succession planning for rural hospitals

IHA/ICAHNIHA/ICAHN

IHA/ICAHNIHA/ICAHNBuilding a Strong Small and Building a Strong Small and

Rural Workforce for TomorrowRural Workforce for Tomorrow

Succession Planning Succession Planning for Rural Hospitalsfor Rural Hospitals

April 2, 2008April 2, 2008

Succession Planning for Succession Planning for Rural HospitalsRural Hospitals

Prepared byPrepared by

D. David Sniff,D. David Sniff,PresidentPresident

Midwest Consultants for Rural Health, IncMidwest Consultants for Rural Health, Inc

[email protected]@midwestconsultantsrh.com

309.338.4478309.338.4478

All Rights ReservedAll Rights Reserved

IntroducingIntroducingD. David SniffD. David Sniff

33 years in Hospital Administration33 years in Hospital Administration

FACHEFACHE

Served in Executive positions ranging from Served in Executive positions ranging from CAH to Senior Executive of a multi-hospital CAH to Senior Executive of a multi-hospital systemsystem


IntroducingIntroducing

D. David Sniff D. David Sniff (continued)(continued)

National award winning projectsNational award winning projects

Started MCRH in 2003Started MCRH in 2003

Strategic Planning, Facility Assessment, Strategic Planning, Facility Assessment, Coaching, Transitional Assistance, Coaching, Transitional Assistance, Turnaround Assessment, Governing Board Turnaround Assessment, Governing Board Ed.Ed.


Learning ObjectivesLearning Objectives

Review what succession planning is Review what succession planning is for rural hospitalsfor rural hospitals

Discuss why it essentially is Discuss why it essentially is nonexistent in rural hospitalsnonexistent in rural hospitals

Develop a Plan for Succession vs. a Develop a Plan for Succession vs. a Succession Plan focused on CEOs Succession Plan focused on CEOs with some discussion of Dept with some discussion of Dept ManagersManagers


What is Succession Planning?What is Succession Planning?

The deliberate, organized effort to The deliberate, organized effort to identify and prepare future leaders to identify and prepare future leaders to succeed incumbent individuals in succeed incumbent individuals in those positions when the incumbent those positions when the incumbent departs.departs.– Involves predetermined plan of goals Involves predetermined plan of goals

and objectives, training, and timeline for and objectives, training, and timeline for implementation.implementation.

– Is supported and approved by Is supported and approved by governancegovernance


Status of Succession Planning in Status of Succession Planning in HospitalsHospitals

Articles abound geared to larger Articles abound geared to larger facilities with depth of resourcesfacilities with depth of resources

Even then, still under 50%Even then, still under 50% Why?Why?

– CEOs have too much on their plates and CEOs have too much on their plates and boards don’t raise the issueboards don’t raise the issue

– ““Our CEO is a ‘young’ person, so why Our CEO is a ‘young’ person, so why worry?”worry?”

– ““We’ll deal with it when we have to”We’ll deal with it when we have to”All Rights ReservedAll Rights Reserved

CAH Rurals vs. Non-ruralCAH Rurals vs. Non-rural

CAH’s, by and large, do not have the CAH’s, by and large, do not have the depth of human resourcesdepth of human resources

Some have COOs, but they may not Some have COOs, but they may not be candidates for CEObe candidates for CEO

Presumed not to be possible since Presumed not to be possible since there isn’t a successor, i.e., no VP, no there isn’t a successor, i.e., no VP, no Assist AdministratorAssist Administrator

It’s somewhat akin to writing a will It’s somewhat akin to writing a will (psychologically)(psychologically)


Reasons Why Succession Reasons Why Succession Planning is NeededPlanning is Needed

Reduces chaos or degree of confusion Reduces chaos or degree of confusion and apprehensionand apprehension

Provides stability during what can be a Provides stability during what can be a most difficult timemost difficult time

It is professionally incumbent upon a It is professionally incumbent upon a CEO to leave his/her organization with CEO to leave his/her organization with the satisfaction s/he has prepared for the satisfaction s/he has prepared for the futurethe future


Reasons Why Succession Reasons Why Succession Planning is Needed Planning is Needed (continued)(continued)

Turnover among CEOs is 16% or one in Turnover among CEOs is 16% or one in six years (rural seems to be in line with six years (rural seems to be in line with urban)urban)

Some areas are higher Nevada 33%, Some areas are higher Nevada 33%, Hawaii 23%, Utah 6% as of 2006. Hawaii 23%, Utah 6% as of 2006. (Trustee Summer 07).(Trustee Summer 07).

