February 14, 2017 – As the life sciences sector continues to expand and reshape itself, organizations at the vanguard in the field are looking to renew and refresh their leadership ranks. In demand: multi-skilled executives who can effect change on many levels. Stepping up to the task are search consultants, recruiting well-rounded individuals who understand science as well as the dynamics of a transitioning industry.
Cost-conscious executives who can make organizations more efficient – and who have the ability to translate their knowledge over multiple therapeutic areas as easily as they can operate a lab, are in high demand. The life sciences sector, say specialist recruiters focused on the area, has a unique and growing need for leaders with the ability to function within an evolving environment amid uncertain times.
Versatility is Key
“This is truly an era of extraordinary opportunities and rewards as well as challenges and risks for industry and venture capital / private equity clients in the life sciences sector,” said Helga Long, chair and CEO of global life sciences firm HM Long/RSVP Group. “Success in this highly competitive, rapidly shifting global marketplace demands truly exceptional leaders. Individuals with educational pedigrees and tenures with big-name companies, who, in addition to their specific experience, have the innate ability to see the big picture, are the ones in high demand.”
These leaders, said Ms. Long, possess an acute understanding of business, financial, regulatory, political and competitive dynamics that combine to make the life sciences sector unlike any other.
“When we try to define the ‘innovative’ leader, there is not a one-size-fits-all formula, but there are benchmarks I always look for,” she said. “They are highly intelligent and usually highly intuitive. They have a deep understanding of their market. They’re visionaries. They understand what works today and they have a pretty good feel for why it’s not going to work tomorrow.” And, she noted, they’re willing and able to stand out from the pack and articulate this. “They’re usually the kind of people who thrive on big changes and big challenges.”
Because the venture capital market isn’t creating an environment where talent can be groomed and cross-pollinated with different experiences, mentors and organizations, there are simply fewer candidates to go around.
But there’s another problem. “The fact that many of these start-ups are taking longer to get a successful exit, CEOs and their respective teams are staying in place longer, creating fewer opportunities for new entrants into this market sector,” said Strawn Arnold & Associates managing partner John Groover. “On the large-cap front, more executives are staying put given the aforementioned start-up environment. That combined with the industry consolidation we’ve all experienced over the past decade has left fewer open chairs at the corporate leadership table.”
“I think an argument – and a strong one – could be made that there is not sufficient talent poised and ready to take on the C-suite level roles in the major national and super-regional health systems,” said Martha Hauser, managing director and national healthcare practice leader at Diversified Search. Fueling the problem, she said, is the heavy M&A activity taking place among life science sector leaders.
In September, Diversified Search, one of the top 10 executive search firms in the U.S., acquired San Francisco-based BioQuest, a recruiting boutique specialist serving healthcare innovators in the life sciences market. BioQuest has built leadership teams for innovative companies in medicine, science, and technology. Under terms of the agreement, BioQuest will operate as an independent, wholly-owned subsidiary within Diversified Search, where it is expected to boost revenues by about 10 percent.
By bringing BioQuest into the fold, Diversified Search is acknowledging the growing intersection between health services and life sciences. “It allows us to offer a full complement of experience and resources through both our healthcare and life science verticals, broadening our experience, content knowledge, and access to talent in areas such as healthcare innovation and medical devices,” said Ms. Hauser, who has worked with hospitals, health systems, academic medical centers, higher education, and non-profits in a career that has spanned 25 years. No less important, BioQuest has dramatically added to the search firm’s extensive networks with venture capital and private equity firms. “In short, we view the acquisition as an avenue to the future of healthcare,” she said.
Identifying top job candidates is a constant challenge for recruiters, what with start-ups of all sizes emerging across the U.S. and abroad to complement the expanding base of mid-sized and large biotech and pharma companies that already exist. But talent requirements for executives in what has become an increasingly complex health system are much different than in previous years. And now, as an uncertain political environment begins, talent consultants are seen as critical levers – and the best ones are giving their client organizations a competitive advantage through leadership selection.
“The recent transition to President Trump and a Republican majority in the House and Senate will certainly change healthcare reform in its current state today,” said Todd Drometer, a partner at Phillips DiPisa and Associates, a boutique search firm specializing in life sciences and healthcare. “However, we do not yet know the direction that will be taken or how deep the changes will be. With change comes new leadership opportunities and we have seen this within hospitals, health systems, medical groups, and managed care organizations over the past several years.”
Philips DiPisa has extensive experience placing C-suite level leaders within hospitals, health systems, and physician organizations. The majority of its searches focus on the provider side of healthcare delivery across the U.S. “Each C-suite position is different and interest will vary based upon the organization’s financial health, its current and future strategy, the leadership team composition, the organization’s culture, and geographic location,” said Mr. Drometer. “Each candidate will need to consider relocation dynamics depending upon individual geographic preferences and personal dynamics at a given point in time. All of the above play a key role in terms of a given candidate’s potential level of interest and if the role is perceived as a growth opportunity, including compensation.”
