BES Healthcare Leadership Trends for 2025 Whitepaper

Healthcare Leadership Trends for

2025 Must-Know

Leadership Trends Healthcare Decision Makers Can't Ignore

Healthcare Leadership Trends for 2025

Overview B.E. Smith Leadership Solutions, an AMN Healthcare company, is a leading provider of healthcare interim leadership, executive search and academic leadership services. Each year for the past decade, the company has surveyed executives to glean timely insights on pressing issues and influential forces in leadership talent management. Healthcare Leadership Trends for 2025 presents findings on recruitment, retention, engagement, and development along with an opening discussion of the financial and operational context in which the leadership issues play out (Figure 1). Throughout the report, independent data enhances interpretation of the results.

LEADERSHIP DEVELOPMENT

ENGAGEMENT

RETENTION

RECRUITMENT

Figure 1

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Healthcare Leadership Trends for 2025

Survey Methodology The survey was conducted by email to an extensive list of healthcare leaders from manager through C-level. Collected between October 18 and Nov 17, 2024, valid responses were received from 588 executives. Demographic highlights include:

58% female, 42% male.

39% C-suite/Trustee (including 14% CEOs), 11% Sr. VP/VP, 46% Director/Manager. Additional representation from academic leaders and clinic administrators. 73% work in health systems and hospitals, 10% in clinics/group practices, 3% in post-acute facilities, and the remaining 14% in urgent care centers, medical schools, and other care settings. Among the acute care respondents, 38% represent large systems with 500 staffed beds and higher, 33% at medium hospitals between 100 and 500 beds, and 29% in facilities with 100 or fewer beds. 16% of the organizations generated 2023 net patient revenue of over $3 billion, 20% had $1-3 billion, 32% at $100-999 million, and 32% under $100 million. 43% have worked at their organizations for more than 10 years, 18% 6-10 years, and 39% for 5 years or fewer.

77% white, 8% Black, 4% Latin/Hispanic, 4% Asian.

52% Generation X, 34% Baby Boomer, 14% Millennial.

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Healthcare Leadership Trends for 2025

Key Findings Forty-three percent consider their ability to attract quality leadership candidates to be extremely or very challenging, a five-point improvement over last year. Organizational size is a factor: 50% for small, 46% for medium-sized, and 33% for large hospitals. Forty-six percent of leaders intend to leave their organization within twelve months. Almost three-fourths have been approached with a job opportunity in the past six months, and 17% pursued it. Leadership is rated as highly engaged at twice the level of nurses and doctors. This significant leadership- clinician gap has persisted through previous Trends surveys. Technology leadership roles in IT, Cybersecurity, and Artificial Intelligence made strong gains to place second through fourth in the ranking of roles growing most in importance this year. Leaders projected the timeline on which AI would change healthcare managerial work at meaningful scale: 13% this year, 46% in 2-3 years, 27% over 3 years, and 14% no change expected. The percentage of respondents anticipating better organizational health this year than last decreased 19 points to 34%. “No change” doubled to 48%.

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Healthcare Leadership Trends for 2025

Industry Financial and Operational Context

As in recent years, 2025 presents a challenging financial and operational environment in which healthcare leaders must maneuver. Five themes stand out as top-of-mind for leadership.

Financial Improvement but Lingering Stress Points Improved metrics in 2024 further distanced the industry from pandemic-era lows. Net hospital operating revenue through November logged gains of 9% over the prior year and 18% over 2021. 1 Median year-to- date health system/hospital operating margins through November were 1.7% and 4.7%, respectively. 2 Those margins will increase this year, according to 60% of surveyed hospital CFOs. 3 S&P Global predicts a “stable but shaky” scenario for 2025, citing “good revenue and demand for services, easing of certain labor-related and inflationary expenses, and generally sound balance sheets.” 4 Diligent financial management will be essential. High costs for labor, drugs, and supplies will “require management teams to maintain aggressive annual operating initiatives.” 5 Average budgeted total compensation in healthcare services will climb 3.5%. 6 Progress is needed on other measures. Nonprofit hospitals’ median operating cash flow margin was 5.3% in 2023 but 8.5% in 2019. 7 Days cash on hand has plummeted from 260 in 2021 to 211 in 2023. 8

1 Kaufman Hall, National Hospital Flash Report, January 2025. 2 Strata Decision Technology, “Monthly Healthcare Industry Financial Benchmarks,” January 2025. 3 Wells Fargo, “Hospitals — CFO Survey Expects 2H24 Growth Acceleration Ahead, More Normalized Growth in 2025,” October 22, 2024. 4 S&P Global, “U.S. Not-For-Profit Acute Health Care 2025 Outlook: Stable But Shaky For Many Amid Uneven Recovery And Regulatory Challenges,” December 4, 2024. 5 Ibid. 6 Mercer, “Despite Economic Uncertainty, U.S.

