Health care CEOs made $2.6 billion in 2018

https://www.axios.com/newsletters/axios-vitals-3dafd3d8-dd1c-47ed-a1f0-287e7f37fc6f.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

https://docs.google.com/spreadsheets/d/1AY1nXwBnQVlata0RgdLz17OI4XaK6785hfAsiLFz84U/edit#gid=0

Illustration of George Washington with a stethoscope around his neck.

The CEOs of 177 health care companies collectively made $2.6 billion in 2018 — roughly $700 million more than what the National Institutes of Health spent researching Alzheimer’s disease last year, according to a new Axios analysis of financial filings.

Why it matters: The pay packages reveal the health care system’s real incentives: finding ways to boost revenue and stock value by raising prices, filling more hospital beds, and selling more drugs and devices, Axios’ Bob Herman reports.

By the numbers: The median pay of a health care CEO in 2018 was $7.7 million. Fourteen CEOs made more than $46 million each.

  • The figures were calculated by using actual realized gains of stock options and awards, which are in the annual proxy disclosures companies file with the Securities and Exchange Commission.

The highest-paid health care CEO last year was Regeneron Pharmaceuticals CEO Leonard Schleifer, who made $118 million. A spokesperson said Schleifer “has built Regeneron from a start-up into a leading innovative biopharmaceutical company” and that he “generally holds his option awards until nearly the end of the full 10-year option term.”

  • Pharmaceutical CEOs represented 11 of the 25 highest compensation amounts last year.
  • Executives of medical device and equipment companies that don’t attract as much attention — such as Intuitive Surgical, Masimo, Hill-Rom and Exact Sciences — also were sitting at the top.

Between the lines: A vast majority of CEO pay comes from exercised and vested shares of stock. Salaries are almost an afterthought.

  • But health care executives routinely earned millions of dollars in cash bonuses, based on factors like revenue goals and financial metrics that experts say can be manipulated.
  • Quality of care is either not a factor at all in CEOs’ bonuses at all, or a marginal one.

Details: McKesson CEO John Hammergren received a $4 million bonus for hitting financial targets last year, just as the company was facing a slew of lawsuits over its role in the opioid crisis. McKesson did not immediately respond to questions.

  • Community Health Systems CEO Wayne Smith recorded a $3.3 million bonus even though his hospital chain continued to hemorrhage money. His bonus was heavily weighted by an adjusted metric that made CHS look profitable, and none of his bonus was tied to patient outcomes. CHS did not respond.

Worth noting: The analysis does not include compensation from not-for-profit hospital systems, because their 2018 tax filings have not been released yet.

 

 

 

HEALTHCARE INDUSTRY MOST FOCUSED ON CONSOLIDATION, CONSUMERISM IN 2019

https://www.healthleadersmedia.com/finance/healthcare-industry-most-focused-consolidation-consumerism-2019?spMailingID=15535559&spUserID=MTg2ODM1MDE3NTU1S0&spJobID=1621654766&spReportId=MTYyMTY1NDc2NgS2

A new Definitive Healthcare survey polled healthcare leaders on the most important trends of the year.


KEY TAKEAWAYS

Industry consolidation was listed as the most important trend of the year, leading the way with 25.2% of the votes, followed by consumerism at 14.4%.

Definitive tracked 803 mergers and acquisitions along with 858 affiliation and partnership announcements last year, a trend that is not expected to slow in 2019.

Thirty-five percent of healthcare M&A activity occurred in the long-term care field, according to CEO Jason Krantz.

Widespread industry consolidation as well as the growing influence of consumerism registered as the most important trends healthcare leaders are paying attention to in 2019, according to a Definitive Healthcare survey released Monday morning.

Industry consolidation was listed as the most important trend of the year, leading the way with 25.2% of the votes, followed by consumerism at 14.4%.

Other topics that received double-digit percentages of the vote were telehealth at 13.8%, AI and machine learning at 11.4%, and staffing shortages at 11.1%. Cybersecurity, EHR optimization, and wearables rounded out the list.

The top results are generally in-line with some of the top storylines from the past year in healthcare, including focus on several vertical megamergers and longstanding business models being redefined by consumer behavior.