Knowing what to look for can help recruiters identify executive talent and recruit leaders who have the ability to communicate with a wide range of on-the-job partners, from a scientist and a regulatory authority, to a medical patient – not to mention a board of directors and other important stakeholders.
“There is a ‘high tech meets biotech’ phenomenon happening. Leaders with backgrounds in computational biology and data analysis with strong leadership competencies are in high demand,” said Robin Toft, president and CEO of the Toft Group, a global search firm dedicated to life sciences and healthcare. “Baby boomers are retiring and becoming patients in the healthcare system, rather than employees. As we retire, there are not enough candidates available to fill those roles within biotech and healthcare providers.”
Recruiters say there are senior level positions where health systems have historically requested that leaders be considered from non-healthcare delivery related industries, including human resources, information technology, chief experience officers, and marketing & communications. However, more often than not, companies ultimately hire executives with prior experience in healthcare.
Learning from Other Industries
There is limited patience, recruiters say, for newly hired executives to take an extended amount of time to assimilate and execute. The rate of change in healthcare has been significant over the past several years, and it is expected that newly hired executives get up to speed and provide value shortly after joining an organization, Mr. Drometer said. “This is because of the steep learning curve around the industry and the dramatic cultural difference present in a not-for-profit health system versus a for-profit, non-healthcare related company,” he said.
Creating a Wider Talent Base
To create a wider talent base, companies can and should learn from other industries about certain operational and strategic experiences in pursuing non-traditional job candidates, according to Furst Group managing director Bob Clarke. “Understanding supply chain is a perfect example,” said Mr. Clarke, who consults with boards of healthcare organizations to manage C-suite transitions and also develops succession plans and implements leadership development programs. “It wasn’t that long ago when the healthcare system wasn’t paying enough attention to this from a management perspective. It is important to understand how other industries approach areas of commonality and learn from them.”
Within healthcare talent pools, there has been an elevation of non-traditional leaders, which includes physicians and nurses. “On some searches, we are often given more latitude to recruit outside the industry,” said Keith Southerland, president of Southerland Partners, an executive search firm specializing in complex integrated delivery systems, hospitals, academic medicals centers and payer organizations. “We have found many top candidates who are quite receptive and eager to be considered.”
The healthcare sector will continue to demand the same skill sets from executives – critical thinking, data analytics, customer service and technical innovation. These days, however, healthcare is more consumer-oriented, resulting in a new wave of candidates possessing qualities that have not always been associated with the sector. These include flexibility and the ability to pivot, digital connectivity and service, and even the ability to leverage social media, while creating a greater demand for innovation and creative thinking.
All of this has led to firms like Diversified Search becoming more collaborative within their own ranks. “We have functional experts in areas such as supply chain, technology, marketing, and human resources who now spend a great deal of their time in healthcare,” said Ms. Hauser. “We’re able to leverage talent from other industries, given that some of the skill sets now needed by healthcare systems do not currently exist within the traditional ranks of the industry. I can think of numerous instances where healthcare systems have opted to recruit talent from other industries in order to drive the degree of innovation and change.”
Furst Group’s Mr. Clarke said some candidates have the ability to think outside the box and implement a “strategic imperative.” Organizations willing to take such operational risks can attract strong leaders among job candidates. “For those organizations that offer the right opportunity, in that they’re looking to create future strategy initiatives, we can attract people to those jobs,” he said.
Wanted: Crack Talent
As the market continues to consolidate, expect to see an even stronger recognition by boards that healthcare and life sciences leaders be required to have experience in mergers and acquisitions and a consumer focus. “As national and super-regional systems develop, this is where we’re really seeing the need for talent from other industries,” said Ms. Hauser.
“I never grow tired of learning about the changes in healthcare, and there are many happening all the time,” she said. “It’s dynamic and energizing to incorporate those changes and demands into the process of identifying the right leaders for the right healthcare organizations at the right time. I also believe that people are always better when doing something they love. I soon learned that I loved the highly intelligent people in healthcare, who are there because they have a sense of mission and purpose in their work.” One problem, there, of course: mission-driven leaders are at the top of every recruiter’s target list, and every industry seems to want them today.
Companies need new strategies and new professionals with innovative vision to successfully develop access to new markets, said Ms. Long. They will also need to be innovative when it comes to raising capital and finding ways to control costs. “Over the past three years, we have begun to see innovative approaches to partnerships and hiring,” she said. But with so much competition, she added, institutions in need of crack talent will likely look outside the sector for these new leaders.”
Contributed by Scott A. Scanlon, Editor-in-Chief and John Harris, Managing Editor — Hunt Scanlon Media