Employers Maintain Elevated Compensation Budgets for 2025, According to Mercer,” December 10, 2024. 7 L. Dyrda, “Hospital Operating Margins to Stay Low in 2025: Moody's,” Becker’s Hospital CFO Report, October 16, 2024.

8 A. Condon, “Hospitals’ Credit ‘Trifurcation’ Issue,” Becker’s

Hospital CFO Report, August 16, 2024.

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Healthcare Leadership Trends for 2025

Divergent Experience and Outlook Analysts parsing the numbers have uncovered a substantial divergence in financial health among organizations. From mid-2023 to mid-2024, operating margins ranged from 8% to 32% for hospitals in the 60th to 95th profitability percentile versus 2% to negative 19% for those below the 40th percentile. 1 Rural healthcare continues to be in crisis with 700 hospitals at risk of closure due to finances — over half in immediate danger. 2 Other sectors display similar economic divergences. Over one-third of skilled nursing facilities had a 2023 margin of -4.0% or worse and a nearly equal percentage registered 4% or higher. 3 Many Problems May Be Structural and Take Longer to Solve Leaders worry that critical financial and operational challenges are not transitory. Rather, they appear “baked in” and resistant to near-term improvement. Moody’s believes “the steep rise in healthcare wages over the last three years remains a structural problem and credit risk for the hospital industry.” 4 Advisory Board echoes the term “structural” to characterize labor conditions such as higher workloads and lingering burnout that cause persistent “slower throughput and reduced capacity.” 5 Fitch refers to a ”fundamental disconnect” between revenue and expenses that may be “here for the long term.” 6

1 Advisory Board, “The State of the Industry Heading into 2025,” October 3, 2024. 2 Center for Healthcare Quality & Payment Reform, “Rural Hospitals at Risk of Closing,” July 2024. 3 Clifton Lawson Allen, 39th SNF Cost Comparison and Industry Trends Report, October 10, 2024. 4 L. Dyrda, “Hospital Operating Margins to Stay Low in 2025: Moody's,” Becker’s Hospital CFO Report, October 16, 2024 5 Advisory Board, “The State of the Industry Heading into 2025,” October 3, 2024. 6 A. Condon, “Hospital Margins' 'New Normal',” Becker’s Hospital CFO Report, August 12, 2024.

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Healthcare Leadership Trends for 2025

Insurance Reimbursement Changes Threaten Economics Trends in health insurance could portend volume and margin declines. Four merit highlighting: Shift to lower-margin reimbursement. The aging population will bring the percentage of enrollees in commercial plans to 55% by 2030, down from 59% pre-pandemic. 1 That represents millions of patients generating lower Medicare reimbursement for providers. Affordable Care Act (ACA) marketplace risk. The enhanced premium subsidies program that boosted enrollment substantially in recent years terminates at the close of 2025. Government forecasts see a resulting direct-purchase enrollment decrease of 7.3 million people. 2 Any lost coverage could lead to deferral or avoidance of care. Medicare Advantage (MA) difficulties. Almost 33 million people were enrolled in MA in 2024. Carriers seek improved margins on these policies and could request higher premiums that prompt enrollment decreases. Moreover, MA has been administratively burdensome to providers due to high volume of prior authorizations and denials. A number of health systems have terminated MA agreements. Medicaid enrollment decline. Medicaid enrollment also benefited from the federal continuous enrollment requirement instituted during the COVID crisis. That program has now expired and is projected to reduce participation to 79.4 million people in 2025 from over 90 million in 2023. 3 Many anticipate further reductions. Workforce Management Continues to Demand Attention Healthcare’s workforce disruptions have receded, but significant flash points remain. One study projects a shortfall of 100,000 critical healthcare workers and 73,000 nurse assistants by 2028. 4 Another analysis predicts a gap of about 300,000 registered nurses (RNs) in 2027 and over 200,000 by 2037, assuming that historical labor patterns persist. 5 Turnover permeates the industry. The nursing rate is 18.4% nationally. 6 Medical practices face “rampant turnover,” notes a leading association. 7 Over half of nursing homes annually replace 50% or more of staff. 8 The myriad workforce issues make staffing management paramount. Organizations are using technology to manage their needs and find an optimal blend of permanent and temporary staff.

