Contract or “temp” employment used to be viewed as a means of supplemental income: a side hustle to an average day job, or a way to pay the bills while searching for full-time work. Now, gig work is back in style, and more workers want in on the flexibility — including C-suite executives, Korn Ferry recently reported.
The gig economy surged when older millennials, born in the 1980s, began rejecting the one-firm careers their parents had, according to Korn Ferry. Although they are currently midcareer, older millennials have switched jobs 7.8 times on average. Baby boomers are also using temporary work to keep busy during retirement, and Generation Z appreciates the flexibility that comes with contract labor.
As temporary work grows in popularity, its influence is spreading to the C-suite. Interim executives are becoming more likely to be tapped when a leader departs, Korn Ferry reported. This gives organizations like health systems, which urgently need leadership in a rapidly changing industry, more time to conduct their searches for full-time replacements.
Sixty percent of executives predict that the number of interim workers at their companies will “substantially increase” within the next three years, Korn Ferry reported. In a period of economic instability, temporary labor can mean less commitment and cost than a permanent worker. But there are downsides to contract labor, too. Since they lack benefits, many contract workers demand higher pay — which can trickle down and lead their permanent counterparts to ask for matched salaries. In the healthcare industry, this is visible in travel nurses’ paychecks, and their controversial effects on health systems’ finances.
For better or for worse, contract labor does not appear to be dying out anytime soon. Fifty-eight million U.S. workers now consider themselves “independent,” Korn Ferry reported — an estimated 36 percent of the total workforce.
Abstract:This article is the second in the series that addresses the initial stages of going through a career transition. Career management articles in the blog have been popular. A transition is a traumatic event, to say the least, especially the first time. These articles address what you should be doing BEFORE your transition occurs.
In the last piece that is the first in this series, I addressed the fact that there is little relationship between how good you are at what you do and the probability that you will end up in a transition.
This article addresses what you should be doing to prepare for an unplanned transition.
The ACHE tracks hospital CEO turnover. The average annual rate is around 18%. According to Challenger, Gray, and Christmas, hospital CEO is one of America’s most dangerous occupations measured by potential longevity or lack thereof in a position. One of my most popular articles discusses some of the many reasons for executive turnover that have little to do with performance. A lot of people are very interested in the topic.
HFMA does not track CFO turnover, but it is probably equally rampant as CFOs too often get credit for substandard organizational performance despite having little control or influence over the incurrence of operating cost or results. CFOs and other C-Suite inhabitants bear a disproportionate risk of having their career disrupted by CEO turnover.
If you start asking around, you might be surprised to learn how many healthcare executives were involuntarily ‘freed up to seek other opportunities’ at least once in their career. When I told my friend John at a reunion that I had decided to go into the consulting business, he immediately accused me (correctly) of having been fired. John went on to tell me how lucky I was because few executives that are disruptive innovators have not been fired at least once. To my friend, having been fired is a rite of passage.
John’s career goal at the time was to become the CEO of a large hospital, and he believed that a transition would strengthen his CV. As fate would have it, not too long after the reunion, I got the call from John and, you know, the rest of the story. John went on from this setback to become the long-running CEO of one of the largest Baptist hospitals in the southeast.
For those who push hard in organizations to get them to change their culture for the better and get on a better track, the risk of being let go is much higher. With one exception, every person that I have ever worked with through a transition has emerged a wiser, stronger person in a position much better suited for their skills and talents. While I would never encourage anyone to go through a transition, the process’s outcome has been both cathartic and career-enhancing.
