Strategies for Hospital C-suite Organization
Philip Betbeze, for HealthLeaders Media, September 14, 2010
We all know who holds the ultimate power in the C-suite, but what's the ideal balance of power among its
other leaders? How does the boss delegate work responsibilities in his or her inner circle? What's the best
way to structure executive decision-making? How do you get your top lieutenants working together as a
team rather than as little tyrants lording over their healthcare fiefdoms?
While there's obviously no one set way things work, hospitals and health systems have certain practices of
how the CEO gathers the best information from which to make the big decisions. However, there are
usually commonalities among successful organizations, and we talked to five top CEOs from some of the
best hospitals and health systems of a variety of sizes to help determine the best answers.
Creating a functional culture
Some CEOs want individual go-getters to blaze their own path through a variety of new initiatives, but
most seem to favor a team-based approach to decision-making, mirroring the way many hope to organize
their clinical employees into team-oriented, cohesive wholes, rather than loose collections of free agents
protecting their own turf.
It's an important point, says Harris M. Nagler, MD, president at Beth Israel Medical Center in New York,
because lots of healthcare systems don't really function as systems, culturally.
"We do share some elements of the IT infrastructure and an electronic order entry system that contributes to
'systemness,' and we have experienced difficulties that are not unexpected but they have been solvable in
the collaborative environment within which we exist," he says.
One of the advantages of having a physician leader as a president is that Beth Israel's chief looks at himself
as "the alignment" between the business and clinical sides of the organization.
"My job is to make sure that we maintain the perspective of both groups, so that they collaborate to ensure
our success."
Nagler says he can use that perspective as a calling card when he has to make difficult decisions on sharing
risk. Historically, the concept of sharing risk hasn't really existed in academic medical centers, he says, and
so it involves new initiatives, new positions, growth strategies, and—critically—personal ownership of
those risks, he says.
As a new president and CEO who took over for a 25-year veteran at Heartland Health, Mark Laney, MD,
didn't want to start making cultural changes right away, before he understood how the current teams
interacted at the St. Joseph, MO, 35-licensed-bed integrated delivery system.
"I wanted to spend the first six months listening and learning about the organization and not having any
preconceived notions," he says. "We had a very high-performing team and one that bonded together very
quickly, but I was brought in to lead the culture and strategic planning and develop an alignment with the
physicians, which was not as strong as we wanted it to be."
Every CEO has to put his or her own stamp on the executive team—how they want information delivered,
or how meeting-centric the culture needs to be, for example—but they all stress that taking one's time when
making substantive changes in those areas is critical to long-term success. Paul Kronenberg, MD, was
brought in to lead Crouse Hospital in Syracuse, NY, after it emerged from bankruptcy several years ago.
He admits he leaned heavily on his lieutenants to help him figure out what was most important, but he
bristles a little when a reporter calls this approach "humble."
"Perhaps leaning on them at the beginning was humble, but I like to say that I'm going to make the final
decision but I need everyone's input. That input has to be with respectful disagreement," he says. "You
have to create an environment that allows people to have that discussion and candor."
Does he think he's great at it?
"We continue to get better as we've worked together," he says, with humility. "We've had the current team
together for 21/2 years, and I know that people embrace this approach. I think that keeps them from being
so territorial."
Steven P. Johnson, president and CEO of Susquehanna Health in Williamsport, PA, values teamwork
above all other attributes of his leadership team.
"What I'm looking for are individually talented people who have a strong, experienced background, but
who are very good at working together," he says. "If I can't have someone with both, I'll default to a better
team player."
That means finding a delicate balance of often competing personality traits, he says.
"Are they candid with each other in a constructive way? People who avoid conflict don't do well, and
people who are lightning rods aren't solid either," he says. "What keeps them on the same playing field is a
commitment to the mission."
Making changes to the team
Most of the hospital and health system CEOs interviewed for this story, not surprisingly, inherited their
leadership team structure from a predecessor. But that doesn't mean they hesitate to put their own stamp on
their team, whether that means a wholesale reorganization or tinkering with titles and personnel.
Big changes are coming for hospital revenue streams, and the ones that are able to best incorporate
clinicians into leadership roles in the hospital system have an early-mover advantage as payers on both the
commercial and government sides push greater coordination of care through more targeted financial
incentives. But often, such changes are a longer-term initiative for a new CEO. A new leader may want to
evaluate and make changes to the inner circle slowly, and with more circumspection. For Beth Israel's
Nagler, who was initially hired on an interim basis before being made permanent this past spring, "the team
was largely in place. In an interim role I didn't want to make draconian changes."
