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Picture this: a long-term hospital executive is being let go. Uncertainty about leadership leads to rumors and low morale, which affect patient care. Or imagine this: ailing financials, declining quality of service, shrinking volume and unhappy physicians illustrate that your hospital is in trouble. It may be time to bring in an interim CEO.

Why Interim?

Hiring an interim leader is a strategic decision that can catalyze much-needed change in a health care organization. In fact, one of the best ways to ensure the success of an incoming, permanent CEO is to leverage an interim leader first to stabilize the operational and financial environment.

Interims have the immediate goal of solving the short-term challenges in a way that will set the hospital up for long-term success. Permanent CEOs are equipped to tackle the same problems, but the process of accomplishing objectives and enacting massive changes can saddle a permanent CEO with strained relationships and political and personal conflict.

By nature of their short-term appointment, interims don't need to protect long-term career aspirations, which could color their operational decisions. Consequently, interims are free to act in the organization's best interest and to answer any questions honestly and openly.

Let's look at an interim situation in a community hospital. In his first eight weeks, the interim CEO met with 300 employees and nearly 60 physicians in both formal and informal sessions. He set expectations and explained what he needed to accomplish during his tenure. He also explained that he was fully empowered by the trustees with the same authority imbued in a permanent CEO. In addition, he reached out to the community, elected officials and other interested parties to reaffirm the hospital's local value and to restore communication channels.

With transparency as his mantra, the interim notified hospital executives that a permanent CEO might not retain them upon developing his or her own leadership team, and he encouraged them to begin their own job searches. When he planned staff reductions, he informed those who would be affected up front. Although he rubbed elbows daily with the same people he would have to lay off later, his openness created a sense of trust.

The interim leader also announced to the entire hospital staff that he would reduce the expense base by three to five percent within 90 days to improve the hospital's profitability. But he focused equally on initiatives to increase volume and improve service quality, which helped to create a positive atmosphere in the midst of change.
This leader's style received an overwhelmingly positive response. He was able to make critical changes to the hospital's infrastructure without worrying about how the fallout would affect his career. His predecessor, who had been CEO for more than 25 years, had been stuck in legacy processes. As an energized newcomer with no long-term political concerns, the interim CEO brought a fresh perspective.

Understanding the Culture

Interim CEOs must be strategic, decisive and able to enforce tough decisions.

In most cases, the right interim leader needs six to eight months to achieve objectives and create an environment conducive to sustainable change. He or she often will be able to determine a productive path forward in as few as two months, but still will need time to implement the changes. Operating as a hospital employee concerned about the long-term stability of the institution, an interim CEO needs to get to know hospital staff and understand organizational culture. This level of understanding prepares him or her to make recommendations and take action to improve the overall health of the organization for years to come.

The Bigger Picture

When U.S. hospitals received non-profit status, trustees were told to manage these assets for the community and were given both fiduciary and stewardship obligations. Today, fiduciary concerns usually are at the forefront of a trustee's actions. But an interim professional also helps bring balance with a view toward both finances and stewardship.

Accountable care organizations and other ramifications of reform suggest that hospitals increasingly will absorb physician practices. Hospitals then will face two challenges: incorporating physicians into their balance sheets; and addressing the clash of cultures between physicians, who operate as sole proprietors, and hospitals, which are process-oriented.

The job of an interim CEO is to envision and plan for the bigger, longer-term picture: Hospitals need to continue to prepare and adapt. ACOs and electronic health records need to be financed. Technological advances will continue to change the way service is delivered. The complexity of financing new knowledge will be with us for years to come and American consumers always will expect to see the latest technology.

Foundation for the Future

Intense pressures surrounding cost control and decision-making have led to a spike in hospital CEO turnover. In addition, trustees are becoming more aggressive about holding CEOs accountable for faulty decisions or poor performance. Stock-based businesses have had higher performance standards than hospitals for years, and it appears that hospitals also are beginning to embrace such standards.

As health care evolves in response to reform, an interim leader, unattached to the old ways and free of political concerns, can provide a solid transition period for an organization seeking a new CEO. With the right interim leader, a short-term investment can bring a wealth of experience to take the institution to the next level.

Jeff Souza (JSouza@LeadersForToday.com) is CEO of Leaders for Today LLC, Plymouth, Mass.