Like the rest of the population, CEO Like the rest of the population, CEO boomers are aging and the class of ’46 boomers are aging and the class of ’46 will reach 65 in 2011 will reach 65 in 2011 IFIF they plan to work they plan to work to 65to 65


What would your hospital doWhat would your hospital doif the CEO suddenly departed?if the CEO suddenly departed?

Panic?Panic? Appoint the CFO, CNE or someone else Appoint the CFO, CNE or someone else

?? Appoint a “team” leadership?Appoint a “team” leadership? Find a senior manager who would say Find a senior manager who would say

yes?yes? The Chairman of the Board becomes The Chairman of the Board becomes

acting CEO or some other Board acting CEO or some other Board member, (generally retired)member, (generally retired)


What would be the process of What would be the process of appointing an “acting” or “interim”?appointing an “acting” or “interim”?

Draw straws among the management Draw straws among the management teamteam

Tell everyone to carry on as usual until Tell everyone to carry on as usual until the board has an opportunity to figure the board has an opportunity to figure it outit out

Go on line and EBay search under Go on line and EBay search under Rural Hospital CEORural Hospital CEO

Board Hire a recruiter and instruct Board Hire a recruiter and instruct them to find a rural hospital CEOthem to find a rural hospital CEO


OR…OR… Develop a Plan of Succession!Develop a Plan of Succession!

The focus is on a planned approach The focus is on a planned approach not not finding a personfinding a person

It includes appropriate individuals in its It includes appropriate individuals in its design as chosen by the Board and design as chosen by the Board and hopefully involving the CEOhopefully involving the CEO

The CEO develops the DRAFT materials The CEO develops the DRAFT materials and toolsand tools

It is reviewed at least annually to ensure It is reviewed at least annually to ensure its appropriateness (suggest same time as its appropriateness (suggest same time as Board or CEO Evaluation activity)Board or CEO Evaluation activity)


Suggested Preliminary StepsSuggested Preliminary Steps

CEO brings the topic up to the CEO brings the topic up to the Board Board ChairmanChairman (have at least a topical (have at least a topical outline written before just bringing outline written before just bringing up the subject cold)up the subject cold)

Quickly explain this is proactive and Quickly explain this is proactive and not a hint you are leavingnot a hint you are leaving

Go over the outline with the Go over the outline with the Chairman and, depending on the Chairman and, depending on the hospital’s culture, determine going hospital’s culture, determine going forward stepsforward steps



Assuming the Chair is supportive, Assuming the Chair is supportive, further develop at least some elements further develop at least some elements of the plan in draft form to present first of the plan in draft form to present first to the Chair and then to the full Board or to the Chair and then to the full Board or Executive Evaluation/Compensation Executive Evaluation/Compensation CommitteeCommittee

The Chair should introduce the subject The Chair should introduce the subject at the Board Meeting and suggest the at the Board Meeting and suggest the CEO be charged with developing CEO be charged with developing elements of the plan to be introduced elements of the plan to be introduced later.later.



Develop a file to be kept in the CEO’s Develop a file to be kept in the CEO’s office “Plan of Succession”office “Plan of Succession”

Include a check list of all elements in Include a check list of all elements in the plan and the review schedulethe plan and the review schedule

Make sure the CEO’s assistant and Make sure the CEO’s assistant and the Chairman know where the file is the Chairman know where the file is located, or provide the Chairman located, or provide the Chairman with a duplicate file.with a duplicate file.