Jason Krantz, CEO of Definitive Healthcare, told HealthLeaders that healthcare is becoming increasingly more complicated and leaders are looking at a host of business strategies to navigate industry challenges or emerging market conditions.

“Something that’s on the mind of all of the people that [Definitive Healthcare] has been talking to, whether they are pharma leaders, healthcare IT companies, or providers, is that they’re constantly grappling with all of these new regulations, consolidation, and new technologies,” Krantz said. “[They’re asking] ‘What does that mean for my business and how do I address my strategy as a result?'”

In 2018, Definitive tracked 803 mergers and acquisitions along with 858 affiliation and partnership announcements, a trend Krantz does not expect to slow in 2019.

While Krantz cited some of the major health system mergers from last year as examples, he said another area that is experiencing widespread M&A activity is the post-acute care side.

Thirty-five percent of healthcare M&A activity occurred in the long-term care field, according to Krantz, and this is indicative of hospitals seeking to control costs and drive down rising readmission rates.

It also relates to another issue likely to accelerate in the coming years, which are the staffing shortages facing providers.

The sector currently suffering the most are long-term care facilities, which struggle to maintain an adequate nursing workforce due to the advanced age of most doctors and nurses in the face of the rapidly aging baby boomer generation. Krantz warns that all providers are likely to face these issues going forward.

Krantz also expects consumerism to hold steady as a top issue facing healthcare, citing the growing popularity of urgent care centers and the interconnection of telehealth services to provide patients with care outside of the traditional delivery sites.

However, the growth of these are reliable business options are all dependent on figuring out an adequate reimbursement rates for telehealth services rendered, Krantz said, which has not been fully addressed.

“I think until [telehealth reimbursement rates] get completely figured out, it’s hard for the providers to invest heavily in it,” Krantz said. “This is why you see a lot of non-traditional providers getting into telehealth, but I think it is something that people are thinking about and they know they need to adjust to, though nobody’s stepping up and being first in [telehealth] right now.”

For AI, machine learning, wearables, and cybersecurity, though the responses are split into smaller amounts, Krantz emphasized their combined score, which encompasses more than 25% of total votes, as a sign that healthcare leaders are paying attention to the area despite market complexity.

He added that they are all interconnected issues that deal with technological changes health systems are aware they will have to address in the coming years.

One issue related to harnessing technological change is EHR optimization, which Krantz believes leaders on the provider side are finally starting to gain excitement around. He said most leaders who have waited years to set up a comprehensive EHR system and input data are in-line to now utilize the data in their respective system.

“There’s a lot of great data in there and people are starting to figure out how to utilize that and improve patient outcomes based on the sharing of data,” Krantz said. 

 

 

 

Culture Change – Slow Down to Go Fast

https://www.strategydriven.com/2019/03/29/culture-change-slow-down-to-go-fast/

StrategyDriven Article |Workplace Culture|Culture Change – Slow Down to Go Fast

When my children were taking violin lessons and were given a new piece to learn, they would start from the beginning and race through the song at breakneck speed. One day, their teacher offered an insight that radically altered how they were able to progress. He told them that if they wanted to play fast, they would first have to practice slow. Similarly, taking the time to slow down and plan improvements to workplace culture also produces more effective results down the line.

Workplace culture isn’t something you can instantly fix, swap out, or quickly reboot. It’s not like a used car you can trade in when it no longer runs smoothly. Culture change requires culture work – and success necessitates effort and attention. Rather than being daunted by this task, we need to take a breath, slow down, and intentionally chart our course forward.

We recently worked with an organization who took the advice to slow down and take the time to invest in their long-term workplace culture to heart. Their decision was precipitated by a harassment complaint that revealed many layers of dysfunction – they could no longer ignore the impact their unhealthy culture was having.

Management was distant and unaware of the tension between employees, staff turnover was high, valued customers were leaving, and the human resources department admitted they were overwhelmed with the flood of complaints. The task of improving their workplace seemed enormous, but they decided to roll up their sleeves and get to work.

