CEOs leaving rural hospitals at high rate

Print Friendly and PDF By: Andy Miller Published: Nov 30, 2010

Recent departures of CEOs at three large urban health systems created big waves within the Georgia hospital industry.

At the same time, though with less public attention, an even bigger exodus of hospital CEOs has rocked rural areas of the state.

A new survey shows that one of every three CEO positions at Georgia rural hospitals has turned over since January. A large majority of those 22 departures have come at the direction of the hospital’s board, according to the survey by HomeTown Health, an organization of rural hospitals in the state.

And several remaining hospital CEOs plan to retire in the next year, says Jimmy Lewis, CEO of HomeTown Health, which conducted the survey of  65 rural facilities.

The chief executive departures have centered on a decline in hospitals’ financial performance, Lewis says.

“Hospital board members are typically people who don’t understand health care finance,’’ especially the lack of payment from people who are uninsured, Lewis says.

The leadership vacuum occurs at a critical time for rural hospitals in the state. They face cuts in payments from Medicaid, an increase in the number of uninsured patients, and the implementation of the health care reform law. “We have the most dramatic change in the delivery system in the history of health care,’’ Lewis says.

A spokeswoman for the American Hospital Association, Maria Watteau, said Tuesday that the CEO departure trend isn’t unique to Georgia. “The pressures on rural hospitals are higher, and they do have a higher turnover rate [nationwide],’’ she said.

Still, Georgia’s turnover rate in rural hospitals appears high. The American College of Healthcare Executives found that hospital CEO turnover nationally increased to 18 percent in 2009 from 14 percent the year before. The survey, which did not differentiate between urban and rural hospitals, said Georgia’s rate was 20 percent in 2009, the latest data available.

Meanwhile, Lewis notes that after a chief executive officer leaves, it’s difficult for rural hospitals to find a qualified replacement. Unlike large hospitals in urban areas, rural facilities often don’t have a ready backup candidate, and it can take several months to hire a new leader.

Amid the turmoil, some rural Georgia hospitals are seeking to align with larger health systems to weather the financial storm, Lewis says. “More rural hospitals are discussing partnerships than ever before.’’

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