1 Oliver Wyman, “5 Ways Hospitals Can Cut Costs, Achieve Long-Term Stability,” April 2024. 2 Centers for Medicare and Medicaid Services, “National Health Expenditure Projections 2023-2032 Forecast Summary,” June 2024. 3 Ibid. 4 American Hospital Association, “5 Health Care Workforce Shortage Takeaways for 2028,” September 10, 2024. 5 National Center for Health Workforce Analysis, “Nurse Workforce Projections, 2022-2037,” November 2024. 6 Nursing Solutions, Inc., 2024 NSI National Health Care Retention & RN Staffing Report, March 2024. 7 R. Payerchin, “MGMA Analyzes Pay for Administrative, Nursing Staff,” Medical Economics, June 26, 2024. 8 The National Consumer Voice for Quality Long-Term Care, “High Staff Turnover: A Job Quality Crisis in Nursing Homes,” September 8, 2022.

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Healthcare Leadership Trends for 2025

Trends & Observations

With the preceding environmental scan as backdrop, Healthcare Leadership Trends for 2025 turns to the survey data for insights on key dimensions of leadership. Six trends are explored.

1. Mixed Outlook With Many Disruptive Forces on the Horizon The survey annually takes the pulse of leaders on their outlook for the period ahead. First, they were queried on their own organization’s health over the next 12-18 months, considering financial prospects, workforce, reimbursement levels and other top-level factors. Results suggest some bullishness but a mainly cautious “holding pattern” (Figure 2). The percentage of respondents expecting “better” status than last year decreased 19 points to 34%, relinquishing an equal positive climb in 2024. “No change” doubled to 48%. At 18%, the “worse” scenario was better than last year. That direction is encouraging yet still finds pessimism among one in five organizations.

OVERALL ORGANIZATIONAL HEALTH IN NEXT 12-18 MONTHS

34% BETTER

48% NO CHANGE

18% WORSE

Figure 2

A second question elicited the outlook for the overall healthcare industry. A balanced distribution emerged. Most expect 2025 to be similar to 2024

(39%), and there were nearly equal results for a better (30%) and a worse (31%) year. These data points reinforce the markedly divergent organizational landscape.

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Healthcare Leadership Trends for 2025

Respondents also specified healthcare’s dominant disruptive forces in the coming 12-24 months:

57%

50%

34%

21%

15%

13%

FINANCIAL PRESSURES AND CONSTRAINTS

WORKFORCE ISSUES

GOVERNMENT REGULATIONS

ADVANCED TECHNOLOGY

CHANGING LEADERSHIP REQUIREMENTS

NON- TRADITIONAL COMPETITION

All of these forces are up noticeably from last year, suggesting greater risk intensity and volatility. One advanced technology disruptor that has garnered heavy interest and investment is artificial intelligence (AI). This emerging technology has many potential high-impact clinical and administrative uses. A new survey question inquired about AI’s disruption on leadership itself. Respondents were asked to project a timeline in which generative and other forms of AI would change managerial work at meaningful scale (e.g., augmenting decision-making, automating/eliminating significant work activities, generating major new analytic insights). The leading estimate was 2-3 years (Figure 3). Skepticism certainly prevails with 41% choosing over 3 years or no change at meaningful scale.

TIMELINE OF AI IMPACT ON HEALTHCARE LEADERSHIP

13% 2025

14% NO CHANGE IN SCALE

27% OVER 3 YEARS

46% 2-3 YEARS

Figure 3

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Healthcare Leadership Trends for 2025

2. Multiple Growth Paths Led by Service Line Expansion Healthcare is balancing financial restraint and the need to invest for sustainable long-term growth. Trends probed each respondent’s top three strategic growth paths in 2025. Those attaining counts over 20% were:

49%

41%

35%

31%

VALUE-BASED REIMBURSEMENT GROWTH

SIGNIFICANT COST REDUCTION

NEW SERVICE LINES

EXISTING SERVICE LINE EXPANSION

31%

25%

22%

TELEHEALTH

EXPANDED CONSUMER MARKETING

SIGNIFICANT PARTNERSHIPS WITH PAYERS OR OTHER HEALTH SYSTEMS

This varied agenda incurred some movement from last year. A tried-and-true strategy, existing service line expansion declined to 49% from 56% in 2023 and 64% in 2022. This expansion may be reaching some limits after years of investment. Shift of care site is a dominant motif for new service lines. The transition of procedures from inpatient to outpatient proceeds apace. Over the next decade, ambulatory volume will grow 17% compared to just 3% for inpatient discharges. 1 Hospitals are also opening urgent care centers which are said to produce an average of $450,000 greater referral revenue than from other primary sources. 2

