Last month, Kaiser Permanente CEO George Halvorson announced that he would be retiring—effective December 2013. The fact that he has announced his retirement more than a year in advance of the actual date of departure is significant. How many healthcare organizations have the luxury of 14 months to find and transition in a new CEO? For all major strategic planning—a category CEO succession planning certainly falls under—Halvorson advises fellow CEOs to look at least three to five years on the horizon.
That Kaiser’s board will take so long to assess new CEO candidates “is a pretty strong indication that it has a solid succession plan in place,” writes Matthew Weinstock, senior editor of Hospitals & Health Networks, in “Who’s the New Boss?” This is the exception rather than the rule, Weinstock says, citing a recent Witt/Kieffer survey that notes that fewer than half of healthcare CEOs have worked with their boards to conduct formal succession planning.
Paraphrasing Elaina Genser, Witt/Kieffer Senior Vice President and Managing Director, Western Region, Weinstock notes that “succession planning often gets pushed to the back burner as more immediate needs arise.” Hard as it may be, CEOs and their boards should hammer out a succession plan at least five years ahead of a CEO’s expected retirement, Genser tells Weinstock.
Molly Gamble of Becker’s Hospital Review also spoke recently with Genser about succession planning. “The CEO is obligated to be mentoring or developing at least one successor even if [he or she has] no immediate plans to retire or leave the organization,” Genser says.
How to Select a CEO
In Gamble’s “Hanging Up the Hat,” Genser shares six best practices for how healthcare boards and their CEOs can better plan for leadership succession. One of those six just happens to be, echoing Halvorson, the “three to five year rule”: “If a CEO says he/she plans to retire in three to five years,” says Genser, “hospital boards should kick their succession planning into high gear and ask some crucial questions: Is anyone inside the organization a potential CEO candidate? Who, if anyone, does the CEO think should replace him or her? Should the hospital hire new executives or develop existing team members to become the next leader? Does the hospital need to conduct an executive search?”
How many hospital leaders—boards or CEOs—have asked themselves these questions in earnest and formulated practicable answers? It’s easy to push CEO succession planning to the back burner, but in the topsy-turvy world of healthcare, three to five years can go by in the blink of an eye.
By Paul Thomas, Witt/Kieffer Senior Writer (@PaulWThomas)