So, given this risk, what should you be doing? Your preparation for a turnover event should start IMMEDIATELY!! If you wait until you are out, you have waited WAY TOO LONG!! If you do not have a networking database, you need to start immediately to develop this asset. My networking database commenced during my first transition. It now has over 3,000 companies and over 4,100 contacts. Most of my contacts are business-related, and most of them will respond to an email or return a call. Contrast this with the call I get too often from a newly terminated executive asking for connection assistance, that never bothered to record phone numbers or email addresses of people that may be in a position to be of help. Too many friends had contact files stored on a corporate phone or a corporate database and lost them when they turned over a phone or access to corporate systems was terminated. Frequently, access is restricted right before the victim learns of their fate as a security measure of the organization. Getting your data back if this happens is not going to be easy or fun.
For this reason, I have successfully refused to use a company-owned phone or put my networking database developed over twenty years on a computer system I do not control. The problem with having business and personal data on the same device is if you give the organization access to ‘their data, they cannot lock it selectively. When they lock or wipe the device, they are going to destroy everything on the device. My networking database is my most valuable personal asset. There is an article in my blog dedicated to networking. The time to start building your networking database and skill is before you need it.
You should start the process of thinking through the next step in your career. Get out a piece of paper. What do you like about your current situation and wish to preserve? What do you want to change? Where are you willing to relocate? What is your idea of the perfect relationship with a superior? What will the effect of a termination/relocation be on your family, and how will you manage that? In other words, what are you going to be when you grow up? A turnover event is sometimes the catalyst that causes someone to decide to start their own business. Is there a path forward in your current situation, or should you be thinking about proactively inducing your turnover event or at least beginning preparations? People that have been through transitions will tell you from experience that it is a lot easier to get a job while employed than when you are not employed.
A turnover event is a huge psychological and physical burden. Everyone around you is going to be affected. Do not delude yourself into thinking you can manage a transition without help, especially the first one. My dad had a sign in his shop,
Shop Rates
Labor – $20
If you watch – $40
If you help – $80
If you already worked on it yourself, $200
My most significant learning from consulting experience is recognizing when an expert is needed and understanding the necessity of getting my ego out of the way in the process of seeking and availing myself or my client of expert assistance. Clients and consultants do more harm than good by trying to do something they have no business doing in a frequently futile effort to save money. Sometimes, the results are disastrous. We have all heard the adages that a doctor treating himself has an idiot patient or a lawyer who represents himself has a moron for a client.
Contact me to discuss any questions or observations you might have about these articles, leadership, transitions, or interim services. I might have an idea or two that might be valuable to you.An observation from my experience is that we need better leadership at every level in organizations. Some of my feedback comes from people who are demonstrating an interest in advancing their careers, and I am writing content to address those inquiries.
The easiest way to keep abreast of this blog is to become a follower. I will notify you of updates as they occur. To become a follower, click the “Following” bubble that usually appears near each web page’s bottom.
I encourage you to use the comment section at the bottom of each article to provide feedback and stimulate discussion. I welcome input and feedback that will help me to improve the quality and relevance of this work.
This blog is original work. I claim copyright of this material with reproduction prohibited without attribution. I note and provide links to supporting documentation for non-original material. If you choose to link any of my articles, I’d appreciate a notification.
If you would like to discuss any of this content, provide private feedback or ask questions, you can reach me at ras2@me.com.
Abstract: This article is a continuation of the theme of ‘What they don’t teach in school.’ The subject of this article is the importance of the development of your decision-making skill.
In my article on career advancement, I observed the correlation between decision-making ability, career, and income level. So how do you improve your decision making or cognitive ability? Several strategies have proven successful for many people. Unfortunately, most of them require doing something that can be very hard – exercising and expanding your brain. Ziglar, Foreman others have argued that most of us rarely use more than 10% of our intellectual capacity at any given time so we have plenty of unexploited potential. So how do you develop your cognitive capability? One thing for me was taking courses in software development. The most challenging course I encountered in college was a computer programming course that I took as an elective! Computers do not do what you intend; they do exactly what you tell them. Computer programming requires the development of precise and highly structured instruction sets. The skillset required to develop computer code has excellent application to problem-solving that goes along with improved decision making.