Growth partnerships dipped slightly from last year’s results, but they remain an essential avenue to success for many. A study found that almost 4 in 10 leaders regard strategic partnerships as their top initiative to redefine their business portfolios. 3

1 Sg2, “2024 Impact of Change Forecast Highlights,” June 2024. 2 Advisory Board, “By The Numbers: Urgent Care is a Referrals Winner for Health Systems,” April 2024. 3 Huron Consulting Group, “Leaders Innovate to Tackle Top Challenges,” 2024.

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Healthcare Leadership Trends for 2025

The industry generally views value-based care (VBC) favorably as a growth strategy that aligns with emerging healthcare economics. Yet uptake has been slow. While nearly all hospitals have at least one VBC program in place that covers 49% of their patient populations, only 17% generate over 20% of net patient revenue from the various VBC payment modes. 1 Under 30% of leaders believe their current organizational capabilities are sufficient for VBC. 2 AI is seen as a major enabler of all of the growth initiatives. The Trends survey had leaders weigh in on the leading barriers to effective deployment over the next 12-18 months:

54%

43%

37%

34%

30%

LACK OF APPROPRIATE TALENT

CULTURAL BARRIERS

HAVE NOT IDENTIFIED STRONG USE CASES

DATA QUALITY PROBLEMS

ABILITY TO INVEST FINANCIALLY

3. Leadership Job Intention and Opportunities Heighten Retention Risks

A stable, productive workforce can be a major strategic asset. The same holds for leadership, making retention a vital priority. As a benchmark, the turnover rate across industries is 5.4% for top executives and 7.6% for management. 3 Trends explored multiple facets of the retention issue. Career satisfaction A helpful starting point in turnover risk assessment is leadership satisfaction. This year’s Trends results confirmed an ongoing slow erosion in satisfaction, though levels remain reasonably strong. Overall, 79% are extremely or somewhat satisfied with their job, down from 82% the prior year. Those categorizing themselves as extremely satisfied fell from 38% to 32%. The somewhat satisfied group, a designation implying some risk, ticked up two points. Tenure matters. The survey saw 74% satisfaction from leaders who have been at their current job between 1 and 5 years, compared to 82% for those with more than 5 years. Monitoring leaders earlier in their tenure can pay retention dividends.

1 VMG Health, Health System Leader Expectations for 2024, January 2024. 2 Forvis Mazars, Mindsets: Executive Leadership Report, June 2024. 3 Mercer, “Results of the 2024 US and Canada Turnover Surveys,” September 5, 2024.

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Healthcare Leadership Trends for 2025

Satisfaction with the respondent’s organization showed a similar pattern to job satisfaction. Extremely satisfied came in at 27% versus 30% previously, and somewhat satisfied was about level with last year at 45%. The dissatisfied cohort was 18%, a limited but meaningful concern. Intention to Leave Position The survey also seeks to uncover vulnerability to leadership exits by polling leaders on intent and potential timelines. Equivalent to last year, 34% said they have no intention of leaving their organizations. Tenure is again a factor. Those least likely to contemplate a change have been with their current organization for more than 10 years, while the most likely to consider leaving have a one to five year tenure range.

The desired timing of departure among the leaders considering a change:

20%

19%

11%

15%

WITHIN 3-5 YEARS

WITHIN 6 MONTHS

WITHIN 1 YEAR

IMMEDIATE

The response suggests a restive population with just under half of leaders signaling potential to leave within one year. Of course, many will not execute the timeline, but the findings are a warning. Among leaders satisfied with their organization, 41% are not considering a move, whereas 80% of those dissatisfied express desire to leave within a year.

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Healthcare Leadership Trends for 2025

Opportunity to move An indication that the executive talent market remains healthy and conducive to job change can be seen in the survey question on mobility. Asked if the respondent received a recent credible approach about a new job, 74% said yes (Figure 4). That is down from 79% last year but remains a high exposure. Fifty-seven percent did not pursue the approach. Consistent with previous Trends surveys, 17% did pursue. This level is a concern. There were no significant differences in responses by leadership level. Those dissatisfied with their job pursued the opportunity at a 10% higher rate than total respondent pool.

