An aging physician workforce combined with burnout and heightened pandemic-era stress has led to an increase in the recent rate of physician retirements. As the industry braces for the numbers to continue rising, one segment of physician retirements may be especially concerning–that of physician executives. Year to date, CEO turnover at hospitals is at a four-year high, and many of those retiring are physician executives. The reasons for the increased turnover are complex, but retirement certainly plays a part.
What can the industry do to prepare for physician executive retirements? The Jackson Physician Search Retirement Report offers several things administrators can do to reduce the impact of physician retirements, and they apply to physician executive retirements as well. Succession planning will lay the groundwork for finding a replacement, but other strategies, such as offering flexibility and retention bonuses, may serve to delay a physician executive’s retirement timeline. Keep reading to learn more about five ways to reduce the impact of physician executive retirements.
1. Physician Executive Succession Planning
According to an MGMA STAT poll, just 35% of healthcare organizations have a succession plan for leadership positions. While this is slightly better than the 21% that reported having succession plans for typical physician retirements in the Jackson Physician Search Retirement Report, it still shows a lack of proactive planning from the majority of healthcare organizations. However, this is not because they don’t recognize the importance of succession planning; in a 2021 joint study from MGMA and Jackson Physician Search, healthcare administrators assigned an average importance of 7.5 to succession planning (with 10 being the most important). Although administrators clearly understand its importance, they may feel they don’t have time to work through the multiple steps involved with succession planning. We’re here to suggest it’s okay to start small by prioritizing just a few of the steps.
2. Build or Strengthen Internal Leadership Training Programs
Ideally, healthcare organizations are able to seamlessly promote someone internally to replace a retiring physician executive. After all, across industries, multiple studies suggest that internal hires have higher performance rates, better retention rates, and are more cost-effective. In the aforementioned MGMA and Jackson Physician Search study, 43% of administrators who reported having succession plans said their plans included a mentor program. We are hopeful to see this percentage grow, as some of the most respected, physician-led hospitals in the nation are known for their robust internal training and mentorship programs.
Internal training programs will look different at every organization, and obviously, a thriving leadership training program isn’t built overnight. However, it is worth taking small steps, such as assigning physician executive mentors to promising physicians. You can also assemble a team to start building a curriculum around the key leadership skills needed by physician executives at your organization.
3. Offer Retention Bonuses and Increased Flexibility
In the Jackson Physician Search Physician Retirement Survey, just 12% of physicians said they intend to retire and stop working altogether. Nearly half (43%) of physicians hope to reduce their work hours in the years leading up to retirement, and a third of physicians plan to retire from their current job and work locum tenens or work part- or full-time with another organization. The numbers may look somewhat different for physician executives, but it is likely that retiring physician executives also hope to continue working to a certain extent.
The question then becomes, how can administrators retain retiring physician executives for a longer period at their current organizations? Offering increased flexibility–reduced hours or the option to work remotely–may be enough for them to consider prolonging their departure, and, of course, a retention bonus or an enhancement to their future retirement package may also be persuasive. However, retention efforts are not one size fits all. Talk to retiring physician executives about their motivations for leaving and discuss adjustments that can be made to keep them happily working in their own capacity. This will give you ample time to find a qualified replacement who is a good fit culturally and, therefore, likely to stay long-term.
4. Develop a Contingency Plan
Organizations must also prepare for the case scenario that a physician executive will retire without substantial notice or interest in retention incentives. This is where a contingency plan for a physician executive vacancy comes into play. Just as a locum tenens physician may temporarily fill a physician vacancy, an interim physician leader may step in to temporarily fulfill the duties of an absent physician executive. While this situation is not ideal, it is one worth exploring so you know who to call if needed.
5. Partner with a Physician Executive Search Firm
If it is determined that an external search is needed to replace the retiring physician executive, organizations will improve the odds of connecting with top candidates by utilizing a physician executive search partner that has spent decades building relationships with physicians and physician leaders. Over the course of 10,000+ permanent placements, Jackson Physician Search has developed relationships with physicians all over the country at all stages of their careers. In addition to providing access to a vast network of physicians, a successful physician executive search firm will serve as an extension of your team, putting in the hours to conduct the necessary physician executive outreach for you.
News of a physician executive’s retirement from a healthcare organization is typically not wished for, but adequate planning can help prevent it from burdening other leaders and staff or disrupting the continuity of patient care. Focus on creating a comprehensive succession plan and prioritizing internal leadership and mentor programs. Create an environment of transparency so you can openly discuss with the retiree their reasons for leaving and propose solutions that allow them to consider staying on in some capacity. Prepare for the worst by lining up a temporary contingency plan, but ideally, you will have ample time to activate your retained physician executive search partner to officially start your search for a replacement.
If you need help preparing for a physician executive retirement at your organization, reach out to Jackson Physician Search today. Our Physician Executive Search team has the experience, network, and expertise required to provide organizations of all types and sizes with the physician executive recruitment support you need. Contact our team today to learn more.