In case you missed it, Becker’s Hospital Review recently published a story on the “decline” of COO positions. While the data presented was not specific to healthcare, it did cite universal reasons for the position being eliminated by attrition or outright, as with Carolinas HealthCare.
As a company that provides a methodology and tools to drive operational improvements, the elimination of the COO position is attention getting. The Becker’s article discussed three reasons for the dwindling numbers in the ranks, down from 48 percent of Fortune and S&P 500 companies having the role in 2000 to only 36 percent in 2014.
CEOs today have greater management capacity than in the past
Companies are becoming flatter
No more pre-selected successors
At a time when so much attention is being focused on gaining operational efficiencies to counter revenue/reimbursement challenges and cost pressures it seems counter intuitive to eliminate the position that focuses on operations. While it’s true that part of these efficiencies include becoming lean, flatter organizations, the COO still has a vital role to play in an organization’s efforts to become more efficient.
The first reason the article discusses – CEOs’ increased management capacity – is the reality of doing more with less; a rationale that can do as much harm as good. I like to shift that line of thinking to doing better with the resources you already have. CEOs are already stretched thin, as evidenced by the high rate of CEO turnover in healthcare. While that rate decreased from 20 percent to 18 percent in 2014 it is still one of the highest rates recorded in the past 15 years.
Over-burdening the individual tasked with charting and guiding the course is not the solution. While it is true that operational improvements are the responsibility of the entire C-Suite (and every person in the organization), the COO can and should play a critical role in most initiatives.
While the COO might have historically been the pre-selected successor to the CEO role, healthcare has bucked that trend with its increasing focus outside the industry when filling the top role. A CEO, especially one from outside healthcare, needs someone with deep operational experience to help him or her chart the course. The outright elimination of the position might be a step too far in an organization’s drive to become more efficient.
At the end of the day, if operations are given the attention they deserve then I suppose it does not matter what title is attached to the responsibility. However, operational initiatives need champions and individuals with the experience and ability to see the big picture and can sort through the minutia of a thousand moving parts to get resources aligned and get things done. This is typically a COO.
I’m curious to hear what you think. Feel free to share your thoughts with me at jackie.larson@avantas.com.