APPROACHED WITH CREDIBLE JOB OPPORTUNITY IN LAST SIX MONTHS

25% NO

58% YES, DID NOT PURSUE

17% YES, PURSUED OPPORTUNITY

Figure 4

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Healthcare Leadership Trends for 2025

Factors fostering retention A cornerstone of retention management is understanding what most motivates leaders to stay. B.E. Smith experience shows that this issue is multifactorial. Consequently, the survey presented respondents with a menu from which to select the two factors most influential to their remaining at their organization. Figure 5 presents the ranking.

FACTORS THAT MOST INFLUENCE INTENT TO REMAIN AT CURRENT ORGANIZATION

ORGANIZATIONAL CULTURE

44%

COLLEAGUES

39%

38%

COMPENSATION PACKAGE FLEXIBLE SCHEDULING

20%

CAREER POTENTIAL MANAGEMENT

18%

17%

12%

REMOTE WORK OPTION

OTHER

12%

10%

20%

30%

40%

Figure 5

Except for 2022, Organizational Culture has been a perennial leader of this list. Colleagues and Compensation have been equally consistent performers. Culture was the top factor for 52% of C-level respondents, while 41% of director-level leaders named compensation as the leading motivator. Among the other responses, flexible schedule experienced a four-point uptick, suggesting the ongoing resonance of greater schedule control for leaders today. In fact, combining the response with the 12% for Remote Work Option produces a solid endorsement for workplace flexibility. A few independent observations help illuminate the top motivators. Culture and colleague relationships are clearly intertwined. Culture building should include on-the-ground encouragement of colleagueship as part of a broader emphasis on fostering “strong relationships among leaders, vendors, payers, and the entire organization,” a network that is “essential for achieving successful outcomes.” 1

1 M. DeFreitas, “How CFOs Are Taking Charge of Financial Accountability and Care Strategy,” HealthLeaders, August 27, 2024.

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Healthcare Leadership Trends for 2025

Compensation is always an essential ingredient for leadership. It can be difficult to determine the right levels, but there are some helpful benchmarks. Median annual increases in 2024 were 5.2% for base salary of health system executives and 8.3% for total cash compensation. 1 The same categories for subsidiary hospital executives were 3.5% and 7.4%, respectively. Incentive compensation is also critical throughout the leadership ranks. The popularity of various bonus measures and their weighting can be gleaned from ( Figure 6) . 2

2024

Overall Measure Categories Utilized at the System-Level

Prevalence

Weight

Financial

93%

32%

Quality

85%

22%

Patient Experience and Access

75%

20%

People

73%

18%

Patient Safety

61%

17%

Growth

41%

19%

Figure 6, Source: Sullivan Cotter

Advancement potential An important component in the leadership retention matrix is perception of advancement potential. Given the significant survey participation by senior executives, it is not surprising that 34% of respondents pointed to being at the top of their career ladder where they work. Just 22% said they are currently on an advancement track, a decrease from 25% last year. This figure has never exceeded about one-quarter of the respondent base in recent years. More promising is the 43% of Millennial respondents indicating their organizations have them on course for advancement. Twenty percent are not seeking advancement. An equal percentage believe they must actually leave their employer to move ahead, in line with the prior year. This group no doubt includes many strong performers who do not perceive a forward path where they are. Mid-term and younger respondents noticeably sounded the alarm on needing to leave: 27% of those with tenure between 6 and 10 years and 27% of Gen X leaders.

1 Sullivan Cotter, “Health Care Executive Compensation Insights,” 2024. 2 Ibid.

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Healthcare Leadership Trends for 2025

Various organizational barriers were cited. Representative comments are shown in ( Figure 7).

" "

Lack of Change My Leader is not willing to restructure in a manner that aligns with industry standards. System reluctant to change. Executive leadership team ... very set in their ways.

Size Constraints The only way up would be to go to a bigger hospital or system.

Lack of Leadership Development There are no defined development pathways or opportunities. No succession planning to grow leaders.

Cultural Barriers Culture here doesn't support someone with specific experience of transitioning to a new role even if they are willing to gain needed skills. Culture of leadership does not support growth, especially for Directors. Leadership plays favorites.

Preference for External Candidates All new C-suite leaders looking to bring in own team. New leadership has been brought in from external entities at all levels above me.