Suggested Preliminary Steps Suggested Preliminary Steps ChecklistChecklist

Determine who will be the official Determine who will be the official spokesperson. This is generally the spokesperson. This is generally the Chairman of the Board or a Board Chairman of the Board or a Board member with experience in speaking member with experience in speaking with media who will be there the day with media who will be there the day of or soon after CEO’s departureof or soon after CEO’s departure

Develop a draft notification protocol Develop a draft notification protocol memo that can be tailored to the memo that can be tailored to the circumstances surrounding the CEO’s circumstances surrounding the CEO’s departuredeparture


Suggested Preliminary Steps Suggested Preliminary Steps ChecklistChecklist

Include in the memo who is to be Include in the memo who is to be notified in what sequence, admin team, notified in what sequence, admin team, hospital Board members of and any hospital Board members of and any other Boards in the organization, other Boards in the organization, medical staff, personnel, Auxiliary, medical staff, personnel, Auxiliary, Volunteers and Media.Volunteers and Media.

Notify the State Department of Health Notify the State Department of Health of departure and who should be called of departure and who should be called in the immediate future re any issues in the immediate future re any issues


Plan of Succession:Plan of Succession:The CommitteeThe Committee

Appoint a Plan of Succession CommitteeAppoint a Plan of Succession Committee This can be the Executive Committee of This can be the Executive Committee of

the Board and some ex-officio the Board and some ex-officio appointments, e.g., Pres of Med Staff if not appointments, e.g., Pres of Med Staff if not already a member.already a member.

Some may include Auxiliary Pres or Chair Some may include Auxiliary Pres or Chair of Volunteers, Ministerial Rep, others?of Volunteers, Ministerial Rep, others?

Establish the duties and responsibilities of Establish the duties and responsibilities of the Committeethe Committee


Plan of Succession:Plan of Succession:Who’s in Charge?Who’s in Charge?

Suggest the CEO be named the Suggest the CEO be named the facilitator or the staff person charged facilitator or the staff person charged with bringing the information forward with bringing the information forward in DRAFT form.in DRAFT form.


Plan of Succession:Plan of Succession:What Next?What Next?

Review the CEO position descriptionReview the CEO position description– Does it meet the current and future Does it meet the current and future

needs of the organization?needs of the organization?– What skill sets will be most important to What skill sets will be most important to

the organization?the organization?– What personality, character traits are What personality, character traits are

desired?desired?– What are the academic/experiential What are the academic/experiential

qualifications needed?qualifications needed?


Plan of Succession:Plan of Succession:Is there someone on Admin Staff?Is there someone on Admin Staff?

Is there a person who could and would Is there a person who could and would accept being named acting CEO?accept being named acting CEO?

Part of the determination should be Part of the determination should be what they will be asked to dowhat they will be asked to do

Spell out the Acting CEO’s duties and Spell out the Acting CEO’s duties and responsibilitiesresponsibilities

Determine up front if Acting is also Determine up front if Acting is also viable candidate for CEO (issues)viable candidate for CEO (issues)


Appointing Acting Issues If the Acting CEO is a candidate from

within and is a serious candidate for CEO, other applicants will want to know

If the Acting CEO from within is NOT selected, serious evaluation needs to be made about his/her continued employment

If he/she was NOT expected to be named CEO, the same issues are generally not present

Appointing Acting Issues, cont’d

If the Acting is not selected and was a serious candidate, an exit strategy needs to be developed including transition counseling and assistance

Plan of Succession:Plan of Succession:Acting CEO’s Duties etc.Acting CEO’s Duties etc.

