Healthcare Leadership White Paper
Healthcare Trends – 2011
By Doug Smith, MBA, MHA
and Christine Ricci, RN, MBA
B. E. Smith’s annual survey of more than 200 health-
care executives provides insight into issues industry
leaders expect to face in the coming year. The results
of the most recent survey conducted in October 2010
revealed a common theme: a rapidly changing health-
care landscape is creating a level of uncertainty that will
make skilled leadership more critical than ever before.
Although change in healthcare is constant, the accel-
erated rate at which it is currently happening is
unprecedented in history. Healthcare organizations
will need to be more nimble than ever to keep up with
technological advances, aggressive healthcare reform
and increasing regulatory and reporting demands, all
of which are occurring at a lightning-fast pace.
One survey respondent said it best: “Organizations
that cannot adapt to change quickly will find them-
selves on the outside looking in. This includes access,
safety, finance and information technology.” All of
these issues underscore the importance of having
seasoned executive leaders in place to guide health-
care organizations into an uncertain future.
Following are the top trends cited by healthcare
leaders as the industry prepares for 2011.
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Healthcare Trends – 2011
Political landscape
Up to 34 million people will gain access to insur-
ance coverage as the new healthcare reform
legislation begins to take effect, adding to growing
service demand created by an aging population —
especially in the emergency room. At the same time,
the legislation cuts $155 billion in Medicare hospital
Designing payments, which will further squeeze organizations
already operating on tight budgets.1 As a result,
and delivering cost management is a primary concern.
a superior Keeping costs down
customer An article in the October 11 edition of Modern
Healthcare revealed that 80 percent of hospital
experience leaders surveyed by the American College of
every step Healthcare Executives (ACHE) reported that
reducing operating costs would be a leading priority
of the way... in the next 12 months.2 Instituting cost manage-
is more critical ment initiatives while complying with regulatory
demands was repeatedly cited by survey respon-
than ever. dents as a concern for 2011.
Operational excellence, with cost
constraints
The impact of healthcare reform has yet to be fully
felt, leaving many organizations hesitant to make
immediate changes. Some aren’t filling open leader-
ship positions, for fear that the skill set they recruit
now, may no longer be relevant in six months.
At the same time, political change is creating a
high demand for operational excellence. Skilled
senior leaders who can successfully manage the
entire operational picture, including clinical and
quality concerns, regulatory demands, financial
performance and healthcare reform, will be crucial.
Additionally, the need for effective revenue cycle
management means skilled case managers will be in
demand as hospitals learn to do more with less.
Many organizations are beginning to address these
challenges with interim leaders who have the flexibility
and depth of experience to help them adapt quickly.
Economic Landscape
Capital access is more restrictive than it used to be.
1
Biden announces deal with hospitals to cut Medicare, Medicaid payments by $155 billion, the Commonwealth Fund, July 8, 2009.
2
Jessica Zigmond, “In wake of reform…” Modern Healthcare, October 11, 2010; pp. 10-11.
2 877.802.4593 | www.BESmith.com
Shrinking reimbursements, lower endowments and
the difficulty of acquiring a loan in today’s stagnant
economy all contribute to this problem. Health-
care organizations lacking strong profitability and
substantial cash reserves will find it harder to secure
funding for expanding services that support demand.
To compensate, survey respondents are focusing
on capturing additional market share as a
means of gaining revenue. A key component of a
successful market strategy is to build awareness of
core competencies and key differentiators, while
embracing innovative loyalty programs that make
your organization the one of choice. In order to do
this, healthcare organizations have to focus on sepa-
rating themselves in the marketplace.
Building your brand
Consider ways to strengthen your organization’s
brand within the community. The following actions
will help define your brand position and strategy:
• Revisit your market position, key strengths and
challenges to determine the differentiating
attributes that define your brand.
• Survey customers and prospects to get a more
accurate perspective on how they view your
organization.
• Raise visibility of your organization with strong
community involvement.