Figure 7

One strategy to open new pathways is to encourage “sideways” executive moves. Some have called this approach a career “lattice” or “jungle gym” rather than a ladder. One recent analysis noted that many organizations would need to create an appropriate support system, develop compensation policies, and overcome managerial resistance to implement lateral steps. 1

1 B. Elliott, “When Moving Sideways Makes Sense,” MIT Sloan Management Review, September 23, 2024.

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Healthcare Leadership Trends for 2025

4. Leadership - Clinician Engagement Gap Proving Difficult to Narrow

Engagement is a key yardstick of leadership strength and cultural health. Each Trends survey examines how leaders evaluate the current state of engagement of three of their critical groups: physicians, nurses, and the leadership team itself. Results were generally flat from last year and demarcate the persistent engagement gap between the administrators and clinicians (Figure 8) .

PERCEIVED LEVEL OF ENGAGEMENT

63%

30%

53%

33%

29%

55%

12%

17%

LEADERSHIP

PHYSICIANS

NURSING STAFF

High

Medium

Low

Figure 8

Leadership was rated as highly engaged at twice the level of nurses and doctors, with the latter having declined three points from last year. The clinicians fall squarely in the medium category, suggesting ambivalences that need to be overcome. The 17% low engagement for physicians is a concern, as is the 12% of nurses in that category.

Healthcare Leadership Trends for 2025

Additional notes on engagement Recent independent studies confirm survey findings and add further context across the workforce spectrum: Overall. Engagement is a general healthcare struggle with one-third of health care workers registering low engagement levels. 1 Nursing. AMN Healthcare’s recently conducted nursing pulse survey found “prevalent” job dissatisfaction. Buttressing the claim was the 55% of respondents saying they were very or somewhat likely to change jobs in the near term. 2 Physicians. Culture plays a central role in engaging doctors and enlisting them as partners for change. One physician survey identified four leading steps to improve their employer’s cultural health 3 :

42%

32%

38%

37%

Maintaining a positive atmosphere

Committing to work-life balance for physicians and staff

Attending to how management treats staff

Consulting physicians on organizational and policy decisions

Leadership. Leadership must examine its own engagement. One cross-industry study revealed that employees regard only 59% of leaders as actively engaged, and over half are likely to leave if their leadership exhibits consistent disengagement (Figure 9) . 4

55% OF EMPLOYEES ARE LIKELY TO LEAVE IF LEADERS APPEAR CONSISTENTLY DISENGAGED

22%: Very Likely

22%

32%: Neither Likely Nor Unlikely 33%: Likely 8%: Unlikely 5%: Very Unlikely

32%

33%

Figure 9

1 Press Ganey, “Employee Experience in Healthcare 2024,” July 2024. 2 AMN Healthcare, “Nurses in 2024: A Brief Check-In,” May 2024.

3 Medscape, “Seeking an Energizing Environment: Medscape Physician Workplace Culture Report 2024," August 2024. 4 Nectar, ““Employees Say Only 59% of Leaders are Actively Engaged. Could This be Undermining Your Company’s Success?” November 6, 2024.

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Healthcare Leadership Trends for 2025

Healthcare’s complex processes and systems often breed disengagement. “There is no greater generator of dissatisfaction,” notes a study, “than working in a system not intentionally and carefully designed for success.” 1

5. Recruitment Landscape Improves But Still Barriers to Finding Quality Leaders

Though 2024 witnessed some hiring slowdowns, the new year is expected to place a premium on recruiting leadership talent. The need for rapid results on many change initiatives makes having the right leadership in place imperative. Noting that health systems “do not have 10 to 12 years” to deal with major risks and pressures, a study concludes that organizations need leaders who can “radically rethink operations to succeed.” 2 The Trends survey revealed some affirmative recruiting developments along with a number of significant challenges – especially for smaller hospitals. Results also suggest that recruiters are exercising multiple levers to foster success. Recruiting driver: Leadership shortages For several years, talent shortages have been a problem. The 2025 expectation for shortages in the senior to mid-level management ranks is relatively benign. Reflecting an increase over last year, 62% of respondents anticipate few if any shortages. Moderate levels are expected by 29%, and just 9% characterized their shortages as high. These latter levels still represent hundreds of hospitals.

1 K. Mate, J. Clark, and J. Salvon-Harman, “To Improve on Health Care, Focus on Fixing Systems, Not People,” Harvard Business Review, July 12, 2024. 2 Oliver Wyman, “Healthcare Players Face Big Decisions Over the Next Decade,” 2024.

