The Shifting Healthcare Leadership Pipeline CLIENT LOGO GOES HERE CONSULTANT NAME, DATE

TABLE OF CONTENTS Who We Are Diversity Capabilities Our Commitment Healthcare Leadership Today Gender and Healthcare Leadership Implications for Organizations

WHO WE ARE Top ten executive search firm in the U.S. Global presence throughout 30 key economies as exclusive U.S. partner of Alto Partners Nearly 40 years of successful service to our clients and candidates GSA and Women’s Business Enterprise National Council (WBENC) certified Over 5,000 searches since founding, with 200-225 searches on average per year

DIVERSITY CAPABILITIES Diversified has been committed to diversity since its inception. The firm was formed, in part, to promote gender diversity by providing professional women with entry into the executive marketplace. Our firm is a nationally recognized leader in gender and cultural diversity recruiting. We have established a comprehensive network of senior diversity leaders across industry sectors. Our goal is to present a balanced panel of candidates on every search assignment. We believe we have the best record of retention in the industry. Since 2002, we have monitored our progress on a quarterly basis in the area of diversity of candidate pool and placement. Diversified is certified by the Women’s Business Enterprise National Council (WBENC) and are honored to be in the company of some of the finest organizations in the nation. 4

DIVERSIFIED COMMITMENT We uncover high-potential, standout leaders in every search because the opportunity for greatness is often found in unexpected places. Standout Candidates GENERATIONAL gender industry culture FUNCTION ethnicity

Healthcare Leadership Today CEOs ranked top issues facing hospitals: Financial challenges Healthcare reform implementation Governmental mandates Patient safety and quality Care for the uninsured Patient satisfaction Physician-hospital relations Population health management Technology Personnel shortages Creating an accountable care organization CEOs surveyed by ACHE in 2013 listed their concerns in order of importance. Succession planning and leadership were not at the top of their list. Take Away: The list reflects leaders’ pre-occupation with the daily pressures of operating an organization. As a result, healthcare organizations too often aren’t focusing sufficiently on building “bench strength”. Source: Top Issues Confronting CEOs: 2013. American College of Healthcare Executives. Retrieved February 2014. www.ache.org/pus/research/ceoissues.cfm

Healthcare Leadership Today The turnover rate of hospital CEOs over the last three decades has averaged 15%. www.ache.org/pubs/research/ceoturnover.cfm Research indicates: Only about 20% of that annual turnover is attributed to termination. Point of reference: Fortune 500 companies average a CEO turnover rate of about 13%. http://www.healthleadersmedia.com/page-1/HR-277606/High-CEO-Turnover-No-Succession-Planning-Plague-Hospitals## Healthcare led all industries in CEO turnover in 2013 with 265, 70 of which occurred in the last quarter of the year. http://www.challengergray.com/press/press-releases/year-end-ceo-report-1246-ceo-changes-2013-more-women-top-spot#sthash.I3NdO7Xd.dpuf Take Aways: Industry dynamics do not suggest any significant decrease in the leadership turnover rate any time soon. “As the retirement of baby boomers continues, the CEO turnover rate—which is already too high—may continue to increase,” says Thomas C. Dolan, PhD, FACHE, CAE, former president and CEO of ACHE. Source: Hospital CEO Turnover 1981-2012. American College of Healthcare Executives. Retrieved February 2014, http://www.ache.org/pubs/research/ceoturnover.cfm.

Healthcare Leadership Today Hospital leadership is aging. The average age in 2001 was 51. In 2011 it was 56 with 66% of hospital leaders over the age of 56. Source: http://www.yaffeco.com/site/wp-content/uploads/2011/12/Navigating-Succession-Planning-Leadership-Dev-and-CEO-Transition_OHA-Trustee-2011.pdf Tenure: 58% of CEOs have been in the position less than 5 years. Source: http://www.healthleadersmedia.com/page-1/HR-277606/High-CEO-Turnover-No-Succession-Planning-Plague-Hospitals## Take Away: These data reflect what many see in their own organizations: an aging leadership with high turnover rates. As an industry, we are not addressing the issues of leadership development or succession planning—which go hand-in-hand—in a comprehensive, consistent way. Source: Navigating Succession Planning, Leadership Development & CEO Transition. Yaffe & Co. Survey: Executive Compensation, 2011.

