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Lutheran upbeat despite shakeups

May 19, 2019

Lutheran Health Network, which includes eight hospitals, has experienced significant leadership turnover in the past year, and the pace of departures might be accelerating.

With more than 7,000 employees, Lutheran’s network has a largely stable workforce. But the revolving door for some top spots has attracted attention at a time when critics wonder how parent company Community Health Systems will dig out from a $13.4 billion long-term debt load that at least one expert believes could push the company into bankruptcy.

More than two years ago, a group of 10 local physicians tried to broker a deal for an outside investor to acquire Lutheran’s network from the parent company, claiming Community Health Systems was siphoning local profits to prop up failing hospitals elsewhere.

When that deal didn’t go through, battle lines were drawn : with some local residents joining the physicians on one side and Community Health Systems on the other.

Criticism of the parent company has expanded nationwide, with a nurses’ union last week calling for the CEO to be removed from his position as board chairman.

Local leadership instability includes the recent resignations of Lutheran Hospital’s chief nursing officer and director of emergency services.

Despite the turnover : and other turmoil : at least one local business leader who chairs a hospital board believes the worst is behind Lutheran Health Network.

Outgoing leaders

Although every large organization sees executives come and go, Lutheran’s leadership turnover rate has been notably high the past two years.

In the wake of the rejected bid for Lutheran’s network, the parent company fired Brian Bauer, CEO of Lutheran’s network and Lutheran Hospital, saying he seemed allied too closely with the physicians group. Bauer now works for Indiana University Health, which is entering the Fort Wayne market as a health care provider.

Dozens of other administrators, doctors and support staff have left Lutheran’s network since spring 2017 : too many to count.

Among the most recent and notable are:

• Paula Autry, who had been CEO of Lutheran Hospital less than 18 months, in early March was reassigned to the equivalent position at St. Joseph Hospital. Two weeks later, she opted out of the change that was to take effect April 1. She was named a project CEO with the parent company.

• Karen Fordham was St. Joe CEO before Autry was appointed to the position but left in July after just six months on the job. Her departure might have been accelerated by a remark she reportedly made about Bauer, allegedly suggesting that he “should be shot and killed” for his lack of loyalty to Community Health Systems.

• Mike Poore, who was northeast Indiana regional president for Community Health Systems, announced his departure from Fort Wayne on May 3. He’d been here about two years. Poore planned to continue working for the parent company in Tennessee as a vice president of operations for an undecided portfolio of states.

• Dr. Mark Jones, head of Lutheran Hospital’s heart transplant program, left a void that’s been difficult to fill. Officials have had to temporarily stop the heart transplant program while they search for a replacement. The specially trained advanced heart failure cardiologist who was lined up to take his place opted out of coming here.

• Angie Double, Lutheran Hospital’s director of emergency services, has resigned. 

• Angie Logan, Lutheran Hospital’s chief nursing officer since January 2017, also has resigned. Cameron Memorial Hospital in Angola last week announced that Logan has accepted a position there as vice president nursing/chief nursing officer.

It’s unclear how many departures were prompted by professional opportunities or if any were forced or driven by frustration.

Autry in March said she was focused on the challenges her new role at St. Joe would bring.

“I’m sure the opportunity to build a new and modern facility upon that tradition will be a highlight of my career,” she said in a statement at the time.

But Autry didn’t spend one day in the St. Joe CEO position.

According to data compiled by the American Hospital Association, CEO turnover in recent years has averaged about 18% : meaning that most hospital leaders remain in the post five years or more.

Incoming leaders

Those departed leaders haven’t left a vacuum, however. Others have been hired to take their places, including:

• Mark Medley became Lutheran Health Network CEO on March 18, a position created to report directly to Poore. Now that Poore is leaving the market, he is transitioning duties to Medley, a process that is going well, network spokesman Geoff Thomas said last week.

• Natalie Seaber became the network’s chief nursing officer March 18. Her duties include measuring the quality of care being delivered to patients.