One day, I was sitting in a conference room in a Catholic hospital listening to debate about whether or not to buy upgraded lights for neurosurgery operating rooms or continue pouring money into a failed clinical program. The longer this discussion went on, the more frustrated I became. Finally, when I could take no more, I accused the leadership team of decision making on a scale that ran from the Ouija Board to a Magic Eight Ball. The reaction that provoked surprised me. I had no idea Catholics did not like Ouija Boards, and I had heard about being excoriated by a Nun, but I had not yet had the experience. I asked the Nun whether or not she thought it was important for a neurosurgeon to be able to see what he was doing in the OR?
Interestingly, some of the young people in the room had no idea what a magic eight ball was. In the ensuing discussion, I reminded the leadership team that their continuing, collective engagement in non-evidence-based, politicized, expeditious decision-making was too often focused on non-strategic initiatives or lost causes instead of pursuing the best interests of the institution and its patients. I told the group that this type of reasoning was one of the primary reasons the organization had come to make my acquaintance in the first place. I am lucky I did not get fired on the spot, but everyone in that room that day learned something. For the leadership team, the lesson was that they had to resolve to do a better job making decisions. I have argued that an organization’s performance, however that is measured, is a direct function of the efficacy of the leadership team’s decision-making. To this day, I keep a Magic Eight Ball on my desk. It reminds me of my innocent dispassion about Catholics’ sensitivity to something as simple as an Ouija Board and my admonition to that leadership team and myself never to stop improving decision-making capability.
Another of the things that have helped me a lot is the study of ‘sadistics.’ I know. The mediocre performance of my first and second articles on this topic is sufficient evidence of how well accepted this idea is. I will not try to sell you on this idea again other than observing that statistics arose from the need for an objective structure to analyze and interpret data. If this is not improved decision making, I do not know what is.
Self-study helps decision making. There are books, articles, and other resources available for research to better understand topics that you do not comprehend as well as you envision. Two of my favorite resources are Wikipedia and YouTube. What you can find is amazing. While some concepts can be hard to read and grasp at first, academic articles can be beneficial, especially if you understand the underlying statistical analysis. In an earlier post, I referenced an article onNormative Decision Theory by Chua. This research looks into how people make decisions in the absence of complete information. When was the last time you had complete information at the point you had to make a decision? There is never enough time or information. Decisions regularly occur in situations where data is incomplete and may be inaccurate. Improving your ability to make better calls in this fog is crucial to leadership at higher levels.
To be sure, collegiate courses help improve your cognitive abilities, although plenty of University programs fall way short of achieving cognitive gains in decision-making ability among their graduates. I think the issue is not so much with what you know but how well you learn to apply academic and theoretical intelligence to real-world problems and challenges. Everyone would be better served if more university programs offered courses focused on applied decision making. My practice has convinced me that one of the critical factors that lead to unacceptable organizational performance is a consistent track record of decision making that does not produce the expected results.
In undergraduate school, I took an elective course on logic. I can’t remember what I was thinking when I made this decision, but like many of my electives, this one ended up requiring a disproportionate amount of time and energy. However, the return on investment has been immense. Not only did I learn a lot about disciplined decision making, I learned how to spot flaws in arguments whose logic is not sound. The study of logic is vital if you ever intend to spend time developing computer code.
Since college, I discovered philosophy, which most liberal arts students have in their core curriculum. You could spend a lifetime studying Socrates, Aristotle, and other philosophers that advanced society by advocating for the cause of beneficial argument and probing assumptions. If you haven’t already done so, I highly recommend you pick up a copy of Plato and let me know if it changes your life.
Finally, the University of Alabama at Birmingham’s Doctorate in Healthcare Administration program mantra is, ‘Evidence-Based Decision Making in Healthcare Administration.’ As is the case in other disciplines, academics worldwide are conducting research in healthcare administration and continually publishing learning that is beneficial to practitioners. Sadly, I cannot remember a case where a leader stopped a team in the process of making a decision and sent them to the literature to find all available evidence on the topic before committing to a course of action. Then they are surprised when things do not work out as they expect?
