Cost Reductions and Internal Recruiters

Posted on April 8, 2013 by John G. Self

As many major healthcare systems across America continue sweeping expense reduction initiatives to lower their costs below Medicare because they want to avoid trouble, and not because they are in it, the impact this will have on recruiting is potentially significant.

At this point, for better or for worse, talent management and acquisition is not a high priority in many health systems. It is right up there with succession planning. Roughly translated, recruiting is an expense line, not an investment. The conventional wisdom is that many health systems will begin to shed their internal recruiting overhead over the next 24 months. There are some health systems that plan to retain much, if not all, of their infrastructure, but the vast majority will not.

Lest you think this is a blog post about external recruiters engaged in some very wishful thinking, you miss the point. I cannot speak for my many competitors/colleagues but I am very busy today. No, this is a post to suggest that the dynamics of finding a job will change over the next several years. In many cities, where large health systems have controlled the overwhelming majority of their own recruiting, candidates will, over time, see a return of external recruiters handling these projects in a variety of arrangements:

Contingency – the health system or hospital will pay only if the recruiter successfully places a candidate. The contingency firm will get a professional fee. Expenses incurred in the project will be to the account of that firm. Contingent firms, most of which offer placement guarantees from 90 to 180 days, will face more pressure to strengthen their accountability
Outsourcing – health systems will engage a sole source provider to handle 90 percent of their recruitment needs. Their professional fees will be tied to performance and the budgets will be designed to reduce recruiting costs by 30 to 40 percent with tough performance metrics governing time to hire, etc
Retained recruiting firms — can expect to see an increase in senior level searches but clients will be more demanding in terms of the firm’s value proposition, from the size of professional fees and expense budgets, to the length of the placement guarantee

While this trend will create disruption for candidates who have nurtured relationships with the internal recruiters, there is potentially a silver lining because it will loosen the structure giving more candidates a chance for choice positions.

This is just another example of where it pays for candidates to be flexible and to build relationships with any number of recruiters.

Graduate Education In A Changing World

Posted on January 23, 2013 by John G. Self

We are moving into an era of extraordinary change.

Healthcare will change because government can no longer afford some of its signature programs including Medicare and Medicaid, and because the quality of care and the level of patient safety too often do not match the price we pay.

As this era of change accelerates, we need to think about the role that graduate education will play in solving some of the challenges we face, specifically how we educate physicians, nurses and other clinicians as well as healthcare leaders.

A CMO candidate who practiced law for more than 15 years described medical school as a place where bad practices and inappropriate attitudes are handed down from generation to generation. “We will never have meaningful and sustainable improvement in the quality until we make changes in how we educate and train young physicians.” Tough talk, but there is increasing evidence that he may be on to something. I will leave that judgment to physicians and physician educators to tackle that thorny issue.

Graduate business programs, including those in healthcare, are also coming under increased scrutiny because they tend to focus on teaching people the hard skills of finance and management practices and less about people skills – leadership, the art and ability of negotiation, or the mindset for innovation. So says Jay Bhatti, a Wharton MBA, who was interviewed by John Hockenberry of NPR’s The Takeway. Mr. Bhatti focused on MBA programs and how they are turning out thousands of students, many loaded with mountains of debt only to struggle to find jobs. “We have a proliferation of graduate education programs and a job market that has shrunk,” he said. The theme of the show was the declining value of the MBA.

In the 1950s and 60s, said Mr. Bhatti, the Fords, McKinseys and Goldman Sachs of the world complained that college undergraduates were not adequately prepared in the field of business management, that it took too long to bring those students up to speed. So began the popularity of graduate management programs. “MBA programs have done a good job of this for 50 years,” Mr. Bhatti said, but the game is changing. He believes that MBA programs must reinvent themselves to prepare students tomorrow’s changing world.

This brings me back to the changing world of healthcare management. There has been a proliferation in healthcare graduate education programs as well, and based on my interactions with students from several schools across the U.S., we will face a critical skill shortfall over the next 10 years. They know the theory of managing hospitals based on a knowledge base that is rapidly becoming outdated. All of this is happening at a time when fewer and fewer health systems offer administrative residencies or fellowships.

In healthcare, like general business, there are more graduates than jobs and many of these indebted students are not prepared for healthcare’s changing world.

This imbalance between curriculum and change, together with a surplus of students from healthcare management programs, will pose some extraordinary career management challenges in the not too distant future.

Courage: Critical Leadership Characteristic

Posted on January 14, 2013 by John G. Self

Our new year is bringing ample challenges to the healthcare industry, from strategies to deal with the Affordable Care Act, to the realities that deficit reduction will require additional cuts in Medicare reimbursement to providers.

Congress is still in denial about the biggest problem with deficit spending – Medicare, but healthcare executives should not draw any hope that they will somehow escape the pain.

Cuts in payments inevitably will spark conflict on a national basis, as various healthcare groups bicker over how to divide the smaller financial pie. These “who wins and who loses financial conflicts” will almost certainly “trickle down” to local relationships between hospitals, physicians, and other providers. When money is involved, there will always be tension, and tension will lead to conflict.

This tension, and the conflicts that surface, will be the second biggest contributor to CEO turnover during the next five years, after the Baby Boomer retirement effect. Today, annual hospital CEO turnover is about 17 percent. I predict that will escalate to more than 20 percent in that five-year timeframe.

As I considered these probable developments, I began to rethink my beliefs regarding the competencies and ideal characteristics of the senior leaders who run hospitals.

As I thought about this over the holidays, I realized that the leadership characteristic that kept moving to the top of my list was courage. Yes, communication and relationship management, industry knowledge and business skills are all critical, as is integrity, but I think courage is very important.

These next several years will produce unprecedented change. This change, in addition to concerns about finances, will produce enormous unrest as we redefine how healthcare must be delivered. Hard choices, very hard choices, will be the norm.

These tumultuous times will require leaders who are smart, who possess a deep understanding of healthcare operations who are proven performers, and who are excellent communicators. But more importantly, these men and women must have the courage, the courage to promote innovation and change. They must possess the courage to do the right thing when, career-wise, it would be easier to take the easy way out.