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Healthcare Leadership Trends for 2025

Finding quality candidates and overall recruiting difficulties In the strenuous hunt for leadership talent, 43% of Trends respondents consider their ability to attract quality candidates for executive vacancies to be extremely or very challenging (Figure 10) . That figure is a slightly encouraging drop from 48% last year. But it is still elevated and joins the 37% registering moderate challenge to depict recruiting difficulty. Only 20% indicated minimal challenges. Again, a divergence materialized based on organizational size. Half of small and 46% of medium-sized hospitals labeled attracting quality an extremely or very challenging task versus 33% for large institutions. Smaller organizations frequently account for this differential by citing executive candidate perceptions of geographic, size, and other disadvantages relative to larger employers. Overcoming these barriers requires optimizing recruiting efforts and building a strong employee value proposition.

DIFFICULTY FINDING QUALITY CANDIDATES

13%

EXTREMELY CHALLENGING VERY CHALLENGING MODERATELY CHALLENGING SLIGHTLY CHALLENGING NOT CHALLENGING AT ALL

30%

37%

13%

10%

20%

30%

40%

SOURCE OF GREATEST RECRUITMENT DIFFICULTIES

36%: Both 30%: Middle Management 11%: Senior Management 23%: Not Experiencing Difficulties at This Level

30%

23%

11%

36%

Figure 10

Figure 10 displays an allied chart showing that 77% of respondents have difficulty filling positions. Thirty-six percent are challenged with both senior and mid-level leadership. Another 30% face the greatest hurdles in the middle executive tiers. The results were consistent across small, medium and large institutions.

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Healthcare Leadership Trends for 2025

Time to fill A widely followed marker of recruiting challenges is the time it takes to fill vacancies. Figure 11 shows how organizations are faring relative to previous periods. Those experiencing fill times that are somewhat or much longer fell to 43% from 49% last year. That is still a substantial bloc of providers incurring the cost and time penalties that can accrue from lengthier recruiting. The “about the same” response dominated at 45%.

LENGTH OF TIME TO FILL EXECUTIVE VACANCIES COMPARED TO RECENT YEARS

8% 45% 36% 7%

MUCH SHORTER

SOMEWHAT SHORTER

ABOUT THE SAME

SOMEWHAT LONGER

MUCH LONGER

Figure 11

Improving recruiting What are the primary tactics to address the leadership recruiting difficulties? With multiple responses allowed, survey respondents described strong movement on several fronts:

40%

EXPANDED RECRUITING SCOPE

39%

GREATER RELIANCE ON OUTSIDE EXECUTIVE SEARCH FIRMS

INCREASED COMPENSATION PACKAGES

37%

36%

INCREASED INTERNAL HR RESOURCES ENHANCED RECRUITING PROCESS

28%

SIGNIFICANTLY GREATER USE OF TECHN OLOGY

10%

20%

30%

40%

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Healthcare Leadership Trends for 2025

The numbers showed some interesting year over year movement. Expanding recruiting scope, which has historically involved casting a wider geographic net, entertaining candidates with non-traditional healthcare backgrounds and other tactics, saw a nine point decline. Potential explanations include budget constraints and the desire to restrain fill times. Financial limitations are also a likely contributor to decreases in the response rate for HR staff additions, process enhancements, and use of technology. In some cases, departments other than HR are taking the lead on executive recruiting, while technology use may have reached a steady state after notable expansion in recent years. Investment will no doubt increase as AI sees growing use in talent acquisition. Reliance on external search assistance jumped six points from last year. Organizations need maximum leverage in a talent market that remains tight. They seek help gaining access to a broad pool, including passive candidates who are not actively job-seeking. 6. Leadership Development to Prioritize Strategic Attributes and Clinical and Technology Roles Leadership roles and requirements must evolve in tandem with healthcare’s changing directions. Two baseline aspects of this evolution are today’s preferred traits and competencies and the roles that are growing in importance.

