The American College of Healthcare Executives (ACHE) recognizes that in the face of profound changes in the healthcare delivery system, chief executive officers and other senior-level healthcare executives will increasingly need to address changing external demands and mounting internal pressures. To fulfill their responsibilities for executive decision making and innovative organizational leadership, these individuals will be compelled to make decisions that may expose them to significant risks, both personal and financial. The hospital CEO turnover rate is one indication of the volatility of such senior-level positions. The hospital CEO turnover rate was 16.2 percent from 1998 to 2002.

Because of the link that exists between leadership continuity and overall organizational performance, it is in the best interest of both the organization and the community it serves to provide CEOs and other appropriate senior-level executives with certain, well-defined employment protections. Such protections encourage prudent decision making, create a climate of mutually understood expectations, and demonstrate a commitment to fair employment practices.

Policy Position

The American College of Healthcare Executives believes that healthcare organizations should provide employment protection to their chief executive officers and other appropriate senior-level healthcare executives because their responsibilities to their employers place them at significant personal and financial risk.

ACHE encourages all healthcare organizations to wholeheartedly pursue the following actions:

• Provide executive employment contracts or letters of agreement to their chief executive officers with a goal of establishing conditions conducive to the exercise of strong and innovative CEO leadership.
  
  
• Provide executive employment contracts or letters of agreement to all other appropriate senior-level executives to similarly promote strong and innovative leadership.
  
  
• Provide CEOs with the contractual assurance of a minimum of one year's total compensation (salary and all benefits) upon termination, with the ability to accrue additional severance pay depending on tenure in the position and other contractual agreements.
  
  
• Provide other appropriate senior-level executives with a minimum of six months' severance pay upon termination and the ability to accrue additional severance pay depending on tenure in the position and other contractual agreements.
  
  
• Provide chief executive officers and other appropriate senior-level executives with comprehensive outplacement services in the event of job termination, including assistance in career plan development and job-search assistance.

Reference

American College of Healthcare Executives, Contracts for Healthcare Executives, Fourth Edition (Chicago: American College of Healthcare Executives, 2002).

Approved by the Board of Governors of the American College of Healthcare Executives on November 10, 2003.