A high turnover rate can be damaging in any industry. It leads to a lower quality of service, decreased employee morale, lost profits and a general detour from the true mission and vision of the organization. Researchers say the cost of replacing educated executive positions can be as high as 213 percent of his or her annual salary. For today’s healthcare organization, the struggle to decrease medical practice CEO and administrator turnover is going on at the same time you’re adjusting to landmark changes in Medicare, ICD-10 conversion, electronic health records implementation and numerous other facets of the Affordable Care Act. During a time of such rapid change, understanding turnover and why it’s occurring is critical to stabilizing your practice. How can you minimize the effects of turnover in these key positions? Here are some insights from turnover rates and percentages for 2014 and 2015 for medical practice CEOs and practice administrators.
Turnover Rates at Record Highs
Starting in 2013, the American College of Healthcare Executives (ACHE) reported higher healthcare CEO turnover rates than it has seen since it started reporting in 1981. The 2013 rate of 20 percent fell to 18 percent in 2014, lower but still one of highest rates in the last 15 years. And, we’re just talking about averages. The ACHE report showed some states are well above the national average, with Rhode Island (44%), Mississippi (27%) and Washington (27%) leading. Other research reported a national turnover rate of 32 percent in January 2014 alone.
While it’s yet to be seen how 2015 will end, it’s clear retention in the healthcare sector continues to be a top concern. A recentstudy found that nearly one-third of healthcare recruiters name employee turnover to be their top staffing concern for 2015. Nearly 30 percent said they expect to have more job openings in 2015 than 2014.
Such high turnover rates emphasize the importance of avoiding future turnover by making the right choice, and preparing ahead for the vacancy. It’s critical to remember that medical practice manager recruitment involves looking for an effective leader. While theaverage time to fill healthcare positions is close to two months, this time will be longer for these important leadership roles. Expect a minimum of 12 to 16 weeks, with most large practices taking six to nine months to fill these positions.
Pitfalls to Avoid
While the day-to-day function of a practice will not come to a halt when the CEO or administrator leaves, there are some key areas that suffer. Here are two main pitfalls to beware of and prepare for.
- Strategic goals become less of a priority. One ACHE study of hospital CEOs found that 30 percent reported strategic planning halted or was postponed when the previous CEO departed. A similar effect would no doubt be apparent within a medical practice as well. One of the key functions of a practice CEO/administrator is to be accountable for key strategic initiatives and to ensure senior managers are meeting their portion of the goal. However, when the position is empty for an extended period, there is no accountability and senior managers are often required to carry a larger operational workload, taking their attention away from strategic goals as well. Instead of advancing strategic goals, practice managers spend much of their time just ensuring that day-to-day operations are running. Someone always fills the void. Unfortunately, it is often an “informal leader” that fills the void, one that is not focused on the strategic goals of the practice. Their narrow view of the organization could actually result in actions that move the practice in the opposite direction of their strategic goals. Since healthcare practices are now heavily relying on reaching strategic goals for certain types of reimbursement, staying on track is more important than ever.
- An independent attitude often develops among senior managers when there’s no central leadership. While most workers continue to work productively, many take small liberties that can add up to significant pitfalls for the organization as a whole. Even when minor processes are altered, such as postponing A/R reconciliation or patient billing, the lack of efficiency increases the overall costs of the practice. Additionally, frustration and conflict are likely to develop between those altering the processes and those that depend on the processes to perform their jobs. As a result, the practice may experience turnover in other key positions, making the practice even more unstable. The same ACHE study found top-level managers often left within a year of the CEOs departure, including 42 percent of chief financial officers, 77 percent of chief medical officers and 52 percent of chief operating officers.
Succession Planning: A Key Trend
Recent white paper Health Care Trends-2015 identified “Succession Planning” as a key trend in 2015. In fact, researchers found that many organizations are looking to outside advisors to help build a customized succession program that focuses on emerging leaders within the organization. A succession plan involves more than just identifying a person who could “take over the reins.” While an aging workforce continues to approach retirement, organizations are thinking strategically about the future and how to avoid the pitfalls of leadership vacancies. Identifying emerging leaders and laying out a professional development plan is key to an effective succession strategy. Techniques including executive coaching, mentoring, leadership development programs and competency assessments are just some of the ways organizations are cultivating their future talent.
Assess your organization. You can’t always predict when a key position will be vacated, but you should have a plan in place for when it happens. Advantage Administration is here to help you build a better practice. Contact us to learn more about achieving optimal financial and operational efficiency for your practice.