More than 20 years ago now, the Balanced Budget Act of 1997 was a major disruptor in healthcare. By reducing government payments to providers, the legislation prompted hospitals and health systems to make wholesale cuts to their workforces. In many organizations, for example, layers of leadership were eliminated.
The legislation also created demand for interim executives. Many organizations brought in interims from the outside to help them fill gaps and manage the tremendous flux in the marketplace.
Today, new forms of industry upheaval – the shift from volume to value, for instance – are renewing demand for interim leaders. Having watched the flux and chaos within healthcare for the past few decades, I believe that interim executives are becoming a critical necessity to leadership talent strategies. If disruption is the norm, then there will be demand for interims to help manage it.
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I see several key reasons why healthcare organizations are turning to interim leaders:
- Recruiting top talent takes time. Finding the right CEO, COO, CFO or other senior-leader can take six months, a year or more. Hiring an interim executive buys the organization valuable time to conduct a thoughtful, comprehensive search for an open position.
- Interims provide insight. Inserting an executive into a role temporarily can allow that individual to assess its responsibilities and expectations and provide feedback. With the interim’s guidance, the organization can adapt the position description to fit future strategic needs. (A case in point: an interim CFO can help the organization structure the role towards emerging reimbursement models and a more fee-for-value operating environment.)
- Interims help manage a merger. Hiring permanent executives during a merger or acquisition is a precarious pursuit. Good executives are reluctant to sign on until the ink is dry on a deal; interims, therefore, can provide temporary leadership while the organization undergoes consolidation.
- Interims thrive on uncertainty. This is a key reason executives make the career decision to pursue interim roles—they relish the chance to enter into a transitional or chaotic situation and lend stability. They want to make a big difference in a short period of time. Organizations in flux benefit from executives with this mindset.
- Executives from the outside take pressure off the leadership team. Too often when a vacancy occurs executives from inside the organization are called upon to step in. The classic case is a COO filling in as interim CEO after the departure or firing of the chief executive. The downside is that the COO is now doing the job of two executives. Bringing in an interim leader from the outside, in most cases, eases the strain on the organization’s permanent leadership team.
In any industry, the demand for interim executives tends to be proportional to the amount of disruption experienced at a given time. In healthcare, we seem to be stuck in a disruptive pattern — meaning the demand for interims will remain steady for the foreseeable future.
