Calm­ing trou­bled wa­ters

Af­ter Colorado suc­cesses, Ru­lon Stacey aims to bol­ster tar­nished Fairview

Modern Healthcare - - NEWS - By Paul Demko

Last Au­gust, Ru­lon Stacey’s 24year-old son-in-law, Justin Hanks, went to the emer­gency room for treat­ment of a sore shoul­der. He as­sumed he had ag­gra­vated an old foot­ball in­jury.

But doc­tors found a ma­lig­nant tu­mor. In Novem­ber, surgeons at the Univer­sity of Colorado Hospi­tal—part of a sys­tem Stacey had re­cently headed—cut open his chest to re­move the tu­mor. When Stacey and his fam­ily saw him wheeled into the OR, “we hon­estly didn’t know if that would be the last good­bye,” Stacey re­called.

The surgery was suc­cess­ful and Hanks is be­lieved to be cancer-free. But the episode per­son­ally brought home to Stacey his enor­mous re­spon­si­bil­ity as a health­care leader. “Forty years ago, (Justin) would have died,” Stacey said. “It’s be­cause the people back then made the com­mit­ment to re­search and col­lab­o­ra­tion that kept (him) alive in 2013. I don’t want to fail on that test now.”

That close-up en­counter with the health­care sys­tem oc­curred as Stacey was tran­si­tion­ing to a new chal­lenge. In Septem­ber, the Utah na­tive was named pres­i­dent and CEO of Fairview Health Ser­vices, a Minneapolis-based sys­tem that in­cludes the Univer­sity of Min­nesota Med­i­cal Cen­ter, with 2012 an­nual rev­enue of $3.2 bil­lion. Fairview has been buf­feted in re­cent years by a bill collection scan­dal and a fight with state of­fi­cials over a pro­posed merger that ul­ti­mately was blocked. Now, ob­servers ex­pect Stacey to seek other av­enues for growth as well as to spear­head a push for im­proved qual­ity of care—two ar­eas where he pre­vi­ously has ex­celled.

His move comes af­ter spend­ing nearly two decades in Colorado, where Stacey ini­tially served as CEO of Poudre Val­ley Hospi­tal in Fort Collins. Dur­ing his ten­ure, the fa­cil­ity ex­panded ag­gres­sively across north­ern Colorado and into neigh­bor­ing states and re­ceived nu­mer­ous ac­co­lades for the qual­ity of its care. The cap­stone to Stacey’s ten­ure was a 2012 merger he helped bro­ker be­tween Poudre Val­ley Health Sys­tem and the Univer­sity of Colorado Hospi­tal, cre­at­ing a re­gional re­search and treat­ment dy­namo.

Health­care pro­fes­sion­als who have worked closely with Stacey em­pha­size his will­ing­ness to lis­ten, his def­er­ence to front­line work­ers and his ob­ses­sive fo­cus on qual­ity of care. The stan­dard he es­tab­lished at Poudre Val­ley was that it should strive to be in the top 10% na­tion­ally in ev­ery mea­sur­able bench­mark of care de­liv­ery. That em­pha­sis paid off in 2008 when Poudre Val­ley was among the re­cip­i­ents of the Mal­colm Baldrige Na­tional Qual­ity Award, the only health­care in­sti­tu­tion to re­ceive the pres­ti­gious honor that year.

“In the end, those in the in­dus­try that are suc­cess­ful are those that are ab­so­lutely re­li­gious about qual­ity,” Stacey, 53, said in an in­ter­view. “That’s what’s go­ing to dif­fer­en­ti­ate who we are and what we are. The bot­tom line will be­come less im­pact­ful.”

Stacey takes over at Fairview af­ter a tu­mul­tuous pe­riod in the not-for-profit sys­tem’s century-plus his­tory. The last per­ma­nent CEO re­signed in March 2012 fol­low­ing a na­tion­ally re­ported scan­dal over ag­gres­sive bill collection prac­tices by a pri­vate con­trac­tor. Then last April, merger dis­cus­sions with Sioux Falls, S.D.-based San­ford Health were aban­doned af­ter Min­nesota pub­lic of­fi­cials crit­i­cized the po­ten­tial deal.

