By Aaron Sorensen, PhD, Senior Partner – Lotis Blue Consulting, SullivanCotter’s sister organization and John Putnam, Principal – SullivanCotter
Leadership in an era when standing still is not an option
The health system CEO role has changed faster than many of the succession systems built to support it. A decade ago, the job was already complex: health systems were large employers, politically visible institutions, and clinical enterprises operating under margin pressure. However, the role was still largely understood through the logic of institutional stewardship. The CEO was expected to run the health system well, maintain physician alignment, ensure the delivery of quality care under evolving value-based reimbursement, protect the balance sheet, preserve community trust, and manage through an exacting regulatory environment.
That job has not disappeared, but it has been absorbed into something larger. Preparing the next generation of health system CEOs now requires a clearer view of the enterprises they will be asked to lead – ones that are bigger, more diversified and complex, more volatile, more financially constrained, and more dependent on leaders who can connect strategy, operations, culture, and performance.
A Larger, More Complex Enterprise to Lead
Today, many health system CEOs lead enterprises that resemble diversified national companies as much as traditional multi-hospital organizations. Data from Modern Healthcare on net patient revenue reveals that 38 not-for-profit health systems would exceed the revenue threshold for the Fortune 500 if they were publicly traded. The same data shows that the number of systems with more than $10 billion in net revenue has grown from 9 in 2015 to 24 in 2025.
Health care also employs more Americans than any other industry. Systems now operate across acute care, ambulatory care, physician enterprises, post-acute services, academics, broader geographic markets, diversified revenue streams, joint ventures, and, in some cases, for-profit subsidiaries and ventures businesses.
Scale alone would be enough to change the CEO role, but volatility has arrived alongside it. Health systems are facing:
- Financial pressure, including thin or negative operating margins
- Rising labor, supply, equipment, and utility costs
- Shifting payer dynamics and reimbursement uncertainty
- An aging population with higher care needs
- Workforce fatigue, retention pressure, and talent shortages
- AI and technology expectations across access, quality, cost, and experience
- Policy and regulatory pressure across reimbursement, site-neutral payments, 340B payments, Medicaid eligibility, ACA subsidies, and pharmaceutical pricing
At the same time, patient expectations have changed. Consumers increasingly expect health care to behave more like other parts of their lives: digitally accessible, readily available, coordinated, transparent, and easy to navigate. Once only judged by what happens inside the hospital, health systems are now also judged by whether patients, physicians, employees, payers, regulators, and communities experience the enterprise as coherent.
This is the context in which CEO succession is becoming a board-level enterprise risk.
The CEO Pipeline Is Under Pressure
The demographic picture makes the issue more urgent. According to data from SullivanCotter on a sample of 152 health system CEOs, the average age is 62 and the average tenure in role is just over 7 years. Roughly 60% were internally promoted, and roughly 60% previously served as a COO or regional president. Around 39% are physicians, underscoring the continued importance of clinical credibility.
Additionally, more than a quarter of health systems have experienced CEO turnover within the past three years. Hospitals reported 111 CEO exits in 2025, a 7% increase from 2024. The problem is not simply that more CEO transitions are on the horizon. It is that the role being transitioned into is materially different from the role many sitting CEOs inherited. That distinction should change how boards, CEOs, and CHROs think about readiness.
The central question is not, “Who can replace the current CEO?” It is, “What will the next CEO need to do that the current role may not have fully required?” Succession planning that begins with the incumbent’s strengths can easily become backward-looking. It selects for familiarity at the very moment when the environment demands adaptation.
Make Succession an Integrated Discipline
A better approach begins with alignment. The future CEO success profile should be tightly linked to the organization’s mission, values, strategy, operating model, and culture. It should clarify the executive talent strategy, including whether the organization intends to build, buy, or use alternative talent strategies for critical roles. It should also connect to the rewards philosophy, since compensation sends a powerful signal about what the board truly values.
From there, succession should move through four disciplines:
- Align: Define the future role and competencies required.
- Assess: Evaluate performance, potential, and behavioral tendencies.
- Plan: Identify scenarios, succession risks, and talent mobility needs.
