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Growing CEO’S Departure In Health Care Sector Causes Concern

 March 07, 2012 10:36 AM


At a time when health care sector is witnessing changes, the number of chief executive officers (CEOs) leaving the organization are growing causing concern among the policy makers and experts. The sector took an early lead in the current year after posting highest number of exits in 2011. The trend is likely to continue in the coming months and years due to the size of the sector and the aging.

The health care sector normally does not witness firing as in other sectors. Most of the departures normally happen either due to retirements or resignations. Therefore, the question of ousting any CEO was a rare event. Health care is the second largest sector  employing close to 17 million employees.

The total departures of CEOs in February increased 13 percent to 104 from 92 in the year-ago month, a data from Challenger, Gray & Christmas, indicates. On a month-to-month basis, CEOs exit witnessed 15 percent downside from 123 recorded in January.

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For the year-to-date, the departure of CEOs increased 21.39 percent to 227 from 187 in the previous year two-month period.

Health care sector suffered the major blow. In February, the sector saw the exit of 19 CEOs on top of 22 CEOs in January thus making the total departures to 44. This represents 19.38 percent of the total exits. The health care sector witnessed average age of the retiring CEOs at 63 with an average tenure of 17 years, while those who resigned their position averaged age of 62 with an average tenure of close to 11 years. For other industries, the average tenure was only 8 years.

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Though these statistics indicate that CEOs of the health care sector enjoyed greater stability, no one could deny the fact that it is aging. Challenger views that the combination of aging executives and sector size will likely result in continuance of high turnover in the coming months and years too.

Resignation is the top most reason for the exit of CEOs with 33 thus bringing the total number to 72 cumulatively. Retirement followed it by claiming 52 departures year-to-date that includes 20 in February.

After the healthcare sector, it is the turn of the non-profit and government sector that witnessed 16 CEO changes during February taking the year-to-date total 27. The third ranked computer segment saw 11 of their CEOs leaving in February on top of 10 in January.

Significantly, the average age of the CEOs leaving has dropped to 57.9 from 61.7 in the year-ago month and 61.3 in January 2012. However, the average tenure has increased to 9.8 years from 9.6 in the previous year month and from 6.9 years in January current year.

 

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