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For immediate release


ACHE Study Finds Well-Structured Plans
More Likely to Be Perceived as Effective

CHICAGO, November 22, 2004—A recent study of more than 720 freestanding hospitals found that 21 percent reported leadership succession planning was routinely done in their organization. Approximately one in six indicated that as part of their succession plan they had identified a successor to replace their chief executive officer. The research for the American College of Healthcare Executives was conducted earlier this year by Rush University of Chicago and Tyler & Company, headquartered in Atlanta.

Succession planning is viewed as effective by freestanding hospitals adopting a well-defined process. The study of 722 freestanding general medical/surgical hospitals found that when succession planning is done routinely, particularly if it goes beyond the CEO level, hospitals report that the results are effective.

"While there is increasing attention to succession planning in today's healthcare environment, it is apparent that more needs to be done," said Thomas C. Dolan, Ph.D., FACHE, CAE, president and chief executive officer of ACHE, an international professional society of 30,000 healthcare executives who lead our nation's hospitals, healthcare systems, and other healthcare organizations. "It can be a very effective way for hospitals to help improve leadership transition and long-term success."

The study received 722 responses from 1,651 freestanding non-federal, general acute medical/surgical hospitals. It was conducted by Andrew N. Garman, PsyD, MS, associate professor of health systems management from Rush University, a nationally ranked graduate health administration program, and J. Larry Tyler, FACHE, FAAHC, FHFMA, CMPE, president of Tyler & Company, one of the nation's leading retained healthcare executive search firms. The study was funded in part by a research award from the American College of Healthcare Executives.

"Leadership is critical to the long-term effectiveness of today's healthcare institutions," Tyler said. "The length of transition time for a new leader is the strongest single predictor of perceived effectiveness with transition planning."

The study examined a variety of issues related to succession planning – how many hospitals use it, how the decisions are made, what types of preparation are provided for successors, the length of time between a successor being named and becoming the CEO, and how the institution evaluates its succession planning process.

Larger institutions were more likely to have named a successor to the current CEO (median staffed beds = 130 at institutions naming a CEO successor versus 61 beds at institutions that had not named one). The most frequently cited reason for not conducting succession planning: it is not a high enough priority right now (46 percent). Other reasons cited were because the current CEO is too new (31 percent) and there is no internal candidate to prepare (25 percent). In contrast, only 1 percent of the respondents indicated they thought succession planning was not useful.

"It is clear that most participants saw real value in planning for leadership transitions," Garman said. "It is also clear that keeping this dialogue on the corporate agenda is very challenging, given the formidable pressures facing hospitals today."

Additionally, 87 percent of the 722 institutions said that they did not offer any formal preparation to successors.

"We're seeing that today's freestanding hospitals could use a more structured succession planning process," Tyler said. "Transition in leadership is especially important because a substantial number of senior healthcare leaders are expected to retire in the not-too-distant future."

Thirteen percent of the institutions surveyed offered some type of formal preparation, although the methods varied from mentoring to developmental "stretch" assignments to structured socialization (e.g., meeting with key stakeholders to develop relationships). Statistical models suggested that the two strategies with the greatest impact are: 1) mentoring (e.g., regular one-on-one meetings with the current CEO explicitly for mentoring purposes); and 2) developmental ("stretch") assignments. The average time for a successor to become CEO was 12 months.

Of the 21 percent of organizations that had some type of succession planning process in place, 7.9 percent limited succession planning to the CEO and top-level leadership; the other 13.5 percent involved a broader base of leadership positions.

"Succession planning can go deeper than the CEO level," Tyler said. "Our findings showed that institutions with routine succession planning beyond just the CEO are twice as likely to feel effective in identifying candidates, and almost three times as likely to feel effective in preparing successors compared with those not engaged in routine succession planning."

The conclusion is that succession planning can be a valuable, effective strategy for choosing new leadership when implemented in a structured fashion involving well-defined steps to prepare the incoming leader over a multi-year period. However, succession planning is not yet a routine part of the long-term planning process for most freestanding hospitals.

To increase knowledge about the importance of succession planning, results of the study will be disseminated by the American College of Healthcare Executives to its 30,000 affiliates, as well as presented at the ACHE 2005 Congress on Healthcare Management in Chicago, March 14-17, 2005.

Since the study was based on freestanding hospitals and excludes hospitals that are part of healthcare systems, responses are representative of smaller, more rural hospitals. Respondents were associated with hospitals with a median of 70 staffed beds; 64 percent indicated they were in rural settings. Therefore, results cannot be generalized to all hospitals.

Founded in 1933, the American College of Healthcare Executives is an international professional society of 30,000 healthcare executives who lead our nation's hospitals, healthcare systems, and other healthcare organizations. ACHE is known for its prestigious credentialing and educational programs and its annual Congress on Healthcare Management, which draws more than 4,000 participants each year.

ACHE is also known for its journal, the Journal of Healthcare Management, and magazine, Healthcare Executive, as well as ground-breaking research and career development and public policy programs. ACHE's publishing division, Health Administration Press, is one of the largest publishers of books and journals on all aspects of health services management in addition to textbooks for use in college and university courses. Through such efforts, ACHE works toward its goal of being the premier professional society for healthcare leaders by providing exceptional value to its members. For more information, visit ache.org or call ACHE at (312) 424-2800. ACHE is located at One North Franklin Street, Suite 1700, Chicago.

Rush University Medical Center is the largest private academic medical center in Illinois. Located in Chicago, Rush Medical College was first established in 1837 and is named for physician and patriot Benjamin Rush, one of the signers of the Declaration of Independence and a leading social reformer of his time. The Health Systems Management department at Rush offers Master's and Doctoral programs, and is recognized as one of the Top Health Services Administration programs in the country by U.S. News & World Report.

Tyler & Company, founded in 1978, conducts healthcare executive search across the United States – from Maine to Arizona and from Montana to Florida. Offices are located in Atlanta, Charlotte, and Philadelphia. It is one of the nation's pre-eminent retained executive healthcare search firms, cited as the 38th largest executive search firm in the nation by Executive Recruiter News. The firm's staff includes search consultants and research associates.

J. Larry Tyler is founder and president. The company's headquarters office is located at Northridge Center II, 375 Northridge Road, Suite 400, Atlanta, GA 30350. The firm is a member of The Taplow Group, an international executive search and human capital consortium whose members are dedicated to conducting worldwide searches for highly qualified senior-level candidates to meet the specific leadership needs of companies around the world. It is also affiliated with the Association of Executive Search Consultants. For more information about Tyler & Company, visit the company's website at www.tylerandco.com.



Doug Klegon, ACHE, (312) 424-2800, dklegon@ache.org

Andy Garman, Rush University, (312) 942-5402, Andy_N_Garman@rush.edu

Pamela A. Keene, Tyler & Company, (770) 965-3340, pam@pamelakeene.com