One of the ironies of healthcare is that physicians and other clinicians are deeply ingrained with objective, evidence-based decision-making theory and practice. One of the reasons that clinicians get so frustrated with healthcare administrators is when they see what appears (accurately) to them be malaise in organizational decision-making. A couple of one-liners come to mind. The road to failure is paved with good intentions. The road to disaster is littered with run-over squirrels.
The upshot of all of this is that your preparation for higher stakes decision making supports career advancement aspirations. I promise you that anything you do to improve your decision-making ability will serve you very well long into the future.
Contact me to discuss any questions or observations you might have about these articles, leadership, transitions, or interim services. I might have an idea or two that might be valuable to you. An observation from my experience is that we need better leadership at every level in organizations. Some of my feedback comes from people who are demonstrating an interest in advancing their careers, and I am writing content to address those inquiries.
The easiest way to keep abreast of this blog is to become a follower. I will notify you of all updates as they occur. To become a follower, click the “Following” bubble that usually appears near each web page’s bottom.
I encourage you to use the comment section at the bottom of each article to provide feedback and stimulate discussion. I welcome input and feedback that will help me to improve the quality and relevance of this work.
This is an original work. This material is copyrighted by me, with reproduction prohibited without attribution. I note and provide links to supporting documentation for non-original material. If you choose to link any of my articles, I’d appreciate a notification.
If you would like to discuss any of this content, provide private feedback or ask questions, You may reach me at ras2@me.com
Hospitals are constantly faced with challenges that require them to reassess how they deliver care to their communities. Continuous improvement is necessary as expense inflation consistently outpaces reimbursement gains. However, more fundamental issues threaten hospital fiscal viability such as payor mix deterioration, population or market share declines, and utilization changes. Amplify this environment with a difficult EMR installation and a “perfect storm” creates a fiscal crisis that necessitates a turnaround.
If covenants are breached, bond agreements often require an external and independent consulting firm that is engaged to help create and oversee the implementation of a turnaround plan. Otherwise, a CEO must make a value judgment on whether to outsource the turnaround balancing cost considerations with an honest assessment of (1) their management team’s bandwidth, and (2) ability to prepare and execute a turnaround.
There are multiple models for outsourcing a turnaround. In a complete outsourcing, an engagement letter with the “performance improvement” consulting firm would include an assessment phase and the preparation of a comprehensive plan that covers all areas of operations followed by implementation support services. The firm may require an on-site presence of one year or more to assess, validate, and assist in the implementation of recommended interventions. This can be effective, but the fees can easily reach seven figures even for modest community hospitals. In addition, even in a complete outsourcing there is still a major demand on the time of senior leadership. As a result, management sometimes chooses to limit the scope of a performance improvement engagement, which results in a partial outsource. The limitation may be to only outsource the plan development in the form of a report. This would detail the operational interventions and the implementation steps, but it would leave the heavy lifting of implementation to existing leadership. Alternatively, the scope may be limited by excluding certain areas of review. While there may be valid reasons for the latter approach, limiting the areas of review can be counterproductive to a turnaround plan because many issues are systemic such as patient throughput or revenue cycle. Further, restricting certain areas for review may create the appearance of “untouchables” or “sacred cows,” which should be avoided in a turnaround.
While the CEO should always be the ultimate leader of the turnaround, the CFO is indispensable in the process whether it is fully or partially outsourced or done completely in-house. These abilities are not always in the CFO’s skill set; some executives are most effective in a steady-state as opposed to a turnaround environment. The CEO will be relying on the CFO to demonstrate the following traits, which require a large degree of emotional intelligence:
Delegate some responsibility to their lieutenants but communicate the financial imperative and manage overall execution of the turnaround
Appropriately raise the alarm when progress is not being made. Too much alarm can be seen as crying wolf and too little can add to complacency.