Still, in just the past few months, Nagler has hired a new vice president of finance. He places large trust in
his chief operating officer and his chief medical officer, and has been working closely with another senior
VP who traverses all those domains. Many CEOs refer to such deputies as a "chief of staff," but Nagler is
reluctant to use that title, "because it denotes a sense of grandiosity about me that I'm not willing to put out
there." Still, many healthcare organizations have moved to add the chief of staff title to their executive
teams as a way to remove some of the bickering and influence-peddling that might subvert a team-based
approach to executive decision-making.
Heartland Health's Laney is happy to delegate important functions to his team, which he thinks makes for a
more integrated corporate structure.
"I was blessed with a group that, for the most part, had between 15 and 20 years of experience each," he
says. The only exception was a vacancy in the chief human resources officer's office, "but there was a guy
who had been here more than 10 years who was ready to assume that role."
Laney's direct reports include the chief operating officer, the chief financial officer, the chief of human
resources, the chief brand officer, the chief information officer, and the chief of strategic planning,
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mirroring many CEOs with whom we talked. But at Heartland, for example, the top administrator of the
medical practice actually reports to the COO, on whom Laney leans heavily, perhaps making that title first
among equals, as the saying goes.
"I really like to know what's going on at a high level but I don't have time to manage the daily operations,
so it's kind of a balance between oversight and not getting stuck in the day-to-day," Laney says.
Laney's inner circle is a time-tested one, but many presidents and CEOs are experimenting with new ways
to integrate important new initiatives by appointing a new position of influence. Michael Riordan, president
and CEO of Greenville (SC) Hospital System, which has five hospital-anchored medical campuses, pulled
that sort of switch with his senior executive team.
"We had to have a strong COO, because I noticed in my previous experience that if the COO and chief
nursing officer are equal, it got a little tough to make a decision," he says of a particularly dicey transition.
"The COO who was here had been in the system for a long time, so there was no problem with his
credibility, but the toughest thing was to make sure I was sending the right message to nursing."
Riordan did, indeed, make the COO the final arbiter of operational decisions, but he also promoted the
CNO to a new title of campus president of the flagship hospital, Greenville Hospital.
"That was a good nod," he says. "She became the only woman president of the five-hospital system, and we
protected nursing from feeling they had been marginalized."
Do titles matter?
Titles don't matter, until they do, say most CEOs. There's a veritable alphabet soup of senior executives in
healthcare, and it seems as though a new, hot, vice president-level title gets conferred just about every year;
but, generally, titles in the C-suite reflect the relative importance an organization places on the
responsibilities each person oversees, and the CEO controls that.
"Being a collaborative person is extraordinarily important," says Beth Israel's Nagler, regarding who makes
up the inner circle. "The individual approach is doomed to fail. The monolithic answer is probably the
wrong answer. Being autocratic is not going to get the organization where it needs to go."
With quality of care gaining so much emphasis recently, Nagler stresses responsibilities that span all
leadership titles. One relatively new title at Beth Israel and other hospitals and health systems is the chief
medical information officer, sometimes called the chief medical informatics officer. This person helps
integrate technology and medical applications so that quality data and evidence-based medicine guidelines
can efficiently be integrated into physicians' practice patterns. Overall, he stresses collaboration among the
C-suite.
"One of our catchphrases is 'We're here to help,'" he says. "We're here to help each other. These new titles
don't have a reason to exist without helping someone else achieve their goals."
Restructuring without preconceptions
In organizing his team, Heartland's Laney seeks to ensure that each of the roles' responsibilities are clearly
defined.
"I continue to be surprised by the lack of clarity that people have about their roles," he says about C-suites
generally. "That could be whether it's a board member or an officer, it's critically important for the CEO to
define very clearly what each person's responsibilities are and the expectations. A lot of CEOs assume
people know."
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So that particular failure is more with the CEO than the lieutenant. Laney takes time to be direct with
members of his C-suite about their essential responsibilities, even if some might fall outside the traditional
job description. Further, he says, a follow-up mistake that CEOs often make is that they don't hold their
team members accountable.
"If you don't do both, you haven't done your job," he says. When you do those things with talented
individuals, they will rise to the occasion and exceed your expectations." He says simplicity is important in
defining goals. "I tell them that by the end of 12 months, for example, here's what I need you to
accomplish." He meets with them individually every two weeks for 15 minutes to an hour to monitor
progress on those goals, and meets with the entire group every week for two hours.
As the CEO of a stand-alone hospital, Crouse's Kronenberg has a somewhat different organizational
structure for his team.