• Develop a solid “brand promise” that serves as
the foundation of your marketing messages.
• Choose the right tactics to grow your brand.
What worked yesterday may not be relevant
today.
Become the sought-after provider
Designing and delivering a superior customer
experience every step of the way — and developing
a means to make that experience repeatable — is
more critical than ever, particularly in high-volume
areas. This fosters positive “word-of-mouth”
marketing, which is key to a successful strategy.
Those offering the best physicians, outstanding care
and a positive customer experience every time will
cultivate “brand advocates” among their customers,
Healthcare Trends – 2011
who will spread the good word throughout the
community. The result is that those organizations
will be top-of-mind when people experience a
health problem and need care.
Effective leadership
Demand is increasing for skilled senior leaders, but
supply is dwindling. According to the ACHE survey,
CEO turnover jumped from 14 percent in 2008 to
18 percent in 20093 — the highest rate since 1999.
This is an alarming trend, since CEO loss filters
throughout the organization.
For years, analysts have predicted a mass exodus
of C-suite executives as the baby boomers begin to
retire. It was initially estimated this exodus would
occur over a 10-year period, but many experts are
now expecting it to happen more quickly.
Increased pressure on leaders
Senior leaders are dealing with higher volumes,
lower reimbursements, pressure to improve
outcomes, and an aggressive focus on cost manage-
ment — all compounded by the fast rate of change
within the industry. These conditions place
What can you expect in 2011?
Below are selected comments made by participants in B. E. Smith’s
October 2010 survey of more than 200 leading healthcare executives.
“Healthcare leaders are adopting manufacturing processes like
Lean and Six Sigma that will help quality, if not applied in a cookie-
cutter fashion. Each organization has its own culture and requires
differences in approach. So much depends on strong leadership.”
“Healthcare will need to focus on improving quality care, measured
by satisfaction scores, CORE measures and “never” events. These
quality measures will culminate in pay-for-performance. Leaders
who can improve these measures while reducing costs will be in
high demand.”
“Obtaining capital is more difficult, while the economy depresses
donor fundraising. Organizations aren’t prepared for pay-for-
performance, and there’s a disconnect with physician incentives and
alignment. However, quality is becoming a primary concern, and
increased competition is raising leadership abilities at organizations.
I expect to see a renewed focus on strategic planning.”
3 877.802.4593 | www.BESmith.com
considerable stress on the leadership team. Not
surprisingly, some survey respondents report they
may retire sooner than originally planned.
A number of these executives will pursue interim
leadership as a more flexible career alternative. In
fact, 85 percent of those surveyed said they were
considering an interim career. As a result, healthcare
organizations will have increased access to skilled
interim leaders to address immediate challenges.
Succession planning
Developing young talent to step into leadership
roles will become critical as senior leaders retire.
Coaching programs in which an experienced execu-
tive coach works side-by-side with participants in
their everyday environment can help administrative
teams hardwire leadership skills in top performers.
A changing leadership team
New leadership roles are emerging at many health-
care organizations. Survey respondents identified
a need for strong case management leadership and
quality directors, as well as physician administra-
tors who can effectively lead through the complexity
of integrating physician groups into hospitals.
With the new government mandates for advanced
technology, many organizations are putting a chief
medical information officer — ideally, a physician
who understands technology implementation — at
the C-suite table.
To succeed, integrate
With healthcare reform shifting the landscape from
pay-for-procedure to pay-for-performance, a large
percentage of survey participants cited integration
as a critical success factor for 2011.
Synchronize key relationships
Rapid change in the industry is forcing strong
collaboration and transparency among all involved
entities, including physicians, clinicians and the
financial department. In order for everyone to
be profitable and for the patient to receive ideal
quality care, all of these groups must be closely
aligned. When integrating physician groups into the
3
Hospital CEO Turnover, American College of Healthcare Executives,
March 2010.
