Looking ahead to 2013, B. E. Smith’s survey of more than 300 healthcare executives revealed some very interesting shifts in focus for healthcare leaders heading into the new year. Financial issues are even more front and center for provider organizations than ever before, and many other perennially dominant issues such as quality, patient satisfaction and technology are increasingly seen through the lens of financial performance. The implications for organizational leadership clearly point toward a future where the margins for error and inefficiency are increasingly thin, and where the importance of finding, nurturing and retaining experienced executives who can create cultures of high-performance, innovation and flexibility is greater than ever.

The following are the key trends that respondents to our survey identified as the leading drivers for healthcare organizations in 2013:

Increased Uncertainty

The most pervasive theme in the survey results - especially for CEOs - is concern around economic, policy and regulatory uncertainty, and the challenges associated with navigating and achieving success in such a potentially turbulent time. Leaders are keenly aware that the paralysis of waiting for change to come can be just as dangerous as guessing wrong. With the Accountable Care Act scheduled to remove $550 billion from Medicaid and Medicare programs over the next 10 years, organizations cannot predict if cuts will continue to be delayed or if they are imminent and represent the beginnings of an extended era of lower prices, performance-based reimbursements and expanding efforts to reduce fraud and abuse. Successful organizations will plan for uncertainty by building teams of agile performers and experienced leaders who can create a sense of stability and vision while nimbly responding to change.

Rapid Acceleration of Change

The rapid pace of change throughout the industry will be a key focus for healthcare executives during 2013. In today’s industry, the success of an organization is no longer determined by static measures. An example of the waves of change impacting healthcare is the current emphasis on patient satisfaction. While the idea of patient satisfaction as a basis for reimbursement continues to be controversial among healthcare leaders, most expect it to continue to play an increasing role in both compensation and market share. These kinds of changes will drive many organizations to undergo significant cultural shifts requiring seasoned and steadfast leadership to push past resistance, drive key initiatives and strategies and provide strong guidance for the organization and staff.

Shift to Short-term Planning

Related to concerns around uncertainty and the rapid acceleration of the pace of change in the industry is the need to stay flexible. Healthcare executives surveyed noted the demise of the traditional five-year strategic plan in favor of fiscal and operational goals and initiatives based on six- to eighteen-month timelines. This is generally seen as a response to the dynamic regulatory and reimbursement environments that are expected to continue to dominate for the foreseeable future. For many organizations this more nimble “progressive improvisation” model represents another major cultural change that will require steady guidance and leadership to navigate successfully.

New Leadership Competencies

As the industry continues to transition from volume- to value-based care, organizations are requiring executives to adopt smarter work patterns across the continuum with insights that drive higher performance and better outcomes. When surveyed, executives identified the following competencies for their shifting roles and responsibilities:

• Strategist
• Influential
• Intensity
• Integrator
• Integrity
• Inspirational
• Patient Experience
• Communication

While several factors are driving the adoption of these new competencies, the majority of respondents noted the trend toward provider organizations going at-risk for the cost of care. This new model requires executives to develop a much deeper understanding of and ability to manage the drivers of costs and quality.

Patient Profile/Behavior Changes

Another source of change is the evolving profile of the average patient due to a range of factors, including longer lifespans, an increased incidence of chronic conditions, obesity and socio-economic shifts. While these changes are driving inpatient versus outpatient volume and boosting acuity levels at the ED, they are not driving a similar boost to the bottom line due to reductions in reimbursements. With healthcare reforms expected to grow the ranks of the insured by tens of millions and drive more care at the outpatient level in the long run, success in the near term will be driven by skilled leaders who can control costs and
deliver efficient care. Provider organizations will also continue to build expertise in care management and integrate more effectively with behavioral, long-term and home care organizations.

IT Playing Core Strategic Role

In recent years, meaningful use has been a dominant theme in our survey responses, and the topics of IT integration, adoption and ROI have also been top of mind. Integration and connectivity continue to be key for healthcare leaders looking to make their recent IT investments work better together and with regional information sharing initiatives. With so many technology initiatives underway or recently completed, IT is increasing being looked at as core to the success of the organization and as a critical support for virtually every major organizational goal, including value-based purchasing, patient satisfaction, revenue integrity, readmission rates and the other key areas noted in this survey.

Evolving Healthcare Workforce

The healthcare workforce is in the midst of its most dramatic period of change in more than 20 years:

• 75% of healthcare leaders plan to retire in 10 years (1)
• 43% of CFO’s are anticipating job change within 5 years (2)
• 45% of nurses are over the age of 50
• Hospital CEO and new employee turnover are at all-time highs
• Increase in physician leaders migrating into executive leadership roles

Our research describes a workforce that increasingly embraces change and new opportunities, and organizations that increasingly value productivity, efficiency and flexibility. With an expected MD shortfall of more than 62,000 expected over the next five years and the cost of transitioning through leadership turnover as high as $1 million (severance, recruitment, loss of momentum and market share), attracting, training and retaining top performers is more critical than ever. (3)

Generational Leadership

The importance of leading and maintaining a generationally diverse workforce has also come into much sharper focus. Savvy leaders are addressing the challenges associated with meshing the work styles and personalities prevalent in different generations. As the last of the “traditionalists” (born before 1945) move out or up into board roles to make room for their “baby boomer” successors (1946-1964), and “Gen X” (1965-1979) and “Gen Y” (1980-2000) professionals move into middle management, tectonic cultural and operational shifts are working their way through many organizations. Leaders who adapt to and take advantage of the dominant characteristics of each generation will be well positioned to achieve much higher performance than those leaders who continue to enforce outdated approaches.

High-performance Workforce

As previously mentioned, respondents have clearly identified 2013 as a year of increasingly tight margins driven by an array of short-, mid- and long-term trends. To meet these demands, organizations must focus on identifying their top performers and establishing strategies to develop and retain these future leaders. In an era where efficiency, flexibility and nimble response to changing market dynamics becomes ever more vital to the success of healthcare organizations, the entire workforce needs to be operating at maximum efficiency and productivity.

1 HealthLeaders Media.“HealthLeaders Media Industry Survey 2009.” Survey. February 2009. (www.healthleadersmedia.com/industry_survey)
2 Amalgamation 2012 Analysis: HFMA, William M. Mercer, HR Strategic Solutions
3 “Physician Shortage Projected to Soar to More than 91,000 in a Decade,” by Carolyne Krupa, American Medical News, Oct. 11, 2010.