Healthcare Leadership Today Succession management not embedded in most healthcare organizations. 70% of hospital CEOs say there’s no routine succession planning within their facilities 51% of system CEOs report succession planning is not routinely conducted on a system level at their organization National Center for Healthcare Leadership research confirms succession planning is one of the least frequently practiced leadership development strategies, particularly at hospitals. Succession planning is not an embedded feature of many organizations despite how critical it is to have leadership continuity: 70% of hospital CEOs say there’s no routine succession planning within their facilities 51% of system CEOs report that succession planning is not routinely conducted on a system level at their organization. Source: “Succession Planning Practices & Outcomes in U.S. Hospital Systems: Final Report.” American College of Healthcare Executives, August 2007. Take Away: The challenge we face is renovating and expanding the talent pipeline at multiple levels of the organization. We need to identify and cultivate talent. Sources: Best Practices in Health Leadership Talent Management and Succession Planning. National Center for Healthcare Leadership. 2010. “Succession Planning Practices & Outcomes in U.S. Hospital Systems: Final Report.” American College of Healthcare Executives, August 2007.

Healthcare Leadership Today Women continue to be under-represented at top levels of leadership. Perhaps the largest talent pool we are not fully leveraging: women. 74% of healthcare workforce (Bureau of Labor Statistics, 2012) Source: http://www.bls.gov/cps/wlf-databook-2012.pdf 71% of mid-level officer and management positions (EEOC Employer Information Report for Hospitals, 2011) 54% of executive and senior officer positions (EEOC Employer Information Report for Hospitals, 2011) 24% of senior executives (AHA, 2010) 18% of hospital CEOs (ACHE) Collective Source: Changing Healthcare by Design: Critical Career Inflection Points for Women Healthcare Executives. ACHE 2013 Congress on Healthcare Leadership. Take Away: Women are not making it to the top. Why? Sources: Bureau of Labor Statistics (2011), EEOC Employer Information Report for Hospitals (2011), American Hospital Association (2010), American College of Healthcare Executives (2013).

Healthcare Leadership Today Fewer women aspire to be CEOs than men. More women aspire to stay within healthcare over the next 15 years than men. In addition, a recent ACHE study found far fewer women aspired to CEO positions (37%) than men (66%). “As was true in previous studies, fewer women than men healthcare executives aspired to CEO positions in the next 15 years (37 percent versus 66 percent). But similar percentages aspire to work in a hospital or system during the 15 year time span (64 percent versus 70 percent).” Source: ACHE Report: A Comparison of the Career Attainments of Men and Women Healthcare Executives. Retrieved February 2014, http://www.ache.org/pubs/research/2012-Gender-Report-FINAL.pdf Take Away: We need to take stock of our industry’s sources of leadership talent and better understand which talent pipelines our organizations are relying on. We need to do a better job of identifying and cultivating potential women leaders. Source: A Comparison of the Career Attainments of Men and Women Healthcare Executives. American College of Healthcare Executives. Retrieved February 2014, http://www.ache.org/pubs/research/2012-Gender-Report-FINAL.pdf

Gender and Healthcare Leadership Diversified Research: Healthcare Leadership and Gender Identify specific factors and trends that differ by gender and impact the process of recruiting, developing, retaining and advancing healthcare talent Study conducted in partnership with the Women’s Leadership Center at Kennesaw State University Coles College of Business 282 quantitative responses to online survey 157 women, 125 men in leadership levels from Director to CEO 58% secular non-profits, 21% religious non-profits, 9% government, 7% for-profits, 5% other 38% > 10,000 employees; 22% between 5,000 and 9,999 employees; 32% between 1,000 and 4,999 employees; 8% fewer than 999 employees 52% urban, 36% suburban, 12% rural The purpose of the research was to examine gender differences in the career experiences of healthcare leaders including Chief Executive Officers and other C-suite positions, Vice Presidents and Director Levels. The survey was conducted jointly by Diversified and the Women’s Leadership Center through the Coles College of Business at Kennesaw State University. Analysis was conducted by the Women’s Leadership Center Research Director Samantha Paustian-Underdahl, PhD. Participants included 157 female leaders and 125 males working for healthcare systems, hospitals, medical centers and other types of facilities in a broad range of sizes throughout the U.S.

Gender and Healthcare Leadership Diversified Research: Healthcare Leadership and Gender What factors explain gender differences in career outcomes of healthcare leaders? How do demographics, education, and functional experience differ by gender? How do career and life interests of healthcare leaders differ for men and women? Do these variables explain gender differences in salary, managerial level and career satisfaction? What do male and female healthcare leaders perceive as either positively or negatively impacting their career success? What factors explain gender differences in career outcomes of healthcare leaders Examples of factors: having a non-employed spouse, spousal support, years in HC field, average number of hours worked per week Examples of career outcomes: salary, managerial level, career satisfaction, family satisfaction, family/work conflict How career and life interests of healthcare leaders differ for men and women and if these career / life interest variables explain gender differences in salary, managerial level and career satisfaction Examples: friendly work environment, purpose of the work, social status, sources of satisfaction What factors do male and female healthcare leaders perceive as either positively or negatively impacting their career success Examples: flexible work practices, support from family, willingness to relocate, sponsors, mentors

Gender and Healthcare Leadership Diversified Research: Healthcare Leadership and Gender Education Background Functional Expertise Career Paths Career Advancement Looking at Diversified’s survey outcomes and other research collectively, we ask, “What does the research tell us about women and healthcare leadership?” Talent pipelines: Where do healthcare leaders come from? Do educational background and functional expertise of healthcare leaders differ by gender? Career Paths: How do career paths of healthcare leaders differ by gender? What factors impact career trajectories of men and women? Career Advancement: What do current healthcare leaders say organizations are doing to support their career? What factors do healthcare leaders identify as challenges to their career advancement?