Do not be averse to confrontation but do not create it where it is not necessary. Only use the CEO for those most difficult situations where it cannot be avoided to ensure execution remains on point.
Human nature dictates that self-interest may compromise the CFO’s objectivity. There will be times when the best interest of the organization and the individual are in conflict. If the incumbent CFO is not up to the task, replacing them with an interim CFO with turnaround experience is a better option.
An experienced interim CFO in a turnaround situation has several advantages. First, it can afford the CEO the opportunity to underscore the urgency of the situation by making an example. The experienced interim CFO understands their primary role is to be a key asset in the execution of the turnaround. They are not there to make friends but to influence people (although the best ones do both). Because they are not angling for promotions or favor for future consideration from the board, they are apolitical, and their intentions are more transparent. Having been through turnarounds before, they possess the tools to assist the CEO and the board navigates the ups and downs. Perhaps most importantly, the interim CFO is in the best position to tell the CEO and the board things they may not want to hear such as the need to give up independence or consult bankruptcy counsel if the situation warrants.
Obviously, it is necessary that the hospital must continue to operate safely, securely, and legally during a turnaround. This can be a difficult balancing act, not just for the CFO but for all senior management. The CFO must continue to safeguard the assets of the organization. Likewise, other members of senior management must push back if a turnaround plan may imperil patients, visitors or staff, or violate the law. Consequently, it may be beneficial to bring in other interim C-Suite leaders who are able to effectively manage the multiple critical priorities during a turnaround in addition to, or instead of, an interim CFO. However, this must be carefully weighed against continuity of management and the organization’s ability to attract and retain talent. Senior management turnover creates stress on the organization and is ultimately a reflection on the CEO.
There is not a one-size-fits-all approach to creating and executing a turnaround plan. Outsourcing to consulting firms can infuse new ideas and analytical talent, but it is expensive and still often leaves management with the bulk of the responsibilities. Experienced interim management can add independence and objectivity to create a glidepath for execution.
Rich Goode, vice president and CFO of Dallas-based Children’s Health, resigned Sept. 24, about a month after another finance leader left the organization, according to The Dallas Morning News.
Hospital officials did not give a reason for his departure. The organization has not responded to Becker’s request for comment.
Mr. Goode’s resignation comes after the August departure of Ryan Bailey, head of investments at Children’s Health, who left to form an investment firm.
Mr. Goode served as CFO for three years, joining Children’s Health in 2016. He was previously vice president of finance and CFO at Cook Children’s Health Care System in Fort Worth, Texas.
Mr. Goode is credited with doubling the system’s net operating income and implementing analysis tools to offer better insights into its financial health during his tenure.
Operational changes can improve a hospital’s performance and prospects, but time is of the essence.
The challenges many community hospitals face have become so unrelenting as to threaten long-term financial viability. It’s important that this threat be met with prompt action and operational changes that can improve the immediate situation as well as sustainability. A formal turnaround plan includes analyses and actions, and becomes a roadmap to redirect hospitals and help them stay on track to serve as community resources for years to come.
What prevents some struggling hospitals from getting an earlier start on a turnaround plan?
JK: Leaders from ailing community hospitals sometimes don’t recognize the severity of their problems or that certain indicators call for quick, corrective action. Some common alarm signals that leaders may tune out at first include a downward trend of days cash on hand, shifts in patient volume across the delivery spectrum, medical staff dissatisfaction or defection, and even bond covenant concerns. Recognizing that problems need to be addressed and changes must be made is the first step toward improvement.
Once it’s clear that “business as usual” isn’t working, how does the turnaround process start?
