HealthCare Voice

Executive Search: The Model Is Broken

Editor's Note:  HealthCare Voice, John Self's  healthcare blog, will be moving to the web site, JohnGSelf.Com in two weeks. The blog will run on the web and here  for a couple of weeks and then the content will be exclusively on WWW.JohnGSelf.Com.

John G Self is a frequent speaker and lecturer.  He has a new blog,  John G Self.  It features stories of hope, redemption, and humor of every day life.  His latest blog, URBAN SNAPSHOT: We Assume, We Are Surprised posted on Monday.

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Candidates complain about recruiters – how they do not communicate effectively, how they do not provide real transparency, how they gloss over critical cultural, political and operational issues because to acknowledge them would complicate the search, or because the search consultant simply did not take the time to understand the underlying challenges.

The statistics tend to support candidate concerns.  According to several industry studies, more than 50 percent of candidates recruited from outside an organization quit, are pushed out, or are fired within 24 months when you look at all sectors and all management levels. Heidrick & Struggles, the industry’s second largest executive search consultancy, admitted in 2009 that in an internal study of 20,000 assignments, 40 percent of their senior leadership placements were out the door within 18 months. 

The record of internal recruiters is not much better.  Apparently, the weaknesses that afflict search firms also infect the leadership talent acquisition function of many large corporations, health systems and not-for-profit organizations. 

Aside from these periodic studies and an occasional blog or article, the search industry is strangely silent on this dirty little subject. 

At the core of this industry failing is a broken business and process model which has existed for nearly 50 years. There are precious few industries in the world that have not undergone multiple transformations over the same period.  But not executive search.   Yes, there have been technological advances – the faxmachine, computerized databases, the Internet and email, but these developments have not changed the fundamental structure of this industry.

When you look at this problem, which has significant implications for a client's profitability or, in some cases, their actual survival, you have to consolidate the processes and results of both internal recruiters and outside search consultants.

Here is what the candidate’s are saying and have been saying for quite some time:

• There is a lack of transparency.  Search consultants rarely tell you the whole truth.

• Recruiters place the burden on the candidate to sort out things like corporate culture, how decisions are made, how success will be defined, and the hurdles to success.  The recruiters either were not perceptive and failed to ascertain this information or they made a financial calculation that to know and to tell would only delay the search and erode profitability of the engagement. Internal recruiters, like their external cousins, did not want to ask the tough questions regarding the search or share unflattering (but truthful) information for fear of rocking the boat. 

• There is poor communication between the candidate and the firm once a resume has been submitted.  That is perhaps the most common complaint and virtually everyone who practices in this profession is guilty as charged.  Weekly email updates should be the norm, candidates say.

• There is a lack of accountability for the quality of the service provided by the recruiters and for the outcome of their work, and candidates believe this contributes significantly to the problems they encounter in the recruiting process.  Here, corporate clients join the chorus of criticisms.  There are rarely any fee concessions if the client is unhappy with the quality of the panel of recommended candidates.  The placement guarantee -- the industry standard is 12 months at the executive level -- is really no guarantee since the vast majority of candidates do not leave an organization until the 18 to 24-month period, an insufficient length of time for the client to regain their investment.  Candidates and clients say the problem seems to be a focus on the process and filling a job order, rather than spending the time it should take to produce the right outcome. 

Now the good news:  These are problems that can be fixed.  These are not rocket science issues.  The real challenge will come in changing the culture of how talent acquisition -- external and internal recruiting -- works.  There is resistance to change, especially in the large firms where partners earn substantial six or seven figure incomes.  The people who should lead the change have a vested interest in protecting a business model that works well for them.  You can almost hear it now:  If it is not broken, don't fix it.

But the system is broken and in this period of business transformation spurred by prolonged financial uncertainty owing to world economic conditions and the debt crisis, corporations, especially healthcare providers, cannot afford business as usual.

© 2011 John Gregory Self

A Calling For People With A Heart

Editor's Note:  HealthCare Voice, John Self's  healthcare blog, will be moving to the web site, JohnGSelf.Com in two weeks. The blog will run on the web and here  for a couple of weeks and then the content will be exclusively on WWW.JohnGSelf.Com.

