. Examples include: representation on boards and committees; clinical input on major initiatives to gain buy-in upfront, such as technology requirements, quality metrics, value-based compensation and incentives, care-transition/ care-team planning, financial improvement measures, workflow planning; align compensation & other incentives with facility goals; and clear frequent communication on goals & initiatives, including the financial and medical evidence behind each.
Discuss some of the changes and challenges in the healthcare field as a result of the country switching presidential administrations for the first time in nearly a decade.
Esselman: Most physician leaders we’ve spoken to believe that whether the intentional or unintentional result of the Affordable Care Act, healthcare’s focus on value and population health is the right trajectory for the nation. Physician executives are concerned about any significant change in direction due to the significant amount of energy, time and money that has been invested in the shift towards newer care models. For example, a recent Cejka Search survey showed that the percent of organizations who have adopted the Government’s Accountable Care Organization requirements went from eight to 46 percent in just five years. In terms of the broader transition from a volume- to a value-based reimbursement model, which rewards positive patient outcomes over the number of services provided, most organizations are between 20 percent and 50 percent along on their journey.
Will those changes be more profound under President-Elect Donald Trump?
Gramer: Most important is the destination of a value-based system, which patients have also come to expect and want. So the question is: whether a new administration will accelerate the country’s progress towards a value-based system or not? It’s important to remember just how expansive this shift has been and all of the elements the value-focus impacts, such as healthcare infrastructure, payor policies, realignment of metrics, reimbursement models, government oversight, etc. If there were any changes to the value destination, it would a complex and lengthy process before any change would be instituted.
What kind of talent will be required and is there enough talent in the healthcare field? Recruiters seem to be shifting their concentration to other lines of services such as assessment, culture shaping and executive coaching. Why?
Gramer: Assuming the question refers to the supply of talent within the talent management field, the answer is that there is a growing need for professionals specializing in organizational assessment, organizational design and recruitment within the healthcare sector. At Cejka Search we are constantly recruiting a diversified set of professionals to support our growing client base. We look for experience in executive search, but also operational transformation, clinical integration, marketing and business management experience within healthcare. We find that a team with diversified business experience allows us to help our clients connect the dots on a growing number of emerging roles and skill sets required in today’s agile healthcare market.
What does this mean for the talent management sector heading into the middle of the 21st century? And how do Millennials fit in and what opportunities and challenges might they face?
Esselman: For the talent management sector, demand is growing and, especially in healthcare, competition for talent is growing as well. Social and digital tools have already had a transformative impact on the talent management sector and there are new emerging technologies and tools on the horizon all of the time. Having new generations of talent management professionals join the ranks is always a healthy contribution. But innovation and adaptation of new recruiting tools and methods is happening across all generations of talent management professionals, and is critical to remaining successful in our field. For the healthcare industry, Baby Boomer physicians approaching retirement age are being replaced by younger generations, for whom work-life balance is a higher priority. Today’s younger generations of doctors are looking for less call time, more part-time or job-sharing arrangements, more paid time off and blocked OR (operating room) time, in order to better manage their work week. But some of our healthcare executives have commented that this does not necessarily mean that they have less of a work ethic. In fact, some executives say that younger doctors who maximize the use of available technology and support teams are able to be just as productive while spending fewer hours at work. When it comes to the up and coming Millennial generation, of age to be entering medical school right now, there will many things that today are innovative but will quickly become expected by the time they graduate. The Millennial generation is the first to have grown up with personal technology since birth, and expect access to information and connectivity 24/7 with little tolerance for inefficiency. They are more entrepreneurial and self-reliant than previous generations. So, healthcare organizations who fall behind in terms of creating collaborative and efficient work models and environments will find it difficult to recruit and retain the best Millennial talent.
Given all that, will senior executives have to find new roles and transition from other industries into healthcare?
Gramer: It has been well reported that the healthcare industry will continue to see new competitors entering the market, especially from the technology space. As a result, there are growing opportunities for healthcare professionals in other fields, such as insurance, information technology, pharmaceuticals, life sciences, etc. As far as executives being recruited from outside of healthcare, we repeatedly hear an interest from boards and senior management to include candidates from industries such as retail and automotive who know how to align teams and focus on profit improvement and performance excellence. But when it comes to making a C-suite hire they typically select a person with industry experience due to the complexity of payor contracts. It is more common to see talent from non-healthcare industries hired at the functional leadership level, such as HR, IT, marketing, or patient experience.
Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media