Education Background ACHE 2014 member profile provides snapshot of members’ educational backgrounds. 62.6% hold one Masters degree 21.9% hold Doctorate or two Masters degrees 15.5% hold Bachelors or less ACHE membership profile gives us a broad view of healthcare leaders. Source: https://www.ache.org/pubs/research/demographics.cfm

Education Background Diversified research revealed education backgrounds of current healthcare leaders in the study differ by gender. Diversified’s survey assessed the type and level of education of healthcare leaders by gender. Our survey found: Both men and women healthcare leaders more frequently held MBAs than MHAs. While women constitute 48% of medical school graduates, they do not move into leadership roles at the same rate as their male counterparts. (9.6% for women vs 35.7% for men). Source of 48% stat: Association of American Medical Colleges https://www.aamc.org/data/facts/enrollmentgraduate/148670/total-grads-by-school-gender.html Women leaders often come from nursing, suggesting a clinical background benefits women wanting to move into higher leadership roles. Note for graphic: “Other” category includes MSW, MA, MS, Mdiv, MMM, MPH, PharmD.

Education Background Healthcare leaders with MDs are more likely to be men than women; however, demographics of the physician world are changing. One under-tapped talent pool is women physicians. Though two-thirds of actively licensed physicians were male in 2012, the number of female physicians with an active license increased by 8% compared with only a 2% increase for male physicians. In 2010, females represented 29% of licensed physicians in the United States, and by 2012 they comprised 30% of the population. In 2012, the average age for female physicians was 46 years compared with 52 years for males. Furthermore, 34% of female physicians were 39 years of age or younger, compared to only 18% of male physicians Source: Young, A. et al. A Census of Actively Licensed Physicians in the US, 2012. Journal of Medical Regulation, Vol 99 No. 2 2013. AAMC: Diversity in the Physician Workforce: Facts & Figures 2010 “Women continue to enter the physician workforce in greater numbers; however, men still outnumber women. Among Asian, Hispanic or Latino, American-Indian/Alaska-Native, and White physicians, women represent less than half. A notable exception to this trend is among Black or African-American physicians, where women now comprise more than half of this group.” Source: Young, A. et al. A Census of Actively Licensed Physicians in the US, 2012. Journal of Medical Regulation, Vol 99 No. 2 2013.

Functional Expertise Diversified research shows women and men in leadership positions have different work histories. Functional Background: All Leaders Men Women 35.7% Medicine 43.9% Nursing 16.7% Finance 9.6% Medicine 14.3% Administration 6.4% Finance 8.7% Operations 6.4% Human Resources 7.9% Human Resources 6.4% Administration Our survey revealed women leaders often come from clinical areas, again suggesting a clinical background benefits women wanting to move into higher leadership roles. When looking at the CEOs surveyed, data revealed more than half of female CEOs have nursing backgrounds. Male CEOs were more likely to come from general administration. Take Away: We need to ask ourselves if we are overlooking women without clinical backgrounds. If 50% of MHA graduates are women and women are a growing percentage of MBA graduates, then it stands to reason that there would be more potential women leaders from the non-clinical pipelines of administration, operations, finance, HR. Among CEOs in the survey: 53% of women CEOs have nursing backgrounds. 43% of men CEOs come from general administration.

Career Paths Women tend to stay at an organization longer than their male peers. Years in the workforce, in healthcare and in their current positions were very similar within the survey sample. The difference in data points came when asked about years with their current organization. Women averaged 15.15 years versus men who averaged 11.52 years for an average difference of 3.63 years. This is despite the fact that the data show being willing to relocate is significantly more helpful for women’s career advancement than mens’. This may be because women are more reluctant to make lateral moves or hold out for opportunities that are extremely beneficial. It could also indicate that because fewer women than men relocate, when women do, they are rewarded.

Career Paths Women are more likely to be promoted internally than hired externally. A significantly greater number of women than men in Diversified’s research were promoted from within their organizations than hired externally, Men reported the opposite. Possible Explanations: Survey showed men are more willing to relocate for jobs than women--perhaps because women, if married, are more likely to have spouses with full time jobs; women reluctant to uproot children. Literature consistently suggests subtle bias in hiring process—women judged by performance, work she’s done while men are judged by potential. Take Away: This mentality (a) makes it more likely that a woman will be promoted within her organization where her work is known and (b) suggests it is easier for men to be hired into other organizations.