Day to day operationsDay to day operations Establish parameters for:Establish parameters for:

– PurchasingPurchasing– SpendingSpending– HiringHiring– DisciplineDiscipline

Set in writing what must be Set in writing what must be approved by the Chairman or other approved by the Chairman or other officer of the Boardofficer of the Board


Plan of Succession:Plan of Succession:No one in the houseNo one in the house

Consider an interim CEO organizationConsider an interim CEO organization

Identify at least two companies to contact Identify at least two companies to contact and include their contact information in the and include their contact information in the CEO Plan of Succession folderCEO Plan of Succession folder

Include other pertinent information, e.g., Include other pertinent information, e.g., web site, references, who to contactweb site, references, who to contact

another option is to..another option is to.. Consider a company who can immediately Consider a company who can immediately

assess the hospital’s current condition in a assess the hospital’s current condition in a two-three day visit.two-three day visit.


MCRHMCRH


YEAH we can do thatYEAH we can do that

Plan of Succession:Plan of Succession:Interim ChecklistInterim Checklist

Ask for an all-inclusive sample contract, Ask for an all-inclusive sample contract, fees, expenses, etc.fees, expenses, etc.

Experience in working with CAH’sExperience in working with CAH’s The duties of the interim being providedThe duties of the interim being provided The candidate(s) preferably have CAH The candidate(s) preferably have CAH

experienceexperience Committee or at least the Chair should have Committee or at least the Chair should have

opportunity to meet the interim andopportunity to meet the interim and

review status, expectations, and review status, expectations, and communications processcommunications process


Plan of Succession:Plan of Succession:Interim Checklist Interim Checklist cont’dcont’d

CEO consultant could screen CEO consultant could screen candidatescandidates

Set weekly meetings between Chair Set weekly meetings between Chair and Interimand Interim

Interim should provide Chair weekly Interim should provide Chair weekly report of activitiesreport of activities


Plan of Succession:Plan of Succession:Hiring a CEO Search FirmHiring a CEO Search Firm

Recommend the hospital not go it aloneRecommend the hospital not go it alone Why? Who in the organization or on the Why? Who in the organization or on the

Board has experience hiring executives?Board has experience hiring executives? Too many times this leads to Too many times this leads to

unsuccessful choices, increased unsuccessful choices, increased turnoverturnover

““How can this be much different than How can this be much different than hiring a CEO for the bank?” hiring a CEO for the bank?”


Plan of Succession:Plan of Succession:Criteria in Selecting a FirmCriteria in Selecting a Firm

I’ve never met a search firm that I’ve never met a search firm that wasn’t the bestwasn’t the best

Identify three firms for considerationIdentify three firms for consideration Find them through networking; or your Find them through networking; or your

Hospital Association may be a good Hospital Association may be a good sourcesource

If using a hospital consultant advisor, If using a hospital consultant advisor, s/he may be able to help with the s/he may be able to help with the search or the processsearch or the process


Plan of Succession:Plan of Succession:Check List for Search Firm Check List for Search Firm cont’dcont’d

Who will be principal contact with the Who will be principal contact with the firm?firm?

Identify references in your stateIdentify references in your state If not any searches in your state, probably If not any searches in your state, probably

should pass on this oneshould pass on this one Obtain a sample contract including all feesObtain a sample contract including all fees Retainer firm= down payment and balance Retainer firm= down payment and balance

after successful search. Should include a after successful search. Should include a guarantee s/he will “stick”guarantee s/he will “stick”


Plan of Succession:Plan of Succession:Search Firm Search Firm cont’dcont’d

Fees range from 20-something percent to Fees range from 20-something percent to 30-something, with the average around 30-something, with the average around 30% of BASE PAY!30% of BASE PAY!

CAH average salary range $120-$200K, so CAH average salary range $120-$200K, so the fee could be $36 to $60Kthe fee could be $36 to $60K

Boards may balk at that kind of fee Boards may balk at that kind of fee What is the firm’s average placement time What is the firm’s average placement time

for like-sized facilities in similar areas?for like-sized facilities in similar areas? What is the firm’s policy if the search time What is the firm’s policy if the search time

exceeds the contract provision?exceeds the contract provision?


OptionOption

A hybrid approach could be to use a A hybrid approach could be to use a consultant to the Board who could do consultant to the Board who could do one or more of the following:one or more of the following:– Advise with respect to the search Advise with respect to the search

process, review documents and process, review documents and materials, screen candidates, set up the materials, screen candidates, set up the review process, sit in on interviews, etc. review process, sit in on interviews, etc.

