Climbing the ladder to CEO Part II: leadership and business acumen.

In "Climbing the Ladder to CEO: Part I" (The Physician Executive, Jan/Feb 2006) we explored the hiring of a hospital CEO through the eyes of prominent health care search consultants. Central to the discussion was that hiring boards are very risk adverse.

This raises the question of how physician candidates can convince a board of directors that they can successfully lead a complex, multimillion-dollar corporation with thousands of employees.

Assuming a CEO candidate is a good organizational fit, demonstrating proficiency in two general skills will be a major determinant in getting the job offer.

The first and most important skill is leadership. It includes vision, passion, effective communication and the ability to motivate others. Leadership can be demonstrated through past accomplishments, but also "felt" by members of the search committee during the interview process.

The second critical skill is business acumen. In its simplest form, it is the ability to produce a quality product and generate profits. This requires the ability to manage people, execute strategy, generate revenues, maximize assets, acquire capital and successfully complete other tasks inherent to running a business.

To gain insight about how to develop these skills, I interviewed six physician hospital presidents/CEOs. Their organizations ranged from single hospitals to large health care systems, with $120 million to $650 million in net revenues and from 900 to 5,000 full-time employees.

Leadership

The CEOs interviewed were not a homogeneous group of individuals; however, common threads were evident throughout the interviews. Strikingly evident was high energy. All pursued a leadership career path with passion and purpose.

These were not clinical refugees. Without exception, these leaders wanted to have a positive influence over larger patient populations than they could influence in clinical practice. When they originally embarked on their careers, most did not want to be CEOs. They simply said they wanted to "make a difference."

This passion and sense of purpose was so infectious that at the conclusion of each interview there was little doubt in my mind as to why they were hired.

How did they develop such evident leadership skills? As one CEO put it, "I raised my hand for everything." Career paths varied but here are the early entry points:

* Leading committees and organizational initiatives

* Pursuing elected leadership positions within or outside their home organizations

* Accepting entry-level medical director positions

* Seeking larger administrative roles in smaller organizations

* Managing a group practice

While there are no surprises on this list, the interviews provided insight into the qualities and traits that allowed these individuals to grow into successively greater roles. The success factors are purpose, respect and performance.

Purpose

Several CEOs acknowledged that they always enjoyed leading (one stated that he would rather lead the orchestra than be the lead violinist), but all were focused on something other than themselves.

This is more than just an admirable trait. It creates a dynamic that generates success and career opportunity. A person focused on self (things like money, status and power) pursues a position. A person focused on purpose pursues a goal. Goals lead to accomplishments and accomplishments lead to opportunity.

Consider the example of two elected medical staff presidents.

The first physician agrees to his nomination and wins by popularity. He enjoys the camaraderie amongst his status quo preserving supporters and serves out a two-year term. During the interview for his first paid management role he states that he leads by consensus and is well liked by the medical staff.

The second physician seeks a nomination. She has a sense of purpose and sees this position as an opportunity to improve the quality of care for her community. During her interview for a management post she states that she engaged the medical staff "sometimes kicking and screaming" in organizational process improvement efforts. By the end of her term, the organization moved from the bottom quartile of 10 core measures of the Joint Commission of Accreditation of Healthcare Organizations to the top 10 percent.

Both medical staff presidents have leadership experience, but only one has an accomplishment. Is there any doubt in your mind which one is most likely to move into greater roles?

Respect

The CEOs interviewed understand the power of building relationships. They are inclusive and collaborate effectively. They have sincere respect for all team members and understand that being a physician does not trump the expertise and opinions of others.

We need to get over this "physician-ness," one CEO said, explaining that being a physician is a credential and "there is no separate species of leader."

"You'll never get ahead putting others down. You must show what you can do," another said.

Most CEOs said they have mentors. These mentors are often non-physician administrators or business people whom they deeply respect and call upon for advice and guidance. Several CEOs felt strongly that this is the single greatest factor attributable to their success.

It's a matter of respect. As a practicing physician, our patients come to us with a certain amount of trust and respect even before they know anything about our personality or ability. The CEOs have no such expectation of the people they lead. They know that trust and respect must be earned. While they are not afraid to pursue difficult goals, they understand the importance of conducting themselves with integrity and consistency.