Leadership attributes This year’s top four required leadership qualities were:

23%

12%

28%

13%

COMMUNICATIONS

INTEGRITY AND TRUST BUILDING

VISION / STRATEGY

ABILITY TO BUILD POSITIVE CULTURES

This lineup mirrors 2023 findings. Vision/Strategy has been a perennial leader, and its ongoing prominence shows how critical it is for organizations to chart the right course amidst great change, uncertainty, and, for some, existential financial threats. Trust building and integrity rose from 19% last year to place firmly in second place. Trust is essential to change management and to establishing credibility with all stakeholders. An extensive independent healthcare survey underscored the workforce implications with the finding that “employee perceptions of organizational support and whether they had trust and confidence in senior leadership were among the top three contributors” to turnover intention and satisfaction scores. 1

1 K. Meese, L. Boitet, K. Sweeney, et. al., “Don’t Go: Examining the Relationships Between Meaning, Work Environment and Turnover Intention Across the Entire Healthcare Team,” Journal of Multidisciplinary Healthcare, January 23, 2024.

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Healthcare Leadership Trends for 2025

Roles growing in importance Figure 12 captures the leadership roles respondents identified as growing most in importance during the coming year. Several important takeaways are worth noting.

ROLES CURRENTLY GROWING IN IMPORTANCE

CLINICAL LEADERSHIP

INFORMATION TECHNOLOGY

CYBERSECURITY

ARTIFICIAL INTELLIGENCE

PATIENT EXPERIENCE

OPERATIONS

QUALITY / SAFETY

POPULATION HEALTH MANAGEMENT VALUE - BASED CARE

BEHAVIORAL HEALTH

INNOVATION

FINANCE

TELEHEALTH

PATIENT ACCESS

WELLNESS

0% 5%

10% 15% 20% 25% 30% 35% 40%

Figure 12

Clinical Leadership topped the charts for the third straight year. This category peaked at 62% in 2022 as pandemic management remained a major need. Today’s clinical leaders are central to everything from technology adoption to financial health to safety, and they need increasingly broad skill sets. The second through fourth roles on the list were occupied last year by Patient Experience, Value Based Care, and Population Health. Each of these fell five percentage points in 2024 to finish further down the list, though still attracting a solid 27-30% response.

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Healthcare Leadership Trends for 2025

They were supplanted by a distinct technology focus in the form of IT positions (33%), Cybersecurity (32%), and Artificial Intelligence (32%). Notably, the latter two categories rose 17 and 10 points respectively, while IT made a strong survey debut. This dominance shows the urgency to advance digital infrastructure, protect organizations from debilitating cyber-attacks, and harness the major opportunities offered by AI. Many existing roles are also undergoing change. One prominent example is the CFO. Rapidly expanding responsibilities are creating an “exponential CFO” driving value creation, operational excellence, and culture shaping. 1 Role of interim leadership Figure 12 captures the leadership roles respondents identified as growing most in importance during the coming year. Several important takeaways are worth noting. A versatile strategy in leadership development that should not be overlooked is external interim leadership (IL). Outside interim executives were engaged by 28% of respondents over the past twelve months. Only 18% of smaller hospitals cited recent usage. More organizations appear ready to tap IL’s benefits: 40% expressed definite or possible use in 2025. Over 8 in 10 deployed interims for their traditional and valuable role buttressing the recruiting effort by filling a temporary executive vacancy (Figure 13) . But 20% — double the prior year — enlisted IL to fulfill a specific project independent of an executive vacancy. B.E. Smith terms this option adaptive leadership. It provides cost-effective leadership augmentation, enabling internal executives to focus on strategic priorities and devote time to professional development.

REASONS FOR USING INTERIM LEADERSHIP

83%

15%

20%

OTHER

TACKLE AN INDEPENDENT PROJECT OUTSIDE OF AN EXECUTIVE VACANCY

FILL A TEMPORARY EXECUTIVE VACANCY

MENTOR AN EXECUTIVE FOR PROMOTION

Figure 13

Figure 13 highlights another important use of IL in development. Fifteen percent of the respondents relied on an external interim to mentor an inside executive in anticipation of a promotion. Interims bring extensive experience that adds value to the mentoring effort.

1 Deloitte, The Exponential CFO, June 2024.

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Healthcare Leadership Trends for 2025

Conclusion Leaders bring a largely positive outlook into 2025. The survey documented some progress in financial condition, executive talent shortages, ability to attract quality leadership and time to fill positions. However, significant lingering concerns emerged in clinician engagement, leadership satisfaction, and retention risk. The results on many survey questions suggest a worrisome industry bifurcation between healthier and less healthy providers. The findings also delineate leadership priorities that foreground pursuing multiple growth paths, reaping the benefits of technology’s many promises, and building strong cultures that promote success in everything from leadership recruiting and retention to change management. The list is broad, the problems difficult, and the resources often limited. With leadership at a premium, organizations will seek internal and external help to ensure they have the talent in place.

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