– Fee based dependent on tasks Fee based dependent on tasks performedperformed


Plan of Succession:Plan of Succession:Communications ProcessCommunications Process

Make regular reports of the search Make regular reports of the search process to:process to:– BoardBoard– Medical StaffMedical Staff– Admin TeamAdmin Team– Media if askedMedia if asked


Plan of Succession:Plan of Succession:TAKE YOUR TIMETAKE YOUR TIME

Make the best decisionMake the best decision Don’t make the quickest decisionDon’t make the quickest decision The range of time to find the right The range of time to find the right

CEOCEO– 3 months to a year, generally less than 3 months to a year, generally less than

six months.six months.


Plan of Succession: Plan of Succession: Manager ConsiderationsManager Considerations

Generally within the purview of the Generally within the purview of the CEO or next senior level executiveCEO or next senior level executive

Develop check list Develop check list Determine if there is a likely Determine if there is a likely

successorsuccessor Review the current managerial Review the current managerial

position description position description


Plan of Succession:Plan of Succession:ManagerManager

If If no candidateno candidate, look to next senior , look to next senior person to be temporary acting and set person to be temporary acting and set parameters for authority and parameters for authority and communicatingcommunicating

Use the job description as a guideUse the job description as a guide Once the person is selected, review Once the person is selected, review

routine functions routine functions Conduct department meeting to Conduct department meeting to

explain the role and expectationsexplain the role and expectationsAll Rights ReservedAll Rights Reserved

Plan of Succession:Plan of Succession:Manager Manager cont’dcont’d

Have weekly meeting with acting Have weekly meeting with acting managermanager

Acting manager should keep a diary Acting manager should keep a diary of accomplishments, actionsof accomplishments, actions



A candidate is identified or comes A candidate is identified or comes forwardforward

Name the most likely Acting Manager Name the most likely Acting Manager while the process of selection is while the process of selection is underway and discuss the same underway and discuss the same procedures as aboveprocedures as above



Techniques for selection, no right wayTechniques for selection, no right way– Solicit input from other employeesSolicit input from other employees– Ask them to write a short note about why Ask them to write a short note about why

s/he should be manager or nots/he should be manager or not– Review each prospect’s resume and job Review each prospect’s resume and job

performanceperformance– Look for comments about behavior Look for comments about behavior

traits,e.g., leadership, self starter, team traits,e.g., leadership, self starter, team player, not the technical skillsplayer, not the technical skills



Techniques cont’dTechniques cont’d– Ask the prospect to put in writing why Ask the prospect to put in writing why

s/he should be considered for managers/he should be considered for manager– Ask the prospect what supervisory or Ask the prospect what supervisory or

management courses s/he has takenmanagement courses s/he has taken– Conduct interviews of all prospects as Conduct interviews of all prospects as

you would with any new hire and ask you would with any new hire and ask the same questionsthe same questions



A candidate should surface after these A candidate should surface after these actionsactions

Consider appointing as Acting ManagerConsider appointing as Acting Manager Adjust salary, good rule of thumb 10%Adjust salary, good rule of thumb 10% Set ninety day goals and objectives being Set ninety day goals and objectives being

very specific about who will do what and very specific about who will do what and whenwhen

Measure progressMeasure progress



Develop a continuing education planDevelop a continuing education plan

Consider job shadowing with a Consider job shadowing with a qualified department manager from qualified department manager from another facilityanother facility


Succession Planning for Succession Planning for Rural HospitalsRural HospitalsQuestions?Questions?

For more information contact:For more information contact:

D. David SniffD. David SniffPresident, President,

Midwest Consultants for Rural Health, Inc.Midwest Consultants for Rural Health, Inc.

[email protected]@midwestconsultantsrh.com

309.338.4478309.338.4478All Rights ReservedAll Rights Reserved

succession planning for rural hospitals

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