HFMA CFO Forum
Quarterly Insights
Summer 2007

Very few hospitals and healthcare systems have formalized plans to ease the transition to a new top-level executive. In a 2004 report by the American College of Healthcare Executives, only 21 percent of 722 freestanding hospitals surveyed--representing 44 percent of all freestanding hospitals in the United States--had succession plans to guide the process of replacing their executives, compared with an estimated 64 percent of other types of organizations in the private sector. The report also found that only 15 percent of the hospitals surveyed had identified a successor to their current CEO.

So we asked the CFO Forum members this question:

What are you actively doing to recruit, retain, and groom your successor? What barriers are you finding? Why is the private sector so far ahead in this endeavor, and what can CFOs do to drive this effort?

And here is what you told us:

The difficulty I've experienced is trying to find an individual or even several individuals who are willing to put in the extra hours required to take on an executive leadership position/shared position. I'm not finding it difficult to find someone who is willing to support volunteer activities such as doing a project for a professional association, but rather someone who is willing to go the extra mile for a client. I suspect this is a cultural shift we're dealing with whereby individuals wish to give back to their environment, but otherwise they'd prefer to work an eight-hour day, Monday-Friday, and have the leisure time to spend with family and others--all of which are nice, but unfortunately, not necessarily part of being in an executive leadership role. So, if someone has the answer to helping me find a successor(s), tell me. Thanks!

Rose T. Dunn, RHIA, CPA, FACHE

First Class Solutions, Inc.

At Gibson Area Hospital, we strive to provide succession planning in all our departments. Particular to the CFO, we have identified two employees who are interested in advancing in the finance area of health care. Both employees are currently getting their accounting degrees, with financial assistance from the hospital. We have also set up a career path in finance whereby employees may advance in their careers to the CFO level. We have a decision support position that would lead into the controller position, the chief compliance officer position, and then the CFO position. We are a critical access hospital, so we are small enough for staff members to have interaction with administration, medical staff, and board members on a regular basis, exposing them to administrative-level decision making.

Rob Schmitt, FACHE, FHFMA, CPA, MBA

Gibson Area Hospital

According to one of my professional organizations, only about 16 percent of CFOs surveyed have a successor lined up. This survey would include healthcare and non-healthcare CFOs. The biggest barrier that we face in this area, especially in this industry, is that most people do not think about leaving their current position--even for retirement. It seems that as a group we tend to plan for almost every contingency except the transition to a new leader. Either because we are all so busy that succession planning just gets pushed aside or there is a limited number of staff to draw upon to groom a successor, succession planning just doesn't happen. I think there are more accounting and finance staff in the private sector to draw upon to groom a successor than in the not-for-profit sector, so the private sector is ahead of us in this area.

Christopher E. Brown, CPA

Winneshiek Medical Center

At our firm and in public accounting as a whole, we are constantly dealing with employee\employer expectations, especially when it comes to defining each employee's career path. I believe it starts with an active employee performance review policy. What I mean by "active" is that both employee and employer actively participate in annual goal setting, timely performance review, and documenting career aspirations. Once goals have been set, career aspirations have been agreed upon, and the steps necessary to attain those goals and aspirations have been established, one-on-one interaction throughout the year is key to ensuring buy-in by both the employee and management into how the employee can achieve those goals, both short term and long term. Management must be committed to the performance review process and ensure with HR that the performance review process is realistic and adhered to by all employees, managers, and executives.

The barriers I see in retaining people is that there is distrust between management and employees when expectations and success factors are not well defined or when employees perceive that they are not evaluated fairly against those success factors when compared with their peers. An active, well-defined employee goal-setting and performance review process allows for expectations to be defined and monitored on a timely basis so both the employee and management know how the employee is progressing toward meeting goals and career aspirations. This also allows for managers to evaluate their personnel on an ongoing basis whether they are in the process of grooming future management talent or looking outside the organization to recruit qualified individuals.

Businesses in the private sector are so far ahead in this endeavor mainly because they want to recruit and retain the best and the brightest. To attract high performers, organizations have to be able to show they are committed to employee job satisfaction, as well as recognize what employees are looking for in a career. That can be demonstrated only through an active employee performance review policy that values employees both at work and at home, but also gives them the feedback on their performance that they need to be successful.

Anthony R. Cawiezell

RSM McGladrey, Inc.

Articles: A Matter of Talent: Identifying and Developing the Next Generation of Senior Financial Executive Top Talent

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