Summary: Independent health systems have always required intention and discipline to sustain their independence. What has changed is what that demands of the CEO. Drawing on CEO searches conducted at small to mid-size independent systems across the country, Furst Group examines the four competencies boards are prioritizing now, why governance readiness is as important as candidate selection, and what separates the organizations that sustain independence from those that do not.
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Independent health system CEO succession has never been more urgent. Hospital CEO departures rose 32% in the first quarter of 2026 compared to the same period a year earlier, according to a recent report tracking CEO exits across U.S. industries. A generation of long-tenured leaders who delayed retirement through the pandemic and successive cycles of uncertainty are now stepping down, and they are doing so into an environment that leaves little room for a slow or reactive search process.
Organizations that have sustained their independence for decades have done so through disciplined governance, a clear community mission, strategic partnerships, and consistent investment in quality leadership. That formula still holds. What has changed is what the role demands of the CEO.
The organizations we work with are not looking to be acquired. Independence is a strategic commitment, rooted in local governance and the belief that an independent health system better serves its communities. That commitment is worth protecting. And protecting it increasingly depends on having the right CEO.
The Environment Has Changed Faster Than the CEO Profile
Independent health systems occupy a distinctive position in the healthcare ecosystem. They are often the primary provider in their communities. They are governed by local boards accountable to the people they serve, and they carry the weight of community trust in ways that are both a responsibility and a differentiator.
That position comes with real constraints. Without the negotiating leverage that larger health systems often enjoy, independent organizations can find themselves at a disadvantage in reimbursement, economies of scale, access to capital, and recruiting. The organizations that sustain independence over the long term tend to do so not by competing on price, but by competing on culture, mission alignment, and their ability to be nimble.
Value-based care models, technology implementations, facilities investments, physician alignment challenges, and evolving regulatory demands are landing on organizations that are running lean on both capital and bandwidth. The question is not whether independent systems face these pressures. It is whether the leadership in place is equipped to respond.
The broader market data reflects what is at stake for independent systems. Nearly 44% of hospital and health system transactions in 2025 involved a financially distressed organization, up from 31% in 2024 and 15% in 2022, according to Kaufman Hall’s Hospital and Health System 2025 M&A Review. For independent systems without the financial cushion of a larger network, that trend is a reminder of what is at risk when leadership and strategy fall out of alignment.
“Boards are no longer just asking whether a candidate has run a hospital or a service line. They want to know whether that person has owned the whole picture, the strategy, the community relationships, the board dynamic, and the finances. At an independent system, there is no one above the CEO to defer to on those things. Boards have gotten much more specific about that distinction.”
Jessica Homann, Senior Client Partner – Furst Group
This Is a Leadership Challenge, Not Just a Strategy Challenge
Organizations facing complexity at this level do not fail because they lack a strategic plan. They struggle when the leadership in place was built for a different era, a different competitive environment, or a different kind of board relationship.
Independent health systems across the country rely on Furst Group as a trusted executive search partner for CEO searches and more. These searches have surfaced a consistent pattern. The competencies boards are asking for have shifted, and not incrementally. The difference between what boards wanted in a CEO five to ten years ago and what they want today is qualitative, not just a matter of degree.
Jessica Homann, VP and Senior Client Partner at Furst Group, works closely with independent system boards through the search process. Her observation captures what has shifted: “Boards are no longer just asking whether a candidate has run a hospital or a service line. They want to know whether that person has owned the whole picture, the strategy, the community relationships, the board dynamic, and the finances. At an independent system, there is no one above the CEO to defer to on those things. Boards have gotten much more specific about that distinction.”
Four CEO Competencies Independent Systems Are Prioritizing Now
Across multiple independent health system CEO searches, four competency themes have emerged consistently in what boards are looking for today.
1. Strategic ownership, not strategic participation.
In a larger system, a market or regional CEO may carry significant operational responsibility while enterprise strategy is developed at the system office level. In an independent health system, the CEO owns strategy entirely: identifying competitive threats, setting long-range financial direction, and determining how the organization sustains its independence over the next decade. Boards are asking candidates to demonstrate their experience and clearly communicate how they would approach the organization’s unique circumstances.
