Zürcher Oberländer, Headhunter does not believe in the future of the GZO hospital

Wetzikon The municipalities involved in the hospital are currently looking for a new Board of Directors for the GZO hospital. We asked headhunters what is needed now and who would do it.

Erik Wirz in an interview with Zürcher Oberland by Ljilja Mucibabic

The good news: the board of directors of the GZO hospital, which has been shot down, wants to clear the way for a new management team. The not-so-good news: finding this new management team is likely to be difficult. It is still unclear whether the hospital will be granted a definitive debt-restructuring moratorium in its financial plight. The deadline is 30 December. This is when the provisional debt-restructuring moratorium expires - bankruptcy is imminent. The hospital could extend this deadline with its application for a definitive debt-restructuring moratorium.

Just morphine for a dying person?

So while it is unclear whether the plug will be pulled on the financial patient at the end of the year, the municipalities are looking for a new management team. They are being supported by an external company. These are usually so-called headhunters. We asked three such specialists what is important now. One of them says that he turned down a corresponding mandate because he wouldn't want to put anyone else in this position. And even if someone was found for the position, the hospital would be doomed.

From confidence to euthanasia

Wetzikon A new Board of Directors is to take the helm at the GZO hospital. With external help, the local authorities are looking for suitable and willing people. We asked three experts what is needed now.

170 million francs to pay back, a reorganisation concept that not everyone likes and a lack of support from the canton - the situation at GZO Spital Wetzikon is precarious. Theoretically, the plug could be pulled at the end of the year. That is, if the debt-restructuring moratorium is not extended.

No one probably wants to think about it. The municipalities involved with the hospital are trying to do their part to save the regional healthcare institution from going under. A new board of directors could fix it. For the search for personnel for the board, the municipalities have sought help from an external firm. These are usually headhunters who specialize in finding board personnel and have the appropriate network. We spoke with three such firms. None of them have a mandate in connection with the GZO hospital.

Expertise in the foreground

Felix Howald, managing owner of Verwaltungsrat Management AG, believes it is right and important that the municipalities have sought external help in their search. «People often let relationships play a role instead of looking at expertise,» says Howald. At the GZO, however, expertise is what is needed above all.

The BoD expert also has a clear profile for the new Chairman of the Board of Directors: He must be familiar with the healthcare sector, have access to the financial market and have experience in managing a large company and in turnaround situations. «Someone from the world of politics would not be ideal,» says Howald firmly.

Erik Wirz from Wirz & Partners would not categorically rule out a political figure. If it were an entrepreneur with reorganisation expertise, it could also be a political figure. Wirz is convinced that the composition of the board is crucial if the hospital is to continue.

The role of the Board of Directors

A shambles awaits the new team. And that's putting it mildly, says Wirz. «If the situation is desolate, you have to make sure that you bring expertise into the BoD and the C-level or new trusted sponsors into play. Unless someone can be found to finance the project for altruistic reasons. But that's unlikely.»

However, Wirz is not very fond of Howald's profile of the Chairman and says: «It's a question of religion as to what the role of such a Board of Directors is.» Wirz sees the competences mentioned by Howald more at the management level, the so-called C-level - i.e. CEOs and CFOs. This level needs to be scrutinised first.

«The strengths and weaknesses at C-level must be recognised by the Board of Directors and, if necessary, filled with the right people,» explains Wirz. When defining the search profile for members of the Board of Directors, care should be taken not to set too many must-have criteria, as otherwise you are limiting yourself too much.

In a reorganisation case like Wetzikon, Wirz thinks that two of the five board members to be replaced could already be in place. «If the investor lenders involved have to assume that they will have to put up with a lot of money, then they also want to have a say if they remain involved.» In other words: all those who would be affected by a haircut or new investors.

Wirz is convinced that the ideal scenario would be to find a person with luminosity. Someone who not only makes the industry sit up and take notice. This could be the president, a board member or an advisory board member. The worst case scenario would be a profiling neurotic. Which brings us to another important question.

Who wants to do that to themselves?