Career Paths Implications of the internal versus external dynamic: Cost of hiring external candidate higher than hiring internal candidate Diversified study shows internal hires’ compensation 93% of external hires’ compensation Cost of recruitment ranges from $50,000 to more than $1.5million for CEO Research indicates performance differs by internal versus external hires Senior leaders hired externally have less tenure in their roles Senior leaders hired externally perform lower when compared to internal promotions In one study, 35 percent of the externally hired CEOs fired versus 19 percent who were promoted from within This internal versus external dynamic has implications for individuals and the organization. External hires cost significantly more and are paid significantly more. In Diversified research, internal hires reported earning on average 93% of what external hires earn. This gap becomes exacerbated over the course of a career as future salaries are derived from current salaries. The average cost of replacing one leader with an external candidate, at minimum, is approximately $50,000 — a cost that could reach as high as $1.5 million for a CEO. Source: Hospitals & Health Networks magazine, https://www.besmith.com/thought-leadership/white-papers/10-questions-comprehensive-succession-planning Meanwhile, research by Wharton School of Management shows senior leaders hired from the outside have less tenure in their roles and perform lower when compared to internal promotions. Other research by Booz & Co. showed 35 percent of the externally hired CEOs were let go versus 19 percent who were promoted from within. Take Away: External hiring is necessary, but the cost of that route in addition to the potential risk of a mismatch or inadequate onboarding process reinforce the need to do a better job of identifying talent then retaining and developing that talent for upward movement within the organization.

Career Advancement Women cited specific factors as more helpful to their careers than men did, including: Leadership abilities Support from family members Networking within their organizations Having sponsors to endorse them Involvement in professional or community organizations Access to flexible work practices In order to do a better job of tapping into women as potential leaders, we have to better understand factors impacting their success in the workplace. Diversified’s research ask men and women healthcare leaders to indicate factors they believe have either helped or challenged their career advancement. Responses clearly differed by gender. Women in all cohorts surveyed—all healthcare leaders, C-suite executives, and CEOs—rated access to flexible work practices significantly higher than their male peers. In fact, men at all levels of leadership consistently rated access to flexible work practices at the bottom of their list. That said, when asked to report how much family life impacts their work, men reported much higher rates of conflict than women. Perhaps this is due to the fact that women not only value access to flexible work practice but are also more likely to leverage them

Career Advancement Sources of professional advice for women: Spouse Family members Friends Senior executives at other organizations Executive coaches Senior executives at current organization Professional recruiters Business consultants Women access professional advice from many sources (listed above in order of extent to which they used these sources; greatest to least). Points of interest: Women are significantly more likely to get advice from friends and executive coaches than their male peers. Women are significantly less likely to seek advice from senior executives at their current organization than their male peers. Women more often seek professional advice from other women than from men. Take Away: While both men and women in the study reported executive coaches as sources of professional advice, women leaders in the study place much greater value on them. With regard to executive coaching……A 2013 Executive Coaching Survey out of Stanford Unv found: Nearly two-thirds of CEOs across industries do not receive coaching or leadership advice from outside consultants or coaches. Almost half of senior executives are not receiving any either. Nearly 100% of CEOs said they actually enjoy the process of receiving coaching and leadership advice. Of those CEOs using an executive coach, 78% said it was their idea to do so (not the Board’s), primarily for conflict management skills. Boards who recommended use of an executive coach primarily interested in CEO improving talent management skills. Source: 2013 Executive Coaching Survey by the Center for Leadership Development and Research at Stanford Graduate School of Business, Stanford University’s Rock Center for Corporate Governance, and The Miles Group. http://www.gsb.stanford.edu/sites/default/files/2013-ExecutiveCoachingSurvey.pdf  

Career Advancement Women identified challenges to career advancement: Lack of supportive supervisors Exclusion from informal networks Lack of senior role models “like me” Inhospitable culture/biased attitudes Failure of senior leadership to help advance someone “like me” The need to prioritize family over work Men identified different challenges to career advancement: Women rated these 6 factors as more significant obstacles to career advancement than their male counterparts. Men rated only these 3 factors higher than the women did in terms of their impact on career advancement. Diversified research also showed men perceived their willingness to relocate throughout their careers as more beneficial than their female counterparts; yet the same research shows relocation is significantly more helpful for women’s career advancement than men’s . Possible explanations: perhaps women who are willing to relocate get “rewarded” with promotions to a great extent than men because it is less likely to happen; Perhaps it takes a major promotion to entice women to relocate whereas men may be willing to relocate for lateral job opportunities. Take Away: Women identify external challenges to their career advancement, while men identified internal limitations as the most significant challenges to advancement Unwillingness to change organizations / companies Having an ineffective leadership style Lack of significant general or line management experience

Conclusion….. Insert final thoughts, take-aways