Performance

I asked the CEOs whether there was a single major accomplishment that had a significant role in propelling their careers forward. The answer was unanimous: "No." However, one CEO said, "(but) I can think of one major failure that almost sank my career."

Another CEO described himself as a "singles hitter"--meaning that an executive can't depend on any single great accomplishment. Career vitality is dependent on consistent performance over time--yesterday, today and tomorrow.

To pursue successive opportunities, it is imperative that you quantify your success using metrics such as satisfaction scores, net income and statistics. Collect these metrics over time so that you can put together an honest, powerful resume.

Evident throughout the interviews was how these individuals were responsible for many impressive accomplishments, but not one took credit or exhibited self-promotion during the interviews. I sensed humble confidence--an admirable trait.

The CEOs were very candid about past failures. Since occasional failure is inherent to those who take risk, I wanted to understand how they survived failure. Several trends emerged.

First, the CEOs had already established a track record of success prior to their failures (i.e.) they were proven entities). Blunders too early in the career path can be much more devastating and it is advisable that you initially lead what you know.

Do not attempt to leap too far beyond your current level of education and experience. Some people have done this successfully, but it is more prudent to grow your career in a logical, stepwise manner. It can be the equivalent of performing an appendectomy prior to your internship and residency.

Second, the CEOs took accountability for failure, protected their team and turned it into a positive learning experience.

Business acumen

Demonstrating proficiency in business is a requirement for most CEO positions. There are two exceptions for physicians:

1. There are organizations where bylaws or traditions mandate a physician leader. These organizations tend to be large multispecialty groups with hospital ownership or tight affiliations, or academic medical centers. The structure often provides for strong non-physician administrators to be "paired" with the physician leaders. This does not mean that these physician leaders do not have strong business minds, but that operations experience may not be mandatory prior to hiring.

2. Organizations that have severely troubled medical staff relations or that view physician relationship building as a core strategy may seek a physician CEO. In either scenario, the board considers the ability to forge strong physician/hospital relations as a requirement for success and will consider a physician without strong operations experience. Often provisions are made to protect business matters, such as a strong COO or a formal mentoring process.

Although it's subjective, let's say that significant operations experience is arbitrarily defined as responsibility for greater than $50 million annual net revenues (not necessarily in hospitals) over a period of three years.

Only two of the CEOs had significant operations experience prior to obtaining their first CEO position; the others didn't even come close. However, don't make the mistake of assuming that demonstrating business proficiency is optional.

All the CEOs hired without operations experience were inside candidates. This is consistent with the search consultants interviewed in Part I who said the inability to demonstrate business savvy is the nemesis for physician executives seeking CEO positions outside their home organizations.

This is the missing skill that is critical to breaking through the "caducean ceiling"--the barrier so often discussed in physician executive circles. Lack of operations experience is a primary reason that only about 3 percent of the nation's hospitals are physician-led--a percentage that has remained stable for many years.

The final installment of this series of articles will explore techniques for obtaining operations experience and shattering the caducean ceiling.

Alan S. Kaplan, MD, MMM, CPE, FACPE, is vice president and chief medical and operations officer at Edward Health Services Corporation in Naperville, Ill. He can be reached at 630-527-3012 or [e-mail]

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Acknowledgement

Special thanks to the following CEOs who gave their time and provided insights to help shape this article:

* Rick Afable, MD, president and CEO, Hoag Memorial Hospital Presbyterian, Newport Beach, Calif.

* Frank Byrne, MD, president, St. Mary's Hospital Medical Center, Madison, Wis.

* Kathleen Hittner, MD, president and CEO, The Mariam Hospital, Providence, R.I.

* John Jeter, MD, president and CEO, Hays Medical Center, Hays, Kan.

* Gary Kaplan, MD, chairman and CEO, Virginia Mason Medical Center, Seattle, Wash.

* Roger Longenderfer, MD, president and CEO, Pinnacle Health System, Harrisburg, Pa.

By Alan S. Kaplan MD, MMM, CPE, FACPE