Senior management started by doing a cultural assessment and mapping out a plan. They began with a number of simple fixes to jumpstart the process. They revamped their respectful workplace policy, as well as held a training day for all staff to inform them of the current cultural assessment. Supervisors and management began joining employees in the common area during breaks.

To begin the long-term work of culture change, the organization initiated dialogue with staff and instituted weekly check-ins. They also revamped their performance management process to include a quarterly focus on employees’ goals, and provided all supervisors with training on conflict resolution and how to give effective feedback. These, along with a number of other changes, started to slowly shift their workplace culture in the right direction.

Now several months into the process, they are beginning to see the positive results! Staff are happier and more engaged, which has led to better productivity and an improvement in the quality of work being done. Their human resources department feels supported by management, and complaints have dropped as supervisors gain confidence in their ability to coach and support employees.
This organization realized that it would take time to replace the unhealthy culture with a healthy one, and that it couldn’t happen all at once. As a result of their patient and intentional work, they have seen a slow but marked improvement in their culture.

Culture is often so ingrained that people take it for granted. When we recognize that there are long-standing issues that we need to address, the work ahead can feel overwhelming, but culture won’t be improved with one-off initiatives like taco Tuesday or yearly surveys. Culture develops over time, and therefore takes time to change. Taking small steps to create a culture that will become the new standard may feel like slow work, but the rewards of a healthier culture are more than worth the wait.

 

 

 

How will you do in a Job search?

https://interimcfo.wordpress.com/2019/03/10/how-will-you-do-in-a-job-search/

Image result for executive recruiting

Abstract: This article is the first in a series that explores the critical success factors of being successful in a competitive recruitment process.  Getting a ‘gig’ as an interim requires essentially the same method as landing a permanent job.  The primary difference is that the cycle time from initial contact to the decision on a potential interim engagement is much faster than it is when a permanent candidate is under consideration.  The articles on this topic are focused on helping the reader improve their probability of success in fiercely competitive recruitment, and all recruitments are competitive.

I have been involved with a lot of recruiting, and it is impressive that not only are individuals with executive talent significantly different, but their job seeking abilities are equally disparate.  In some cases, it is disheartening to witness how poorly some of these ‘professionals’ are prepared to compete head’s up in a talent search.  There have been cases where I knew a candidate and knew them to be much better than they came across in interviews.

I place most of the blame for poor job seeking performance at the feet of the incumbents, but I have been equally disappointed at how poorly some executive recruiters AKA headhunters prepare their recommended candidates to be successful in a competitive executive search AKA a beauty pageant.

In many respects, a search is a beauty pageant, hence the name.  All too frequently, the candidate selected is the one that is most charismatic to the decision maker(s) and not necessarily the best credentialed, experienced or qualified.  Sometimes personal biases, ulterior motives or politics influence executive search outcomes.  I believe that one of the reasons that some executives do so poorly in searches is that job hustling is not something they regularly do so their interviewing skills and other skills necessary to advance in a search are not well developed and practiced.  Getting yourself hired is a much more intense, skill dependent process than I believe many candidates appreciate.  This is especially true if you harbor disdain for selling.

Time after time, I have participated in executive recruitment where unprepared candidates spent the majority of their time just being themselves and treating their interview (at-bat) as a casual encounter like you would expect in a bar.  Zig Ziglar and others argue that most everything in life amounts to selling.  Like any other skill, the skill of selling (yourself) requires study, practice, and development if it is to be executed successfully.   Candidates that come up short in these competitions frequently blame recruiters or hiring decision makers instead of taking a look into their mirror.

If there was ever a time that your success selling is critical, it is when you are trying to sell strangers on the concept that hiring you will advance their personal and corporate objectives.  It is hard to tell where the adage came from, but sources suggest that people buy for only two reasons; solutions to problems or good feelings.  If you intend to successfully convince the hiring decision maker that you are the correct choice among a strong field of competitors, to which of their motivations do you want to appeal?  If you do not believe that a hiring decision maker is choosing the candidate, they feel will best make their life easier or themselves more successful, you are naive.  What do you do when you are the decision maker on a recruitment?