"We don't have the formality of most organizations," he says. "We have chiefs and VPs, and don't ask me
why some are chiefs and some are VPs, but it was historical. I call them my senior leadership team and we
sit around the same table. I use a matrix model of leadership, where there's a lot of collaboration between
the different components."
That said, he does have the traditional titles, with a CFO, CNO, CMO, CIO, and vice president of
communications on the senior leadership team. But he also has a vice president of strategic planning. His
chief quality officer, given the absence of a traditional COO, has many operational responsibilities,
including human resources, which links to quality, security, and patient safety. Finally, he has a vice
president for support services, which includes pharmacy, lab, food services, radiology, and cardiac services.
The director of the hospital's foundation also sits in the C-suite.
Kronenberg didn't hire a COO, he says, after a previous COO left the hospital. The responsibilities and
functions were reassigned to other executives.
He took the unusual step of dividing the functions among the rest of his team.
"I tend to give people things based on their individual strengths and their desire to lead those areas. I've
gotten rid of a CMO and CNO. My previous CNO would not have had behavioral health, for example. My
previous COO wouldn't have had cardiac services, which is a clinical line. Did I have confidence? I guess
so. I had my very first meeting as CEO and I said, 'I have no idea what I'm doing so you have to help me.'
We don't have to just do something because that's what it says in the book."
The biggest problem that he has with the way he's structured his team involves compensation. "The job
descriptions don't match what I've put people in," he says. For example, Bob Allen, vice president of
communications and government affairs, is also in charge of Crouse's geriatric service line. He championed
the initiative, so responsibility for it became his, Kronenberg says. That nontraditional role has paid
dividends, as recently Crouse was selected to participate in the prestigious Medicare Innovations
Collaborative on geriatrics, which Kronenberg is excited about. "We're in there with Mt. Sinai and Hopkins
and Geisinger, and we're this little community hospital."
While organizational structure is important—whether traditional or not—flexibility also matters.
Having replaced a CEO who had been at Greenville (SC) Hospital System for 44 years meant Michael
Riordan, the current CEO, inherited a structure similar to most traditional hospital C-suites, but he has
made some significant changes. The previous CEO had a COO, CFO, CNO, head of philanthropy, vice
president of government affairs, CIO, chief human resources officer, vice president of strategy, and vice
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president of medical affairs, which now has about 550 employed physicians. Legal counsel was handled at
a local outside firm.
"He had a lot of direct reports," Riordan deadpans.
The VP of strategy decided to leave the organization just before Riordan arrived, so he didn't fill that
position. With five campuses and an equal number of administrators, Riordan made those administrators
presidents of their campuses and began an effort to decentralize some responsibilities that had been
controlled by the main campus and central office. He also changed reporting responsibilities to have those
campus presidents report to the COO, as does the CIO, CNO, and vice president of human resources. He
also hired the attorney from the local office to work solely for GHS.
"My sense was if we were going to grow, I wanted to set up enough flexibility so that if we worked with
other [institutions], I wasn't locked into not having individuals functioning at a president level," he says.
"The idea was that if in the future we were working with other hospitals there would be a peer network."
Rebalancing with clinical leadership
Given the increased emphasis many payers—not the least of which includes the federal government—are
placing on clinical pathways, patient satisfaction, and readmission rates, many so-called "lay-CEOs" are
eager to populate their C-suite with leaders who have a clinical background. Often physicians are recruited
to fill these roles, chiefly because they carry authority as peers with a group of individuals that is
traditionally very difficult to manage.
Before Laney came to Heartland, the system had a single physician leader in the C-suite, the CMO, and he
had decided to leave to work for a larger system in Chicago as Laney was coming aboard.
"I elected not to fill that position," he says. Instead, he promoted multiple physician leaders within the
Heartland Clinic to assume the duties, part-time, for which the CMO had been responsible.
"That has been a positive," he says. "Our physicians actually prefer to have me be the leader of the
physicians. I have become—good or bad—the leader of the physicians and the one go-to person for highlevel physician issues."
He attributes to that change the skyrocketing physician satisfaction scores. "We went from the 23rd
percentile two years ago up to the 81st in nine months. They have really responded to the time I've been
able to spend with them, and they've been really good about not abusing that. He attends the meetings of
the Heartland Clinic, to which all 125 employed physicians are invited.
"It gives me a chance to share with them things I'm working on, so that they are in the know, and it's an
opportunity for them to ask hard questions and get the direct answer from the CEO."
He says that connection has helped alleviate a number of crises brewing regarding physician compensation.
The previous comp plan, in which every affiliated physician group would renegotiate the contract with
Heartland from the ground up every couple of years, was causing a lot of angst, Laney says. So he blew
that up and created a comp plan that does not require renegotiations, and has evergreen contracts that roll
into automatic updates that are based on national benchmarks.