- Develop: Build readiness through coaching, mentoring, learning, and growth experiences.
Where Succession Planning Breaks Down
Health systems appear to understand the importance of this work, but they are less confident in their ability to execute it. In SullivanCotter’s 2025 Executive Compensation Pulse Survey of 131 health systems, the largest capability gaps were not in recognizing the need for succession planning, but in the capabilities that make succession planning real: assessing potential and readiness, building talent for future roles, identifying succession risks, and planning for scenarios.
This is evidenced by the limited depth of current succession pipelines. More recently, SullivanCotter’s 2026 Executive Compensation Pulse Survey revealed that only half of the 141 participating organizations reported having pipelines for certain roles, while a comparable proportion indicated pipelines are limited or still developing.
It is not surprising that development was the biggest challenge. Health systems are operating at full capacity, and it is difficult to create protected space for leaders, clinicians, and operators to develop while the daily demands of care delivery continue to intensify. Yet this is precisely why development cannot be treated as a side activity.
In health care, readiness is built through experience. Future CEOs need exposure to clinical, operational, financial, strategic, and board-facing work. They need to lead transformation, manage ambiguity, build physician trust, make resource tradeoffs, and learn how to operate across a complex enterprise and with outside partners. A leadership program or coach may help, but it cannot substitute for the deliberate experiences that stretch a leader beyond what is already comfortable.
This is also why vague labels such as “high potential” are insufficient. Potential for what? A strong operator may not have the strategic range to lead an integrated system through disruption. A gifted physician leader may not yet have the enterprise financial judgment required for the top role. A trusted culture carrier may struggle with decisiveness. A transformational leader may move fast but damage relationships along the way. The 9-box grid is memorable and easy to use, but for CEO succession, the question must become more specific about the potential for this role, in this system, under these future conditions. That was the logic behind SullivanCotter’s Health Care Potential Index, otherwise known as the HCPI.nd stock price performance.
The Four Domains of Future CEO Effectiveness
In research conducted with board members and CHROs from 20 leading health systems, leaders rated 62 competencies from Hogan’s global model based on their relevance to future CEO success. The resulting model focused not on what has historically defined success, but on the behaviors most likely to matter in the next era of health care.
Four domains emerged: strategic mindset, execution engine, cultural leadership, and adaptive capacity.
1. Strategic Mindset
The ability to see around corners and position the system ahead of disruption.
This is practical strategy, not theory. It is the judgment required to read payer, policy, workforce, technology, and market signals early enough to act. It includes sound judgment and decisive action, foresight and strategic navigation, and systems thinking with market insight. The next CEO must understand how clinical realities, assets, capacity, economics, and local market dynamics fit together.
2. Execution Engine
The ability to translate strategy into disciplined, measurable action.
Health care has no shortage of aspirations. The challenge comes in executing them sustainably. Future CEOs must lead change and transformation, drive results in quality, population health, experience, access, and margin, and create enterprise accountability. In a volatile environment, a good strategy executed with discipline is often more valuable than a perfect strategy that stalls.
3. Cultural Leadership
The ability to build trust, alignment, and shared purpose among clinicians, boards, leaders, employees, and communities.
Health systems are often anchor employers and civic institutions, and their legitimacy depends on trust. Future CEOs must mobilize teams with empathy, use integrity as leadership currency, and communicate clearly through complexity. One of the more human implications is also one of the most strategic: leaders must help bring meaning and even joy back into a profession marked by burnout.
4. Adaptive Creativity
The ability to maintain composure, agility, and confidence amid volatility.
Health systems are large moving ships. They do not turn easily, but they cannot afford to stand still. The future CEO must keep the enterprise moving forward while making decisions in ambiguity, shielding teams from noise, and projecting confidence without false certainty.
Taken together, these domains suggest that future CEO effectiveness will be defined less by what leaders know and more by how they think and connect. The best CEOs will balance foresight with judgment, ambition with empathy, speed with integrity, and transformation with continuity. Clinical credibility and operational fluency will matter in many settings, but neither is sufficient on its own. The role increasingly requires leaders who can connect the clinical, financial, operational, cultural, and external realities of the system into a coherent direction.