Some hiring decision makers are not very sophisticated, and as I have facilitated searches, I have observed them making bizarre, irrational or emotional decisions when choosing a candidate from a search pool.  For example, I witnessed a C-Suite candidate getting ruled out of a search because his wife had a visible tattoo on her leg.  Others are more deliberate and analytical, and they will make a more objective, reasoned decision.  What kind of decision maker are you up against?  How can you tell?   Of course, this assumes you ever make it past step one.

Executive recruitment, especially a retained search is like a funnel or a pyramid.  The recruiter starts with a large number of applications from initial sourcing and gets down to less than ten that are presented to the client.  If the initial sourcing turns up 300 potential candidates which is common and you put your pony into the show, you have about a 10% chance of getting to a phone interview with the recruiter and then about a 30% chance of getting an interview with the hiring decision-maker.  The cumulative probability that any candidate will make it to an in-person interview in a hospital is around 3% or less.  Everything being equal (which is never the case), your probability of being selected after an in-person interview is about 20% to 30% making your overall probability of being hired in any particular search at around 1% or less.  The question is, what do you need to do to raise your game to come across as a better alternative than 99% of the competitors you will be up against in your next search?  There are at least four candidate controllable areas that could make the difference the next time you decide to pursue an opportunity inside or outside your current situation.

Qualification for the job

While it should be rote to assume that a candidate in a search is appropriately qualified, that is often not the case.  If you are not qualified and you know it, save yourself and the recruiter some time, don’t waste it by applying for a job you cannot win.  Qualifications include education, experience, relevance to the situation and credentialing.  It is too late to start working on any of these requirements when you become aware of an opportunity.  In other words, if you desire career advancement, start preparing yourself NOW.  If you wait until opportunities present themselves, you are late before the process even begins.

Resume or CV

Your resume is arguably the essential tool needed to get a job.  Your resume is you and speaks for you in those critical first seconds when the appeal of your CV or lack thereof gets you ruled in or out of the first round of consideration.  I have read sources that say that you are lucky if your CV spends thirty seconds in front of a reader before a decision occurs as to whether or not the candidate moves forward.  I have been in this situation when a net is cast, and before you know it, there are hundreds of CVs to review for a position.  After the first twenty or so, the review process speeds up dramatically.  Developing a winning resume is beyond the scope of this article, but you should not underestimate the power of your CV to move you forward or get you eliminated from a search – long before you ever have a chance to speak for yourself.

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 is coming from people that are demonstrating an interest in advancing their careers, and I am writing content to address those inquiries..

If you would like to discuss any of this content, provide private feedback or ask questions, you can reach me at ras2@me.com.

 

CEOs shouldn’t pick their replacements

https://www.beckershospitalreview.com/hospital-management-administration/viewpoint-ceos-shouldn-t-pick-their-replacements.html?origin=ceo&utm_source=ceoe

Image result for ceo succession

While CEOs may be intimately familiar with their companies, their opinion should take a backseat to the organization’s board of directors, according to Stanford (Calif.) University business school professor David Larcker, PhD, and researcher Brian Tayan.

In an op-ed for The Wall Street Journal, the authors note that while it was once general practice for CEOs to pick their successors, changes to corporate governance in recent years have shifted the balance of power to a company’s “independent, professional, outside directors.”

The authors claim that allowing a company’s CEO outsize influence on the hiring of their successor is a mistake because the CEO may not have the right perspective on evaluating candidates and may intentionally or unintentionally control the information presented to the board about candidates, shaping the board’s decision about those individuals.

“At the end of a long career, many CEOs are concerned about their legacy. This can bias them toward favoring candidates who will guide the company in the same direction — and in the same manner — that they themselves led it,” they write.

Instead, the authors argue that a company’s board should be responsible for the final hiring decision and use the CEO’s input to help come to that conclusion.

“Hiring the CEO is a fiduciary duty. The board owes it to the shareholders … to get it right. A subcommittee of independent directors with previous experience in succession at other companies should manage the process, with an open invitation to all board members to participate. If the board doesn’t have depth of experience in place, it can bring in an outside adviser to help,” they write.

To access the full report, click here.