Doug Smith, President & CEO, B. E. Smith
Interim Leadership-Healthcare’s Future Talent Strategy Management Leadership
A number of demographic, economic and political issues in America are expected to create a critical shortage of senior healthcare executives at the very time utilization of healthcare services is predicted to skyrocket. With an aging population, healthcare reform and the recent recession all putting pressure on healthcare organizations, the need for experienced leadership is greater than ever. Opportunities for interim leaders—already the talent solution of choice for many healthcare organizations—will grow as toplevel positions become increasingly difficult to fill.
The Ideal Leader, For Now
Many executive recruiters believe that in the coming years, interim leadership will be a heavily utilized talent strategy in all industries. In a recent article in Fortune, Jon Osborne, vice president of research at Staffing Industry Analysts, estimated that the market for contingent management jobs will grow 90 percent over the next decade, while forecasters at employment law giant Littler Mendelson predicted that as much as 50 percent of all hiring this year will be for contingent positions. These forecasts are proving accurate within the healthcare industry. Many healthcare organizations now hire an interim leader as soon as an executive– or management–level position becomes open, even if the position will most likely be filled internally. The extra time is used to evaluate the job carefully, identifying its scope and alignment within the organization, then determining the qualifications of the right permanent candidate or, in some cases, whether they want to fill the job at all. If the administrative team decides to promote from within, the interim can deliver additional value by onboarding the new leader.
For several years, healthcare organizations have been increasing the use of interim executives because it’s a cost-effective option for acquiring skilled senior leadership. Interim leaders bring years of experience and high-level expertise, yet the organization isn’t required to take on the additional financial burden of a complex benefit package. Interims also supplement a healthcare organization’s succession planning by mentoring existing staff into leadership positions, thus developing younger, internal talent more quickly.
Supply and Demand
With the passing of the healthcare reform bill in 2010, more than 30 million previously uninsured Americans will join the ranks of the insured when the bill becomes fully active in 2014 (see sidebar “Effects of Healthcare Reform” for a partial listing of the effects of the bill). These consumers, combined with an aging population, will boost their use of the healthcare system, creating a supply and demand issue that will have to be met by healthcare organizations.
It goes without saying that the need for staff members—including nurses, physicians, physician assistants, lab technicians, physical therapists and others—is expected to rise considerably. However, with the greatly increased numbers taking full advantage of the healthcare system, management of care also will be critical. Skilled leaders who can deftly handle case, financial and staff management will be in high demand to manage the progression of the masses through the system, creating additional opportunities for experienced interims.
Tomorrow’s Temporary Work Force
It’s well-documented that the bulk of healthcare leaders today are members of the baby boomer generation. A recent report prepared for Congress by the Congressional Research Service noted that nearly half of all hospital employees overall and more than 60 percent of hospital management are baby boomers. As a result, labor trends within the baby boomer generation will have a tremendous effect on healthcare staffing.
For years, analysts have predicted that the retirement of the baby boomers will create a mass exodus of experienced professionals from the healthcare industry. This exodus has been temporarily delayed, as the recent recession and other economic pressures have forced many boomers to stay in the job market a little longer than planned to allow their stock portfolios to recover. In a recent online blog post about the economy and its effects on the baby boomer generation, Emily Brandon of U. S. News& World Report stated that a 2008 AARP survey of 1,002 workers over age 45 revealed that 27 percent of older workers plan to put off retirement because of the recent economic slowdown.2 And according to the U. S. Bureau of Labor statistics, 15.5 percent of Americans over age 65 were still in the labor force in 2007, the highest rate in nearly 40 years.
Now that the stock market is improving, the previously predicted boomer exodus will begin to happen. Experienced, highly skilled talent will be needed to take the roles these professionals leave behind. Today, some positions are taking a year or longer to fill—in five years, healthcare organizationswon’t be able to fill these jobs at all. Highly mobile and flexible interim leaders will get a lot of that work, particularly in rural areas, where it can be nearly impossible to attract top talent for senior management positions.