2. Board partnership and governance fluency.
Community-based boards at independent systems are often composed of individuals with deep local knowledge and a genuine commitment to the mission, with varying levels of experience in complex healthcare governance and national industry trends. The CEO’s ability to build trust with that board, translate industry dynamics into accessible language, manage expectations through uncertainty, and help directors understand what the balance sheet is telling them is a core operational requirement. It is not a soft skill. Boards are asking sharper questions about how candidates have done this work in practice, and those conversations are revealing significant differences in capability.
3. Financial stewardship without scale.
Independent systems do not have the leverage of a larger system in payer negotiations, access to capital markets, or vendor contracts. Therefore, the CEO must find other ways to protect margins and make the case for continued independence to a board that is watching the numbers closely. Strong financial acumen is a baseline expectation. The shift is toward leaders who can translate financial complexity into a clear narrative for a community board and make sound decisions with limited resources over a sustained period
4. Community presence as a competitive strategy.
For an independent health system, the relationship between the CEO and the community is not ceremonial. It is part of a competitive position. The ability to build genuine relationships with civic leaders, physician groups, employers, and community organizations, and to serve as a credible and trusted face of the organization externally, shows up consistently as both a requirement and a differentiator in how candidates are evaluated.
Rebecca Kapphahn, VP and Senior Client Partner at Furst Group, sees the same pattern in how boards are evaluating candidates. “What we see consistently is that the candidates who stand out are the ones who can walk into a room with a community board, many of whom are not healthcare operators, and make a complex financial or strategic situation feel navigable. That ability to build trust and communicate clearly under pressure is not something you can coach quickly. Boards are asking for it explicitly now in a way they were not five years ago.”
That perspective is echoed by leaders who have been on the other side of the table. Terry Forde, President and CEO of Health First, shares, “Today’s healthcare leaders need to be able to facilitate objective conversations about partnerships, affiliations, joint ventures, and independence. Those discussions have become a normal part of governing a health system. Leaders who have lived through those scenarios bring a level of perspective that helps boards separate emotion from strategy and focus on what will create long-term value for the community.”
“What we see consistently is that the candidates who stand out are the ones who can walk into a room with a community board, many of whom are not healthcare operators, and make a complex financial or strategic situation feel navigable. That ability to build trust and communicate clearly under pressure is not something you can coach quickly. Boards are asking for it explicitly now in a way they were not five years ago.”
Rebecca Kapphahn, Senior Client Partner – Furst Group
What Boards Discover During a CEO Search
A CEO search at an independent health system is rarely only a talent identification exercise. It is also a governance alignment exercise. The process of defining what the organization needs from its next leader surfaces new questions for boards to answer explicitly: What does independence mean for us, not in the abstract, but in terms of the strategic choices we are willing to make? What is the CEO’s actual mandate? What does success look like in year one and in year five?
Boards that enter a search with clarity on those questions tend to move through the process with greater confidence, make stronger final decisions, and set up their incoming CEO to have a faster impact. Boards that are working through those questions in real time while also evaluating candidates tend to face greater volatility at the most consequential stages.
This is not a criticism of community boards. It is an observation about what independent governance requires, and an argument for investing in board readiness as part of the organization’s broader leadership strategy. That investment pays the highest return when it happens before a transition is underway, not during one.
The data on board preparedness across the broader hospital market is sobering. According to the American Hospital Association’s National Health Care Governance Survey, nearly one-third of U.S. hospitals did not have, or were unsure whether they had, a formal CEO succession plan. The consequences of that gap are visible when transitions arrive unexpectedly. Organizations without a plan in place are forced into reactive searches, interim appointments, and leadership uncertainty at precisely the moment stability matters most. Interim leadership can bridge a gap. It cannot substitute for the strategic continuity that comes from a well-prepared, well-executed search.
The Work Ahead
The independent health systems that sustain their independence over the next decade will not do so by accident. They will do so because their boards made deliberate investments in governance and leadership, because they were honest about the gap between the CEO profile that served them in the past and what the current environment demands, and because they treated CEO succession as well as governance education and alignment as an ongoing strategic priority.
The stakes are real. Independent health systems serve a vital function in their communities, often as the primary provider, the largest employer, and the most visible anchor of local trust in the healthcare system. Getting leadership right at this moment is not just an organizational imperative. It is a community one.
Furst Group has partnered with independent health system boards through leadership transitions for more than 40 years. That experience has given us a specific and grounded perspective on what separates the organizations that sustain independence from those that do not. If any of the dynamics described here feel familiar, we would welcome the opportunity to share insights and explore the best path forward for your organization.