Assessment and Planning Need More Discipline
Assessment must evolve accordingly. Looking at impact and business results is necessary, but it paints an incomplete picture. Boards must understand both what a leader accomplished and how they achieved those outcomes. Did the leader build trust while delivering results, or leave damage behind? Did performance depend on a narrow operating context, or does it suggest broader enterprise capacity? Reputation and relationships matter because the CEO role is fundamentally relational. Competencies matter because the future role requires specific behaviors. Judgment and critical thinking matter because CEOs increasingly operate without a clear playbook.
The best practice is a multi-method assessment approach grounded in the CEO success profile. Behaviorally oriented interviews with bosses, peers, board members, physicians, and other stakeholders can clarify results, reputation, and leadership patterns. Hogan Assessments and the Health Care Potential Index can help evaluate the likelihood that a leader will demonstrate the competencies required for future CEO success. Cognitive tools such as the Watson-Glaser can provide additional insight into how leaders process complexity and make decisions.
The point is not to reduce succession to a test score. It is to make a high-stakes decision more objective, more role-specific, and less vulnerable to sponsorship, familiarity, or charisma.
The same discipline should apply to planning. Succession plans should account for multiple scenarios:
- Planned CEO transition
- Emergency transition
- Acquisition or integration
- Spin-off or restructuring
- Retirement
- Retention risk
- Downstream effects one or two levels below the CEO
It is common to see the same executive appear on multiple succession slates, or to assume that events will unfold as planned. In reality, health systems need mobility strategies that broaden leaders and reduce enterprise risk. Talent should be moved deliberately to build clinical, operational, financial, and strategic range.
Compensation Should Reinforce the Future CEO Role
Compensation is the final piece of the system, and it should reinforce – not sit apart from – succession, assessment, and development. As the CEO role changes, executive rewards must evolve with it. According to SullivanCotter’s Health Care Management and Executive Compensation Survey, performance-based compensation now accounts for more than half of total direct compensation for CEOs of the largest health systems. That shift is not simply about increasing incentive opportunity, as it reflects a broader governance question: what should boards reward CEOs for accomplishing?
Historically, incentive plans focused on a balance of quality, patient and workforce experience, financial stewardship and other mission related measures. Those measures still matter, but boards are increasingly expanding performance expectations to reflect value creation and long-term sustainability.
Five areas are becoming more prominent:
- Seamless, consumer-centered approach
- Population health
- Digital, technology, and AI-enabled solutions
- Growth and diversification
- Efficiency and affordability
In practical terms, this means there is now more emphasis placed on loyalty, trust, access, retention, health outcomes, reduced friction, improved quality and safety, lower cost variation, and affordability across the care continuum.
Retention plans are also becoming more prevalent, particularly among larger health systems. They are being used to retain sitting CEOs through key milestones such as mergers, integrations, capital projects, and transformation initiatives, as well as align potential successors with the CEO transition timeline. This is another sign that boards increasingly see leadership continuity as an enterprise issue, not solely an HR process.
Bring the Full CEO Readiness System Together
The goal is to create an integrated system in which the leadership profile, assessment and development, performance evaluation, and rewards strategy all reinforce one another. If they do, organizations gain greater continuity, stronger accountability, mitigated risk, and leaders prepared for the system they are being asked to lead. If they do not, the system sends mixed signals: a future-oriented strategy paired with backward-looking leadership criteria, a sophisticated assessment process disconnected from development, and a compensation plan that rewards yesterday’s definition of performance.
For CHROs, the mandate is to make succession a strategic capability. For CEOs, it is to build a bench strong enough to create real options. For boards, it is to insist that readiness be defined, assessed, developed, and rewarded with the same rigor applied to finance, quality, and compliance.
The next era of health care will not be easier. The CEO role will continue to expand as systems become larger, more diversified, more scrutinized, and more essential to the communities they serve. The question is whether succession planning will evolve at the same pace.
Standing still is not an option for health systems. It cannot be an option for CEO succession either.
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