John G Self, his blog on stories of hope, redemption, and humor will continue to be featured on Typepad. John is increasingly requested to speak at colleges and universities, professional associations and at industry and community meetings. His latest blog at John G Self, "One Life to Live", reflects his thoughts on career management. Another of his blog offerings, "Gingrich, Grizzard and Marriage" hit many readers laugh button.

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They say that a man who hates a dog has no heart. They say a man who hates his job is a lawyer. Last week, I wrote that in a piece about career management for my speaker's blog, John G Self. It had a ring to it -- and it fit my message for today -- so I decided to borrow it from myself. 

I do not know how widespread the professional dissatisfaction is within the legal industry, but I have been told by many attorneys in subsequent conversations that it is common. 

If you ask the Baby Boomer generation of healthcare leaders why they chose this profession, you frequently hear phrases like "a chance to serve..." or "the opportunity to help people..." Perhaps one of the best career choice explanations that I have heard from a healthcare CEO is this:

"I felt called to this industry. It is a business, but it is a business with a conscience.  It offers everything for an executive who is seeking one of the toughest challenges in business. We get a chance to experience the intellectual and emotional satisfaction of running one of the most complex business models ever created and in the process we provide meaningful service to our communities and the people who come to our hospitals. And all the time we are looking for ways to innovate so that we can serve more effectively. It just does not get better than that."  

Even after more than 25 years in the profession, this CEO admitted that he still is excited to go to work each day -- yes, some days more than others -- but it still offered emotional and professional satisfaction. His wife agreed. "There are so many challenges in a relationship that create friction or fractures. Your spouse’s work is huge. But I am truly lucky that my husband loves, absolutely loves what he does and it shows up in our daily lives.”  

I know, based on my 30+ years in healthcare, that is not an isolated example, and that makes me very proud to be in an industry where so many people love what they do. There are other professions where this passion runs deep, but in this example -- the law versus healthcare -- the contrast is stark.

The larger, more important career/life's lesson is this: pursue the work about which you are passionate. For college students enamored with a certain profession, look before you leap. Do not be seduced by a mind’s eye rose colored image of what your professional life will be like in five or 10 years. Do not discount the negatives, I don't care how much money they throw at you.

If you choose healthcare expect a bumpy but rewarding career where, if you are smart enough and a good leader, you can make a solid impact  in one of America’s most important service industries, and, along the way, you can improve life for your fellow man. 

© 2011 John Gregory Self

Medicare and the U.S. Financial Crisis: A Collision Course Is Set

Editor's Note: HealthCare Voice, John Self's  healthcare blog, will be moving to JohnGSelf.Com. in two weeks.  The blog will run on both sites for a couple of weeks and then the content will be exclusively on WWW.JohnGSelf.Com.

John G Self, his blog on stories of hope, redemption, and humor will continue to be featured on Typepad.  Later today he will publish "One Life to Live", thoughts on career management.  His blog, "Gingrich, Grizzard and Marriage" hit many reader's laugh button. 

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A former politically savvy county judge in Fort Worth reportedly once told a group of ambulance providers who were loudly opposing a new regional emergency medical authority designed to enhance service and improve quality:  The train is on the tracks.  You are either on the train, or on the tracks.

I have used that story before.  I am dragging it out again because it accurately reflects where we are in healthcare: The Medicare program as we know it today is on a collision course with the U.S. financial crisis.

In healthcare, the train represents said financial crisis and the profound impact that it will have on government spending for healthcare services at a time when there is an avalanche of new beneficiaries entering the program - one every 8 seconds, according to USA Today.  Over the next 18 years, Medicare's ranks -- those who qualify for government healthcare -- will increase by more than 40 million people, even when factoring in deaths, analysts estimate.                                                                                                                    

 Currently, we are borrowing about 30 cents on every dollar paid to physicians, hospitals and other healthcare providers for Medicare services.

Now, add these numbers to the mix:  The current annual deficit is about $1.27 trillion as of midnight last night (02/09/2012).  The national debt is more than $15.3 trillion. 

What is the difference between the deficit and the debt? 