JK: Typically, the process starts with an operational assessment to evaluate strategy, operations, supply chain, revenue cycle and leadership with the aim of reducing costs and increasing revenue—the tried-and-true formula for financial solvency. The analysis includes a review of data and documents, as well as interviews with board, executive and physician leaders. The process reveals any organizational problems or vulnerabilities that aren’t immediately apparent, and it forms the basis for a turnaround plan, including a detailed action plan. An open mind and fresh perspective are important to be able to see options to go beyond operations as they have always been.
What are some of the key areas an operational assessment looks at for potential savings and cost reduction?
JK: Almost every hospital has room to improve staff productivity.Labor is a hospital’s greatest expense, so optimizing productivity by having the right number and mix of staff can make a big impact. Community hospitals that do not have a productivity tool to achieve and maintain the right staffing levels can typically find savings of 15 to 20 percent in salaries and benefits by implementing a tool. In those hospitals where there’s already some productivity monitoring, implementing a more effective tool or improving processes can result in 5 to 10 percent savings. After labor, supply costs are the second highest expense for a hospital, so that’s another key focus area for cost reduction and savings. Industry benchmarks show that many community hospitals have an opportunity to reduce supply costs by as much as 20 percent.
Assessing revenue cycle is also imperative to help identify, monitor and collect every dollar a hospital is due. Gains can be made in this area by renegotiating health plan contracts, streamlining billing for faster payment, auditing medical record coding and reviewing the chargemaster.
Why do the early stages of a turnaround include benchmarking?
JK: Hospitals can potentially identify significant cost-saving opportunities by comparing themselves to hospitals of similar size and volume. Comparing clinical, operational and financial data also identifies areas for improvement and where to allocate time and money for improvement initiatives. For example, a CHC-managed hospital that recently underwent a successful turnaround had discovered through benchmarking that its staff ratios were higher and its benefits were more expensive compared to similar hospitals. This information prompted leaders to take a closer look at the hospital’s situation, and they found it made sense from a sustainability perspective to downsize staff and bring benefit packages to competitive levels. These actions slashed the hospital’s annual expenses by $5.3 million.
To support and sustain a turnaround effort, who needs to be involved?
JK: It’s a collaborative process requiring the participation of the board of trustees, executive leaders, physician leaders, and in many cases an outside management firm to evaluate the situation and develop a specific plan of action. As we discussed, leaders of struggling hospitals usually see the need for improvement but don’t recognize the severity of their situation. Because of that blind spot, it’s often external stakeholders or bondholders who set corrective action in motion by seeking outside assistance.
The exiting president and CEO has been credited with leading the nonprofit system’s financial turnaround. But he has also seen his share of controversy.
The top executive of Erlanger Health System, based in Chattanooga, Tennessee, has left the organization after months of smoldering conflict with some of the nonprofit’s physicians.
President and CEO Kevin Spiegel’s departure was immediate, according to a statement released Wednesday by board chairman Mike Griffin, who offered his well-wishes to the departing leader.
Spiegel, who had been on the job more than six years, reportedly said his separation from the organization was a mutual decision.
“We’re still working out the details, and hopefully that’ll be complete by the board meeting in two weeks,” Spiegel told the Times Free Press‘ Elizabeth Fite. “This is a great hospital, and it’s a great organization, and it’s only going to do better and better things.”
Erlanger’s board is expected to pick Spiegel’s successor in two weeks, at its regularly scheduled board meeting, according to Griffin’s statement.
Spiegel’s exit comes less than two weeks after the board held a special public meeting to talk about physicians’ concerns and criticism of Erlanger’s senior leadership team.
Spiegel is the third high-ranking Erlanger executive to leave since Fite reported in June on a letter from the Medical Executive Committee explaining its reasons for a unanimous vote of “no confidence” in the current executive leadership team. The other two were Executive Vice President and Chief Operating Officer Rob Brooks and Vice President of Patient Safety and Quality Pam Gordon.
Spiegel has been credited with leading Erlanger out of choppy financial waters, but he has also been caught up in a number of controversies, as the Times Free Press reported.
HENRY KOTULA 