«If things go well, you're the hero. If not, it's also clear where to look,» says Wirz, who has already gained experience as a reorganiser himself. Ideally, it is either someone who has experience in the hospital or healthcare sector, or someone with a political agenda. Under no circumstances should this be done for financial reasons. The position is not paid enough for that.

Howald also believes that it could be someone with intrinsic motivation. «There are many competent people who also want to pass on their knowledge. Who say to themselves: «I'm doing this for Switzerland, for Wetzikon, for healthcare».» And someone who brings joy to such an office.

Howald is confident that a suitable person can be found, provided you have a good search strategy. For Wirz, it is clear that the market also plays a role. «In rare cases, such roles are grateful. So you have to be grateful if someone takes it on.»

When even the headhunter doesn't want to

A third headhunter doesn't want to do this role to anyone. The almost 50-year-old works for an office that not only searches for personnel but also provides management consulting services and specialises in the healthcare sector. In order to maintain neutrality, he does not wish to be named.

«If we are completely open, the hospital will certainly go under,» he says firmly. He would have turned down the mandate for this reason if he had been asked. «I wouldn't take someone out of a secure situation and put them there.»

Harsh words from an uninvolved party. But the headhunter backs up his statements with a sober look at the facts. The 170 million bond, which the hospital is already unable to repay at the current interest rate. «How is that supposed to work with 4 per cent and more?» he asks with regard to the demands of the creditor group around investor Gregor Greber. A new building that is 70 per cent complete now has to be demolished. «That's a disaster.» The canton, which does not consider the hospital to be systemically relevant. «This has a signalling effect.»

Consider hospital closure

He does not question the hospital's performance. They are good - the hospital certainly functions well operationally. There will always be someone who wants to use a situation like this as a springboard. And he senses the loyalty to the hospital - and not just from the population.

«You almost can't get a doctor out of there. They believe in it,» says the headhunter, who is already putting out feelers for specialists in the tense situation. You have to ask yourself whether you can secure the business. And if not, whether it is still needed at all.

The headhunter is convinced that the Wetzikon hospital is not needed. Because there are several hospitals within a radius of a few kilometres, above all Uster. He does not see the Aatal bottleneck as a problem. And with a twinkle in his eye: «You could build a helipad in Wetzikon.»

There was a similar situation at Laufen Hospital in the canton of Baselland. With the Laufental as the bottleneck. It had been loss-making for years. «A helicopter taxi would certainly have been cheaper,» the healthcare expert is convinced. But the decision was made to take a different route.

The hospital was closed and a temporary outpatient centre was built on the site instead. This has since been relocated to another site and the land has been returned to the municipality. The municipality has rezoned it and now wants to build housing on the plot.

A problem with the Swiss system

The critic makes a gloomy prediction for the GZO: «Within a reasonable period of time, they will not achieve the necessary EBITDA to even come close to being able to finance themselves.» The Ebitda margin - also known as the return on sales - is already too low at the cantonal target of 10 per cent, says the healthcare expert, who would prefer to see it at 13 per cent or more.

Until 2022 (9.4 per cent), the GZO was still considered a model pupil in terms of its EBITDA margin. The hospital was therefore able to keep its operations running at relatively low costs. In 2023, the hospital was well below the cantonal target at just one per cent and, for the first time since 2019, also below the Swiss average of 2.3 per cent. For the current year, the GZO is expecting a return on sales of just under 5 per cent.

Wirz also believes that the situation becomes more difficult for smaller hospitals that are not part of a network or are a university or cantonal hospital if you look at it purely from a business perspective. The fact is that the coverage rate for outpatient operations is around 80 per cent and around 90 per cent for inpatient operations.

Wetzikon is not even solely to blame for the failure. The critical headhunter also sees the problem in the «cantonal spirit». This is partly responsible for the fact that too many hospitals still have to be kept alive. «The system is geared towards legally prescribed care. This means that hospitals in different cantons are close together.»

A system with care regions beyond the cantonal border would be more expedient. This could be organised geographically, according to the existing supply or the demand for medical services.

However, the expectations of the population also play an important role. «Complaining about the level of health insurance premiums and at the same time being against merging or closing what you feel are your «own» hospitals is contradictory.»