PLANNING ROUTINELY DONE
BY 21% OF FREESTANDING U.S. HOSPITALS
ACHE Study Finds Well-Structured Plans
More Likely to Be Perceived as Effective
November 22, 2004A
recent study of more than 720 freestanding hospitals found
that 21 percent reported leadership succession planning was
routinely done in their organization. Approximately one in
six indicated that as part of their succession plan they had
identified a successor to replace their chief executive officer.
The research for the American College of Healthcare Executives
was conducted earlier this year by Rush University of Chicago
and Tyler & Company, headquartered in Atlanta.
Succession planning is viewed as effective by freestanding
hospitals adopting a well-defined process. The study of 722
freestanding general medical/surgical hospitals found that
when succession planning is done routinely, particularly if
it goes beyond the CEO level, hospitals report that the results
"While there is increasing attention to succession planning
in today's healthcare environment, it is apparent that more
needs to be done," said Thomas C. Dolan, Ph.D., FACHE,
CAE, president and chief executive officer of ACHE, an international
professional society of 30,000 healthcare executives who lead
our nation's hospitals, healthcare systems, and other healthcare
organizations. "It can be a very effective way for hospitals
to help improve leadership transition and long-term success."
The study received 722 responses from 1,651 freestanding non-federal,
general acute medical/surgical hospitals. It was conducted
by Andrew N. Garman, PsyD, MS, associate professor of health
systems management from Rush University, a nationally ranked
graduate health administration program, and J. Larry Tyler,
FACHE, FAAHC, FHFMA, CMPE, president of Tyler & Company,
one of the nation's leading retained healthcare executive
search firms. The study was funded in part by a research award
from the American College of Healthcare Executives.
"Leadership is critical to the long-term effectiveness
of today's healthcare institutions," Tyler said. "The
length of transition time for a new leader is the strongest
single predictor of perceived effectiveness with transition
The study examined a variety of issues related to succession
planning – how many hospitals use it, how the decisions
are made, what types of preparation are provided for successors,
the length of time between a successor being named and becoming
the CEO, and how the institution evaluates its succession
Larger institutions were more likely to have named a successor
to the current CEO (median staffed beds = 130 at institutions
naming a CEO successor versus 61 beds at institutions that
had not named one). The most frequently cited reason for not
conducting succession planning: it is not a high enough priority
right now (46 percent). Other reasons cited were because the
current CEO is too new (31 percent) and there is no internal
candidate to prepare (25 percent). In contrast, only 1 percent
of the respondents indicated they thought succession planning
was not useful.
"It is clear that most participants saw real value in
planning for leadership transitions," Garman said. "It
is also clear that keeping this dialogue on the corporate
agenda is very challenging, given the formidable pressures
facing hospitals today."
Additionally, 87 percent of the 722 institutions said that
they did not offer any formal preparation to successors.
"We're seeing that today's freestanding hospitals could
use a more structured succession planning process," Tyler
said. "Transition in leadership is especially important
because a substantial number of senior healthcare leaders
are expected to retire in the not-too-distant future."
Thirteen percent of the institutions surveyed offered some
type of formal preparation, although the methods varied from
mentoring to developmental "stretch" assignments
to structured socialization (e.g., meeting with key stakeholders
to develop relationships). Statistical models suggested that
the two strategies with the greatest impact are: 1) mentoring
(e.g., regular one-on-one meetings with the current CEO explicitly
for mentoring purposes); and 2) developmental ("stretch")
assignments. The average time for a successor to become CEO
was 12 months.
the 21 percent of organizations that had some type of succession
planning process in place, 7.9 percent limited succession
planning to the CEO and top-level leadership; the other 13.5
percent involved a broader base of leadership positions.
planning can go deeper than the CEO level," Tyler said.
"Our findings showed that institutions with routine succession
planning beyond just the CEO are twice as likely to feel effective
in identifying candidates, and almost three times as likely
to feel effective in preparing successors compared with those
not engaged in routine succession planning."
The conclusion is that succession planning can be a valuable,
effective strategy for choosing new leadership when implemented
in a structured fashion involving well-defined steps to prepare
the incoming leader over a multi-year period. However, succession
planning is not yet a routine part of the long-term planning
process for most freestanding hospitals.
To increase knowledge about the importance of succession planning,
results of the study will be disseminated by the American
College of Healthcare Executives to its 30,000 affiliates,
as well as presented at the ACHE 2005 Congress on Healthcare
Management in Chicago, March 14-17, 2005.
Since the study was based on freestanding hospitals and excludes
hospitals that are part of healthcare systems, responses are
representative of smaller, more rural hospitals. Respondents
were associated with hospitals with a median of 70 staffed
beds; 64 percent indicated they were in rural settings. Therefore,
results cannot be generalized to all hospitals.
Founded in 1933, the American College of Healthcare Executives
is an international professional society of 30,000 healthcare
executives who lead our nation's hospitals, healthcare systems,
and other healthcare organizations. ACHE is known for its
prestigious credentialing and educational programs and its
annual Congress on Healthcare Management, which draws more
than 4,000 participants each year.
is also known for its journal, the Journal of Healthcare
Management, and magazine, Healthcare Executive,
as well as ground-breaking research and career development
and public policy programs. ACHE's publishing division, Health
Administration Press, is one of the largest publishers of
books and journals on all aspects of health services management
in addition to textbooks for use in college and university
courses. Through such efforts, ACHE works toward its goal
of being the premier professional society for healthcare leaders
by providing exceptional value to its members. For more information,
visit ache.org or
call ACHE at (312) 424-2800. ACHE is located at One North
Franklin Street, Suite 1700, Chicago.
University Medical Center is the largest private academic
medical center in Illinois. Located in Chicago, Rush Medical
College was first established in 1837 and is named for physician
and patriot Benjamin Rush, one of the signers of the Declaration
of Independence and a leading social reformer of his time.
The Health Systems Management department at Rush offers Master's
and Doctoral programs, and is recognized as one of the Top
Health Services Administration programs in the country by
U.S. News & World Report.
Tyler & Company, founded in 1978, conducts healthcare
executive search across the United States – from Maine
to Arizona and from Montana to Florida. Offices are located
in Atlanta, Charlotte, and Philadelphia. It is one of the
nation's pre-eminent retained executive healthcare search
firms, cited as the 38th largest executive search firm in
the nation by Executive Recruiter News. The firm's staff includes
search consultants and research associates.
Larry Tyler is founder and president. The company's headquarters
office is located at Northridge Center II, 375 Northridge
Road, Suite 400, Atlanta, GA 30350. The firm is a member of
The Taplow Group, an international executive search and human
capital consortium whose members are dedicated to conducting
worldwide searches for highly qualified senior-level candidates
to meet the specific leadership needs of companies around
the world. It is also affiliated with the Association of Executive
Search Consultants. For more information about Tyler &
Company, visit the company's website at www.tylerandco.com.
Klegon, ACHE, (312) 424-2800, firstname.lastname@example.org
Andy Garman, Rush University, (312) 942-5402, Andy_N_Garman@rush.edu
A. Keene, Tyler & Company, (770) 965-3340, email@example.com