Health Care Industry Faces Looming Leadership Crisis

Health care organizations in North America are lacking in succession planning and as a result face a potential crisis in leadership, according to a survey conducted by American Management Association/Corporate Learning Solutions (AMA/CLS).

The survey, conducted in 2010 and released this year, polled close to 1,100 senior managers and executives in North American companies across a range of industries including manufacturing, pharmaceuticals, biotech, financial services and education. AMA/CLS broke out responses from 117 respondents from health care organizations and found that leadership development is suffering in that industry.

“As we looked at health care, that particular industry was not doing as well as the rest of them, and the rest of the industries weren’t doing that well,” said Sandi Edwards, senior vice president for AMA/CLS. “Health care is lagging behind other industries in North America and there’s much more concern about health care right now, so you [would] think, suspect or consider that they would be looking at this more closely. And they may be, but it’s not coming out in the study.”

The survey found that fewer than 7 percent of health care organizations are prepared to deal with the sudden loss of key leaders. Only 8 percent possess a robust leadership pipeline, while 44 percent reported having merely adequate bench strength. While 74 percent of respondents believe a smooth management transition to be critical, just a quarter believe their organizations are genuinely committed to succession planning. Thirty-four percent reported their organizations often ignore their management succession plan and recruit outside the company to fill key positions.

Edwards pointed to factors that could exacerbate this apathy, turning it into a crisis. “[It’s] certainly obvious that the boomer population is eventually going to find enough money to retire or enough incentive to retire and the next population is a smaller population coming along,” she said. “And retention in health care, when you get down to nurses and therapists and so forth, we know there’s an issue there. While it is very important that you know where your next CFO or your next hospital head is coming from, it is equally important, maybe even more so, that the ranks below that [are filled].”

Justin Lombardo, vice president and chief learning officer at Children’s Medical Center of Dallas and former chief learning executive at Northwestern Memorial Hospital in Chicago, readily admits the health care industry suffers with respect to leadership development. “As is relatively consistent with health care as an industry, we unfortunately tend to lag behind other industries in understanding the importance of maximizing our human capital,” Lombardo said. “We lag behind in finding and accepting best practices that have been adopted by other industries which have faced competition in a different way – more quickly, if you will – than health care has.”

Lombardo explained that the health care industry has been saddled with traditional training systems for physicians and nurses that are based on older paradigms of learning and leadership that prescribe vertical promotion. The thinking around leadership development then becomes “if you’re a great nurse, you’ll be a great manager, and consequently a great leader. If you’re a fabulous physician, you will probably be an astute CEO or COO of a hospital,” Lombardo said. “Nothing could be further from the truth, because in many of the clinical areas, the individuals are not trained to work in team environments, [but] to trust their own best judgment and to work with solo players, which is absolutely antithetical to what good leadership can do. A good physician and a good nurse are trained to look at a tree, which is what you want them to do, especially if you’re the patient – you’re the tree. They’re not necessarily trained to look at the forest, and that’s the difference between a good clinician and a good leader.”

According to Lombardo, at least part of the solution here will be health care organizations bringing in management talent from backgrounds other than their own industry. “More and more solid, strong leaders, who are not necessarily clinicians, are moving into health care, bringing with them best practices [and] an understanding about the importance of planning for succession and development and looking for the business acumen that’s needed to do that.”

This process will likely be accelerated by the ongoing process of transformation occurring within the health care industry at the behest of the federal government. “What’s going to bring this to a head is the next round of change in health care that’s going to be necessitated by the health care reforms,” Lombardo said. “This is going to require a much more agile, process improvement-focused [and] service-oriented group of leaders in health care than currently exists.”

Daniel Margolis is managing editor of Chief Learning Officer magazine. He can be reached at dmargolis@clomedia.com.