Healthcare Change Calls for a New Breed of Leadership

Few industries are currently experiencing the same level of transformational change within healthcare. From regulatory uncertainty, rapid consolidation and technological disruption to the heightened demands for both greater financial transparency and patient data security and privacy, massive change is coming from all directions.

These changing dynamics may be a source of headaches for healthcare companies and those who lead them, but they are seen by private equity (PE) investors as opportunity, as evidenced by a record $63 billion investment made in healthcare in 2018.

Amid growing economic instability and widespread opportunities for continued consolidation, PE investors were particularly attracted to the strong fundamentals within the healthcare sector, according to a recent report by Bain & Company. 

Investment dollars alone will not accelerate growth and herald success in today’s healthcare environment. That will depend on the ability of leadership and management teams to evolve, expand their thinking and engage in a paradigm shift that both meets the demands of growth-hungry PE investors and responds to the uncertain and ever-changing market landscape. Physicians-turned-business leaders running rapidly growing healthcare businesses accustomed to focusing predominantly on patient care must consider multiple stakeholders, while healthcare business leaders need to evolve from their old playbooks for success.

Related: The Future of Healthcare Leadership

With this in mind, these are the leadership attributes that matter more than ever in today’s frenzied healthcare environment:

• Business Acumen and Performance Measurement. Managing healthcare as a business is still a relatively new proposition. With the investment community now firmly in the game, leaders must become adept at quantifying impact and managing against a portfolio of success metrics that meet PE’s growing demands. Mastery of the basics of service delivery will no longer suffice.

• Broadening Perspective by Uncovering and Testing Assumptions. For long-tenured industry leaders, the behaviors and decisions that worked in the past, and for which they were rewarded, may no longer be relevant. Leaders must challenge embedded practices and test preexisting assumptions to determine which ones will and will not work at a significantly larger scale. Those who fail to adapt to new contexts and remain entrenched with their assumptions will limit their ability to lead more strategically ahead of the curve.

• Navigating Interdependencies and Influence. More than most, the healthcare industry moves quickly and is complex. Not one company can “go it alone.” Many physician leaders have grown up leading their own practices and calling all the shots. They must now understand the more broad ecosystem in which they participate and manage new interdependencies that exist. Haven, the Amazon/Berkshire Hathaway/JPMorgan Chase joint venture, is the perfect example of disparate and nontraditional players joining forces to create a new healthcare company. Successful leaders must be able to master these fluid interdependencies and become savvy at managing relationships and aligning with a wider range of stakeholders.

• Managing at scale. Consolidation continues to be a key value driver in healthcare. Successful leaders must recognize and pursue opportunites to rapidly scale their businesses through acquisition and partnerships. When that is done, they must acquire the ability, agility and change management skills to drive efficiencies across the new, much larger, company. And they must do all of this without sacrificing quality.

• Talent spotting. The unpredictable nature of the healthcare industry requires a shift in the way talent throughout the ranks is assessed. Leaders must assess talent not only from the lens of performance execution or whether they can take on bigger roles in five years, but whether they can scale in their existing roles at the hyper-growth trajectory of their companies over the next three years. Successful leaders will set clear goals, provide real-time feedback and champion talent development for the new era of healthcare.

By themselves, each of these attributes is not revolutionary. But together, they represent a more targeted model for leadership in the modern healthcare industry. For the past 20 years, Silicon Valley played a role in driving innovation for leadership and organization effectiveness across the broader technology landscape. The healthcare industry is undergoing a similar evolution. Growth-minded investors and management teams must assess leaders against these key attributes to ensure they have the right people in place to capitalize on the wealth of opportunity. 

Todd Fryling is a Partner at Summit Leadership Partners, a leadership and organization development consulting firm advising boards, investors, CEOs, and senior leaders on delivering peak organization performance.