Healthcare Trends – 2011
hospital, it can be challenging to ensure alignment of organiza-
tional culture and values, but it’s critical to success.
System integration
Another factor impacting integration is technology. The right
technology can simplify the integration process, delivering a
patient-centric focus that enables effective management of
the entire continuum. With care increasingly expanding into
the home environment, integration across the entire service
continuum will be crucial to ensure consistency and quality.
Organizations who integrate successfully will enjoy optimal
clinical, financial and patient satisfaction outcomes, including
improved performance, better cost management, higher reim-
bursement and stronger accountability.
Technology advances
For many survey respondents, new technology represents
a blessing and a curse.
Advantages and disadvantages
When correctly implemented, technology improves patient
safety by reducing medical errors and adverse drug side effects.
It provides easy access to medical records, helping physicians
and clinicians deliver consistent, quality treatment and plan for
the patient’s future healthcare needs.
Concerns expressed included training staff to use technology
properly, so it doesn’t become an obstacle to productivity
and good quality care. Survey respondents also observed that
technology can negatively alter patient satisfaction when it’s
perceived that clinical staff is spending more time behind
computers than providing hands-on care.
About B. E. Smith
B. E. Smith is a full-service leadership solutions firm for health-
care providers. B. E. Smith’s comprehensive suite of services
includes Interim Leadership, Permanent Executive Placements,
and Consulting Solutions. The company is comprised of veteran
healthcare leaders who partner with each client to create a solu-
tion that uniquely fits their individual needs.
With more than 30 years of experience helping healthcare
organizations address a wide range of financial, clinical and
operational challenges, B. E. Smith has the expertise to quickly
address the multitude of complex variables that become real
trends in the healthcare industry.
For more information, visit www.BESmith.com or call 877-802-4593.
© 2011 B. E. Smith
Financial challenges
The cost to implement new technology is an increasing burden
for healthcare leaders. One example is the government-mandated
Electronic Health Record (EHR) program. With federal stimulus
dollars and stiff penalties tied to the ability to implement EHR by
2015, healthcare organizations are under tremendous pressure to
implement the system before the penalty phase begins.
An additional factor mentioned by surveyed executives is building
(and paying for) the infrastructure to support the EHR system
— particularly smaller community hospitals, who don’t have the
resources. For many, the resources required will make it impos-
sible to capitalize on federal stimulus funding.
4 steps toward a profitable future
Heading into 2011, many hospitals will be in “survival mode,”
with a primary goal of maintaining profitability. As Medicare
further tightens criteria for reimbursement, healthcare organiza-
tions will need to take several steps to maintain profitability.
1. Decrease readmission rates while improving quality scores.
2. Implement more aggressive cost control than ever before.
Align closely with physicians and invent new methods to
drive out costs.
3. Provide incentives to top performers, especially physicians.
4. Identify creative ways to invest in infrastructure.
The solution rests within the leadership team. Even in the face
of great uncertainty, healthcare organizations with seasoned
executives — those with a proven history of containing costs
and sustaining profitability while delivering high quality —
will continue to thrive.
Doug Smith, MBA, MHA, has served as president and chief execu-
tive officer at B. E. Smith since 1996. As a seasoned professional with
more than 30 years of experience in healthcare search and recruitment,
Mr. Smith provided leadership to B. E. Smith during a period in which
the firm grew from two consultants to a staff of over 200. Under Smith’s
leadership, B. E. Smith has become the only company in the healthcare
industry that is a leader in both Executive Search and Interim Leadership
services. Doug Smith holds a master’s degree in business administra-
tion, as well as a master’s degree in hospital administration.
Christine Ricci, RN, MBA, is vice president of marketing and stra-
tegic alliances at B. E. Smith. Ms. Ricci is recognized for her ability to
effectively lead, communicate and drive results across organizations. Her
successful track record includes building and directing organizations to
achieve increased profits, cost reduction and expanded market share.
Christine holds a bachelor of science degree in nursing and a master’s
degree in business administration.
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