Want to Avoid a Lawsuit?

The average tenure of a hospital CEO is about 5.6 years, according to data from the American College of Healthcare Executives (ACHE). For-profit hospitals tend to have shorter tenures, often 3-5 years. Approximately 30–40% of hospital CEOs leave their positions involuntarily (fired, forced to resign, or no renewal of contract). Losing a CEO for any reason costs the hospital roughly four times the person’s base salary, and that’s without a lawsuit. Here’s what happens.

MetroHealth’s former President and CEO, Airica Steed, sued the health system over her firing last summer, alleging racial discrimination, harassment, and a toxic work environment. The lawsuit claims MetroHealth’s board mistreated Steed despite her strong performance and unlawfully terminated her while she was on medical leave. She also accused the board of making false and defamatory statements about her post-firing. Steed claims she was never informed of performance concerns. MetroHealth denied the allegations, calling them “baseless” and vowed to defend itself. MetroHealth board chair, Dr. E. Harry Walker, stated the board and Steed had fundamental disagreements on leadership priorities.

This marks the second lawsuit against MetroHealth by a former CEO. In 2022, the board fired Dr. Akram Boutros over $1.9 million in self-approved bonuses, sued for breach of contract, and defamation. MetroHealth claims Boutros was unauthorized to grant himself bonuses, though the Ohio Ethics Commission found no ethics violations.

Clearly, there are no winners in situations like these. Boards of directors can reduce the risk of hospital CEO firings by implementing better hiring practices, proactive governance, clear expectations, and strong support structures. Here are the most effective strategies:

1. Hire Well

Hiring and evaluating is one of the board's most critical tasks, yet in my more than 40 years of experience, I have seen boards drop the ball at the beginning of the game. Instead of seeking help and heeding expert advice, they too often rush the process, hire the person they like best, or take the advice of headhunters instead of experts. Interviews, resumés, and references don’t provide the vital information needed to make one of the most critical decisions boards simply can’t get wrong. Boards need more than subjective opinions that can be both biased and wrong. Instead, directors require objective data and reliable feedback to help them choose the person who will have the most power in the hospital. Directors need information about a candidate’s problem-solving and decision-making abilities, financial acumen, work-related personality characteristics, cultural fit, and leadership style. This highly validated, reliable approach ensures fairness to all and takes speculation out of the selection process with more than 95% accuracy.

2. Establish Clear Performance Metrics

? Define measurable success criteria related to financial health, quality outcomes, employee engagement, and patient satisfaction.

? Conduct regular performance reviews to identify issues early.

3. Improve Board-CEO Alignment

? Clearly define roles, responsibilities, and decision-making authority.

? Hold structured board retreats to align on long-term strategy.

? Conduct director evaluations

4. Support CEO Onboarding & Development

? Provide mentorship from board members or former executives.

? Offer ongoing leadership coaching that includes 360 feedback.

5. Strengthen Succession Planning

? Develop a formal succession plan to avoid reactive firings.

? Identify and mentor internal candidates as potential CEO successors.

6. Avoid Knee-Jerk Reactions

? Assess external factors (e.g., economic downturns, policy changes) before blaming the CEO.

? Avoid firing CEOs for political reasons or short-term setbacks.

? Consider progress over perfection when evaluating leadership effectiveness.

By implementing these measures, boards can reduce unnecessary CEO turnover, protect organizational stability, and create an environment where leaders thrive rather than fail.