November
1993
December 1998 (revised)
November 2003 (revised)
Statement
of the Issue
Board evaluation of the hospital or health system chief
executive officer has long been an important way to ensure
that performance expectations are mutually understood and
that progress is being made toward their attainment. In
an environment characterized by unprecedented change and
uncertainty, the CEO's performance evaluation both assumes
new significance and requires important changes to the nature
and frequency of the CEO evaluation. The evaluation process
should be viewed as an important tool for measuring leadership
effectiveness.
Policy
Position
The
American College of Healthcare Executives believes hospitals
and health systems should evaluate their chief executive officers
using the following principles:
-
Expectations of the CEO, expressed in terms of well-defined
benchmark objectives, should be clearly identified well
in advance of the evaluation to ensure that the evaluation
will be a meaningful assessment of progress made on mutually
understood goals.
- The
evaluation should be a continuous, year-long process culminating
in a formal, annual performance review that contains no
surprises for either the evaluators or the CEO. Continuous
evaluations are a way to provide meaningful feedback on
many aspects of operations and clarify misunderstandings
resulting from poor communication or lack of expertise in
particular areas.
- The
evaluation process should enhance the working relationship
of and information-sharing between the CEO and the board,
rather than be a one-directional process. The CEO should
have an employment contract to further facilitate understanding
of mutually understood expectations.
- The
evaluation should link attainment of organizational objectives
with the CEO's personal performance objectives. Two key
organizational objectives should be considered in the CEO's
performance evaluation: 1) the organization's contributions
to community health and 2) organizational success. Professional
role fulfillment—the CEO's personal performance goals—should
be the third component of the evaluation. Among those items
that should be included in the CEO's personal goals are
1) modeling ethical behavior and 2) participation in continuing
education.
- Data,
not subjective assessments, should be the mainstay of the
CEO's performance evaluation. Hospitals and health systems
should review data on how systems, e.g., efficiencies in
patient admissions, accounts receivable, are working. In
addition, because the CEO is ultimately accountable for
the functioning of such systems and overall quality of care
or service delivered, data about system effectiveness is
among the determinants of the CEO's performance.
- The
CEO's leadership of the organization to improve the community's
health should also be evaluated. Examples of such contributions
might include the extent of the organization's efforts to
address issues such as prenatal care, smoking cessation,
early detection of heart disease and diabetes as well as
more global efforts to educate the community about important
health issues.
- Board
self-evaluations are an important enhancement to the evaluation
process because they further build on the concept of mutually
understood expectations. Consider conducting self-evaluations
of the full board and of individual members.
- Although
overall system performance is an important measure of CEO
effectiveness, the CEO's salary increases must also be tied
to individual performance as measured by the evaluation.
Reference
American
College of Healthcare Executives, Evaluating the Performance
of the Hospital CEO, Third Edition (Chicago: American
College of Healthcare Executives, 2003).
Approved
by the Board of Governors of the American College of Healthcare
Executives on November 10, 2003.
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