While most baby boomers will leave permanent, full-time employment during the next few years, many of them won’t stop working altogether, for a couple of primary reasons.
• Longer lifespan—In general, boomers are projected to live longer than their portfolios may last. Part-time income can significantly extend the life of an executive’s portfolio upon retirement, allowing that individual to continue his or her current standard of living for many years to come. Recent research reveals the percentage of workers planning to continue working after they retire increased to 72 percent in 2009—up from 66 percent in 2007.
• Mental stimulation—The baby boomers are the most highly educated of any age group, with nearly one-third (29 percent) having attained a bachelor’s degree or higher by age 42, according to a U.S. Census Bureau report released in November 2009. Staying active and mentally challenged will be important to these highly motivated professionals—making executive-level, but part-time work an attractive option.
Choosing a Career—Again
Several options exist for healthcare executives who want to continue working in some capacity after retiring from permanent employment.
Self-Employment: Many retirees consider starting a business, often in a field completely unrelated to their previous career. While this option can provide an interesting challenge, it is a considerably high risk financially, requiring an initial start-up investment plus marketing, infrastructure and labor. Additionally, the time commitment to get a newbusiness off the ground is huge—in many cases, around the clock, seven days a week.
Special project work: Some healthcare organizations may increasingly call on former executives to manage special projects. These former employees know the organization well, so they can dive right in and make an immediate difference with no training or onboarding phase. Project work presents an easy way for organizations to use top talent for the short-term. For executives, it brings in some income and keeps them engaged in stimulating professional activity, but not tied down long-term. However, the amount and frequency of work is highly unpredictable—in many cases, it won’t be quite enough to keep a motivated professional busy.
Third-party employment: Executive placement firms using a third-party employment model hire their interim leaders directly. Partnering with a third-party firm presents a cost-effective way for healthcare organizations to have temporary access to seniorlevel talent with the skills and credentials to strategically improve outcomes. With a properly structured agreement in place, the risks are substantially decreased for both parties involved. And, there are considerable benefits for semi-retired baby boomers who work for a third-party firm as interim leaders. These benefits can include medical insurance, 401K and/or profit sharing, and the firm handles taxes and business development, allowing the interim executive to concentrate on the task at hand without worrying about where the next assignment will come from. The interim can choose how busy he or she wants to be, as a steady stream of work is typically available, particularly in high-demand areas (such as clinical and service line leaders).
For many healthcare professionals, it makes sense to select a second, part-time career within their own field of knowledge. In fact, a recent study in the Journal of Occupational Health Psychology reported that among retirees who chose to work part-time, mental health was found to improve only in those who took new jobs related to their previous career. With no additional training or financial investment required, the third-party-employed interim leadership option presents relatively little risk and provides a flexible second career to skilled executives looking for rewarding, part-time work.
Talent Solution for the Future
Fortunately, interim opportunities for skilled healthcare leaders will be tremendous as the market continues to evolve. In an online healthcare leadership blog, Stephen Blattner, MD, MBA discusses a recent article in BusinessWeek covering the “seniors as entrepreneurs” trend created by recent economic challenges. In discussing post-career hospital executives as a previously untapped leadership pool, Blattner summarizes the characteristics these leaders tend to share:
“Enter recent or impending retirees who have skill set, demand stimulation, may be interested and motivated to attack interesting challenges they couldn’t focus on while having stressful ‘day leadership’ jobs, and who—as retired from active practice or hospital leadership—could be one step removed from direct self interest, and whose financial requirements may consist of “filling gaps” rather than creating de novo wealth.”
With the myriad staffing issues that face the healthcare industry in the years to come, innovative executives will pursue valueadded options for meeting supply and demand issues while improving quality of care and financial performance. As a result, opportunities will continue to expand for strategic interim leadership—a proven solution for the many challenges inherent to the future healthcare system.
Global Staffing Associates, LLC