The deficit is the annual shortfall of revenue to spending.  The national debt is the sum of all outstanding debt owed by the Federal Government.  Nearly two-thirds is the public debt, which is owed to the people, businesses and foreign governments who bought Treasury bills, notes, and bonds.  The rest is owed by the government to itself, and is held as Government Account securities. Most of this is owed to Social Security and other trust funds, which were running surpluses. These securities are a promise to repay these funds to Baby Boomers as they retire over the next 20 years. For now, they are unfunded liabilities. These unfunded liabilities represent a  substantial sum that the federal government has NOT included in its debt calculation. Everyone in Washington knows about this, including all the Presidential candidates, and yet no one is talks about it.

In business, corporations are required to count these unfunded liabilities when they are taken on — and report a big loss to shareholders.  Unlike businesses, however, Congress postpones recording spending commitments until it writes a check.  Those are the promises made for future payments in Social Security, veterans’ benefits, government retirement, healthcare for senior citizens, etc. 

If the deficit and debt numbers scare you, then the amount of unfunded liabilities -- the government's "off balance sheet" debt --  will drive you off a cliff.  That number is about $61 trillion, USA Today reported.  These "unfunded obligations amounts to $528,000 per household. That's more than five times what Americans have borrowed for everything else — mortgages, car loans and other debt. It reflects the challenge as the number of retirees soars over the next 20 years and seniors try to collect on those spending promises." 

The deficit, the debt, the unfunded liabilities – those are numbers so big that it is hard to get our arms around the extent of the problem.  So, lets cut it back to a basic number we can deal with.  How much is a $1 trillion?

The most graphic way to understand the size of this number is to use a time analogy.

If you started spending $1 million a day, every day, from 1 AD when Jesus Christ was born, through midnight last night (2/9/2012), you would still have about a quarter of a billion dollars left.

That is how big, how bad the $1 trillion number is. But remember, our national debt is now more than $15.3 trillion.  Now think about  the speed with which the government is incurring new liability -- the Baby Boomers who qualify for Medicare coverage at the rate of one every eight seconds.

Do you see the train? Can you begin to imagine how messy this collision will be?

There are way too many leaders who bristle when you suggest that the healthcare industry that we know today will be substantially different over the next five to 10 years.  It will never happen, they argue, the voters will never allow it.

When I hear that argument, two things come to mind:  the newspaper industry and the Greek government.

These dramatic changes may come incrementally, allowing us some time to adjust.  Or the European debt crisis could ignite a global disruption in the credit markets.  No one can be sure when or how fast this financial catastrophe waiting in the wings will occur.  I do know one thing for sure:  the train is on the tracks.

Today's career management tip: now is the least embarrasing time to learn how to adjust to dramatic change.

Sorry, perhaps I should not joke about something this bad.

© 2011 John Gregory Self

New Way to Look at Healthcare

Hospital Chief Executives and their boards, helped (aided and abetted) by their architects, have constructed some impressive hospitals and support facilities.  From humble community hospitals in small towns across America, to the big box medical centers in the regional centers of commerce, more often than not, the image of the hospital is defined by the quality (size) of the building, the technology inside and its medical staff.

Changes in the way healthcare is delivered, both from the Patient Protection and Affordable Care Act (PPACA) and also some rather draconian deficit reduction measures will most assuredly affect Medicare spending.  This could force us to stop looking at buildings as the center of our healthcare delivery universe and to begin to think about population groups and geographical territories.

Buildings will always be central to healthcare delivery.  But instead of focusing on brick and mortar for how and where we should deliver care, CEOs and their employees should shift their focus to their customers, their markets and geographic territory.  This shift, a nuanced course correction in the eyes of some, will become, over time, a central article of faith in terms of how we design our system and allocate resources.  And over time, this rather radical transformation will play a significant role in reducing healthcare costs.

In the end, however, no one initiative will solve our massive and growing healthcare spending challenge.  There are literally hundreds, if not thousands, of transformative changes and tweaks that will have to occur, from the role of EMS in pre-hospital care, to treatment protocols and locale. 

These will be challenging, but exciting times.  Fortunately, we are an industry that has attracted some of the top graduate school talent over the past 10 years.

I am looking forward to this transformation a great deal.

© 2011 John Gregory Self

Editor's Note: HealthCare Voice, John Self's  healthcare blog, will be moving to JohnGSelf.Com, hopefully later this week.  The blog will run on both sites for a couple of weeks and then the content will be exclusively on WWW.JohnGSelf.Com