"They can look at their productivity and benchmarks, and they will know what their salaries are going to
be," he says. "It really has created a much more positive environment, and got our docs focused on seeing
patients rather than worrying about their contracts or benefits."
As far as managing those physicians, Heartland is under what Laney calls a "big push" to be more
physician-led. That means administrative responsibilities for more doctors, each of whom is joined in
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responsibility for a certain process or department with a professional manager. Laney calls those twoheaded administrative structures diads, which are appointed at the clinic and medical center administrative
level all the way down to the service line level.
"Each has an office manager and medical director," he says. "This allows us to be physician led and
professionally managed, so we get the best of both worlds."
There are no easy answers to CEO decision-making, but that's what makes the job so demanding—and
rewarding, say the five CEOs we interviewed for this story. Harry Truman, a CEO himself, once said, "The
buck stops here." He intended to convey to a skeptical public that he was in charge and paying attention.
Today's healthcare CEO might modify that saying. The buck, indeed, stops at the CEO's desk, but like his
or her subordinates, the CEO is accountable to them, too.
***
Our Experts
Paul Kronenberg, MD
CEO
Crouse Hospital
Syracuse, NY
Years as CEO: 6
Operating entities: Crouse Hospital (466 staffed beds), Marley Education Center, Crouse HelpPeople
Employee Assistance Program, Outpatient Surgery Center in Crouse Physicians Office Building, Madison
Irving Same Day Surgery Center
Number of employees: 2,600
Michael Riordan
CEO
Greenville Hospital System
Greenville, SC
Years as CEO: 4
Operating entities: Greenville Memorial Hospital (762 licensed beds), Greer Memorial Hospital, Hillcrest
Memorial Hospital North Greenville Hospital, Patewood Memorial Hospital
Number of employees: 8,000
Mark Laney, MD
CEO
Heartland Health
St. Joseph, MO
Years as CEO: 1 (appointed 2009)
Operating entities: Heartland
Regional Medical Center (352 staffed beds), Heartland Clinic, Heartland Foundation, Community Health
Improvement Solutions (health insurer)
Number of employees: 3,300
Steve Johnson
CEO
Susquehanna Health
Williamsport, PA
Years as CEO: 6
Operating entities: Divine Providence Hospital, Williamsport Regional
Medical Center, Muncy Valley Hospital, (292 licensed beds total), Susquehanna Health Medical Group, a
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multispecialty physician group, and Susquehanna Home Care & Hospice
Number of employees: More than 3,000
Harris Nagler, MD
President
Beth Israel Medical Center
New York, NY
Years as president: 1.5 (one year
interim, named permanent president March 2010)
Operating entities: Beth Israel
Medical Center (1,106 staffed beds). Beth Israel is part of the four-hospital system Continuum Health
Partners, which also owns and operates
Roosevelt Hospital, St. Luke's
Hospital, Long Island College
Hospital, and the New York Eye
and Ear Infirmary
Number of employees: 7,460
***
The Higher Power
Of course, the hospital CEO is not always the last word—even at the flagship hospital. At Beth Israel
Medical Center in New York, some decisions are made above the pay grade of the president, at Continuum
Health Partners, the corporate entity that governs its four hospitals and multiple other facilities.
"We're part of Continuum, so in a sense, we're the meat in the sandwich. In terms of strategic planning, it
comes from both directions," says Beth Israel President Harris Nagler, MD.
Nagler offers one recent example, as a pancreatic center of excellence was up for grabs after Manhattan's
St. Vincent's Hospital orphaned the pancreatic cancer center. A corporate policy meant that Beth Israel
would not compete with other members of the organization for pieces that one of the others might already
have. But at times, a decision has to be made on whether such a business line is best suited for one
organization or another.
"There was a large pancreatic cancer center at St. Vincent's which was attractive to us, and we integrated
that in our organization after some discussion," says Nagler.
Still, Beth Israel had to deal with competing interests among a variety of physicians who do research and
admit to the center.
"The construct we came up with allowed us to integrate different practice patterns, including a traditional
academic model and voluntary private practice model into one unit. The success of this demonstrated the
value of collaboration to both groups."
To explain, prior to acquiring
St. Vincent's pancreatic cancer center, Beth Israel, a major teaching hospital, had recently recruited a
world-class head of its gastrointestinal division who was interested in pancreatic issues.
"That group had as their clinical focus the area I was trying to bring in from a different
institution, who would have been looked at as interlopers," he says. "But we created a
structure that gave the new people the opportunity to have leadership roles and maintain
some degree of independence where the product was greater than the sum of its parts."
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