Thomas said the organization doesn’t generally discuss personnel changes but makes an exception for key administration position “to ensure a smooth transition of responsibilities.” In that spirit, he confirmed that Logan has resigned. Thomas didn’t comment on Double’s departure.

Seaber, who filled a new position, is now on staff to support the “very experienced and tenured nursing leadership team at Lutheran,” Thomas said.

Andy Bertapelle, Lutheran Hospital’s assistant chief nursing officer, is temporarily filling the position until a permanent replacement is hired for Logan.

Other hires also are in the works.

Jerry Henry, chairman of St. Joe Hospital’s board of trustees, said officials have narrowed their search for a CEO for the downtown hospital to three candidates.

Each has experience with large construction projects, a necessity because Lutheran Health Network is scheduled to break ground on a new downtown hospital in July.

“I think the overall (employee morale) climate is going to change dramatically,” Henry said late last week about the planned construction. “The worst is over.”

Facing uncertainty

Henry, who owns Midwest Pipe & Steel Inc., among other ventures, acknowledged that Lutheran Health Network has struggled the past two years.

“In all honesty, as a businessman, and that’s the only world I know, uncertainty is dangerous to any organization,” Henry said, referring to the numerous leadership changes.

Henry added that he believes the situation is stabilizing.

But even as the local network might be finding new equilibrium, the parent company is under constant scrutiny.

Last week, National Nurses United, the nation’s largest union representing registered nurses, issued a public call for Community Health Systems Chairman and CEO Wayne Smith to be ousted from his position.

The Silver Spring, Maryland-based organization said Smith’s “primary goal has been to enrich himself at the expense of patients and the corporation’s assets.”

Two representatives the union sent to the company’s annual meeting didn’t make it into the room in time to raise the issue as the meeting lasted mere minutes. 

Smith, who received more than 83.5 million votes, retained his board seat.

Stockholders also approved a compensation plan that awarded him about 788 million.

The company explained in a shareholder proxy filing that Smith deserved an increase from his 2017 compensation of 2.46 billion. 

The nurses’ union isn’t the only one watching the books.

Ryan Heslop, a portfolio manager and co-founder of Firefly Value Partners, on May 6 told attendees at an New York investment conference that Community Health Systems is headed for bankruptcy. Heslop suggested it could occur within a few years because of increasing debt and decreasing revenue.

Even Henry, one of Lutheran’s faithful, admitted to having some doubts about the company’s financial soundness.

“That gives us pause, too,” he said. “They do have a lot of debt.”

But corporate officials have assured him they have access to the money needed to build a new downtown hospital, a project estimated at $120 million.

Staying upbeat

Henry sees a turnaround in progress.

“I didn’t know what to expect” when the parent company assigned Poore to stabilize Lutheran’s network, he said. “And he did that. He was prudent and didn’t make rash judgments.”

Henry’s optimism extends to Medley, the new network CEO. Medley has a background in finance, plans to move his family here and has already started meeting local decision makers.

“We hired him. I’m high on him,” Henry added. “He’s boots on the ground.”

Thomas, Lutheran network’s spokesman, dismissed any suggestion that the health care provider’s executive office is in disarray.

“Although there are some leadership transitions occurring now, Lutheran Health Network is a strong healthcare system, and we are making progress in many areas,” he said in an email.

Among recent accomplishments, Thomas said, is the hiring this year of 20 providers : including six primary care physicians : by Lutheran Health Physicians. Another 10 have start dates between now and the end of August.

The goal is to hire 20 more in the next 12 months, Thomas said of the “vigorous recruitment efforts.”

“We are confident and excited about what the future holds for our team and, most importantly, we are focused on delivering high-quality care for our patients,” hesaid.

Henry, St. Joe’s chairman, said not even IU Health’s entry into the market will knock Lutheran’s network off course.  

“I think the sun is going to shine again,” he said. “It’s all going to be OK.”

sslater@jg.net

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