Top brass turnover comes at a bad time for Amita Health – ModernHealthcare.com

A wave of executive departures, capped by the exit of CEO Mark Frey, has swept through Amita Health as the hospital chain grapples with a changing health care sector and works to integrate a major acquisition.

Seven of Amita's 19 hospitals lost their CEOs last month. Aug. 30 brought the resignation of Frey, who had led the Lisle-based organization since it was formed four years ago as a joint venture of national chains Ascension and AdventHealth. Amita didn't announce Frey's departure publicly, and it won't say why he and the other executives left.

C-suite turnover comes at a time when Amita is trying to adapt to turmoil in health care, where cost pressures are threatening traditional business models and driving consolidation. Executive turnover also complicates management challenges facing Amita, which doubled in size after absorbing Presence Health, a local Catholic chain with 10 hospitals that Ascension acquired last year.

Upheaval in executive ranks causes disruption, "which is never efficient and never good," says Erik Gordon, a professor at the University of Michigan's Ross School of Business. Gordon says Amita needs to guard against a loss of momentum as it looks for executives to fill the empty positions, particularly the CEO post. The new boss should have "clear marching orders to move quickly," he says. "You don't want the transition to drag on. You want to show those cost savings; you want to show the synergies."

In addition to folding Presence into Amita, Frey was in the process of retooling a hospital-centric business model amid growing pressure to reduce health care costs. Amita is beefing up outpatient and virtual care, as declining reimbursement rates pinch hospital revenues and new payment models push more care into less-expensive settings.

His plan involved streamlining Amita's outpatient footprint, which grew by 170 locations with the addition of Presence. Frey last year outlined plans to consolidate smaller sites with one or two doctors into large retail centers with specialists and ancillary services like imaging. Amita currently has more than 230 outpatient sites.

The hospital chain also has aggressively cut service lines at some facilities to save money on surgical equipment, space and staff. While the cost-cutting strategy also is intended to improve care by increasing patient volume at select facilities, it means patients could be forced to travel farther for treatment.

That's the case in Elgin and Elk Grove Village, where Amita plans to close mental health units at its hospitals upon approval from the state. The move prompted outrage from community members and elected officials.

Amita's plan to stop offering labor and delivery services at Amita Health St. Francis Hospital in Evanston also faces opposition from community members who say it would hinder access to care. A public hearing is scheduled for Oct. 1.

Meanwhile, Amita in June received approval from the state to end comprehensive physical rehabilitation at Amita Health St. Joseph Hospital in Chicago and open-heart surgery programs at St. Francis and Amita Health Sts. Mary & Elizabeth Medical Center in Chicago.

Cutting or consolidating clinical programs is "arguably necessary" for Amita "to take on bigger players in the market," says Anthony LoSasso, a professor at DePaul University who specializes in health care economics. But some hospital CEOs might not want to give up certain service lines, he adds, which creates a "real territorial fight."

There's stiff competition in Amita's service area, with large chains like Northwestern Medicine and Advocate Aurora Health competing for the same patients and doctors.

Even though many of its patients have private insurance or Medicarewhich pay hospitals more than MedicaidAmita is among the hospital chains that say Illinois' Medicaid managed care program for low-income patients significantly increased administrative costs. In March, it said about 35 full-time-equivalent employees were working on issues related to the program.

Amita was designed to grow with its owners, sources say, pointing to the success of 23-year-old Centura Health in Centennial, Colo., the joint venture between AdventHealth and Catholic Health Initiatives, which is now part of CommonSpirit Health.

Rare as they are, such arrangements appeal to Catholic chains like Ascension that want to grow while preserving their religious affiliations.

The changes at Amita mirror those at 151-hospital Ascension, which now owns nearly 80 percent of the facilities operating within the joint venture. Ascension's Alexian Brothers Health System, where Frey spent three decades, brought five hospitals to the deal in 2015. Altamonte Springs, Fla.-based AdventHealth, formerly known as Adventist Health System, owns four Amita hospitals.

Ascension's new strategy emphasizes outpatient and virtual care, as well as ancillary businesses like revenue-cycle management. Several top executives left the St. Louis-based organization this year, followed by the July retirement of its chief, Anthony Tersigni. Former Chief Operating Officer Joseph Impicciche now serves as CEO.

Meanwhile, five Amita CEOs who oversaw a total of eight hospitals have quietly stepped down since February. The departures follow the January appointments of three regional operating teams, as well as a post-acute care team, to support the growing chain's new scale and geography.

Amita and Ascension declined interview requests, and a representative of 48-hospital AdventHealth did not respond to requests for comment.

Hospital CEOs who have been in the job for a while are used to being "generals on the proverbial battlefield," LoSasso says. "But, now, if you say the true general is the CEO of the whole entity and you're just the colonel, that sort of shift might not be well received and you could see some pushback. . . .(Amita has) to find qualified, committed people who are also willing to work with the broader leadership (team) to carry out the overall mission."

As Amita searches for a new leader, it will be led by interim co-CEOs Karen Springer, executive vice president of performance optimization and nursing operations at Ascension, and Eddie Soler, executive vice president of finance at AdventHealth.

Top brass turnover comes at a bad time for Amita Health was originally published in Crain's Chicago Business

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