Stacey also as­sumes the new post as his and other health­care or­ga­ni­za­tions wres­tle with the fi­nan­cial im­pli­ca­tions of the Pa­tient Pro­tec­tion and Af­ford­able Care Act. He ar­gues that hospi­tal sys­tems would have been forced to cut costs and im­prove qual­ity of care to re­main com­pet­i­tive with or with­out the health­care re­form law. “What hap­pens in Wash­ing­ton, to me, is just ir­rel­e­vant,” he said. “It’s turned into a grand­stand. We do what we have to do. (We have to) col­lab­o­rate more, share data more, find best prac­tices and repli­cate them.” De­spite Fairview’s re­cent dif­fi­cul­ties, it re­mains fi­nan­cially sturdy. Rev­enue has in­creased by more than $600 mil­lion over the past five years—a jump of roughly 25%. In 2012, it had an op­er­at­ing mar­gin of 3.3%, up from 0.5% the pre­vi­ous year. In 2012, Moody’s In­vestors Ser­vice down­graded Fairview’s bond rat­ing from A2 to A3, in part be­cause of man­age­ment turnover and neg­a­tive pub­lic­ity over its collection prac­tices. That bond rat­ing has not changed, but last year Moody’s raised its out­look for the hospi­tal sys­tem from neg­a­tive to sta­ble.

Fairview would not dis­close Stacey’s salary. In 2011, he earned $1.5 mil­lion as CEO of Poudre Val­ley Health Sys­tem, ac­cord­ing to the not-for-profit group’s tax re­turn. His pre­de­ces­sor as Fairview’s top ex­ec­u­tive, Mark Eustis, was paid $1.4 mil­lion in 2011.

Fairview has long been the sec­ond-largest hospi­tal sys­tem in the Twin Cities mar­ket, be­hind only Al­lina Health. The sys­tem in­cludes six hos­pi­tals, roughly 1,500 staffed beds, nearly 100 med­i­cal clin­ics and more than 22,000 em­ploy­ees. Be­tween 2010 and 2012, Fairview pro­vided roughly $60 mil­lion in char­ity care.

But in re­cent years, Fairview and Al­lina have seen other play­ers en­croach on their turf. Most no­tably, in 2012 HealthPart­ners took over Park Ni­col­let Health Ser­vices, mak­ing it the third-largest player in the Twin Cities mar­ket. In ad­di­tion, largely ru­ral health­care sys­tems— in­clud­ing San­ford and Essen­tia Health—have been look­ing for op­por­tu­ni­ties to ex­pand into the Twin Cities.

Fairview likely will look be­yond its cur­rent ge­o­graphic foot­print for ex­pan­sion, pre­dicted Al­lan Baum­garten, an in­de­pen­dent health­care an­a­lyst who writes the an­nual Min­nesota Health Mar­ket Re­view. “I think what they’re look­ing at is go­ing fur­ther into Min­nesota or western Wis­con­sin or even other states in the re­gion,” he said.

Dave Mur­phy, who chaired Fairview’s search com­mit­tee and serves as chair­man of the board, said that he’s con­fi­dent Stacey is the right per­son to lead the or­ga­ni­za­tion through a chal­leng­ing pe­riod. “Ob­vi­ously, this world is chang­ing in a big way and we want some­body who’s strate­gic in their think­ing,” said Mur­phy, pres­i­dent of Red Wing Shoe Co.

Fairview’s re­cent trou­bles be­gan in July 2011, when a lap­top com­puter was stolen from the ve­hi­cle of an em­ployee of Ac­cre­tive Health in Minneapolis. The com­puter con­tained med­i­cal records for more than 23,000 pa­tients of Fairview and other med­i­cal fa­cil­i­ties.

In re­sponse to that se­cu­rity breach, Min­nesota At­tor­ney Gen­eral Lori Swan­son filed a law­suit ac­cus­ing Ac­cre­tive of fail­ing to pro­tect con­fi­den­tial health records. Swan­son’s of­fice also launched a probe into the billing prac­tices used by Chicago-based Ac­cre­tive on be­half of Fairview.

The end re­sult of Swan­son’s in­ves­ti­ga­tion was a sixvol­ume re­port, re­leased in April 2012, that lam­basted Ac­cre­tive’s bill collection prac­tices. It de­scribed high-

pres­sure collection tac­tics that in­cluded squeez­ing pa­tients to pay their bills while they were still re­ceiv­ing treat­ment in the emer­gency depart­ment. “Per­haps the most dam­ag­ing act by Ac­cre­tive was to un­der­mine the ba­sic premise that a hospi­tal is a sanc­tu­ary to treat the sick and in­firm,” the re­port con­cluded.

Neg­a­tive me­dia cov­er­age

Fairview sev­ered ties with Ac­cre­tive and the at­tor­ney gen­eral’s of­fice set­tled the law­suit in July 2012. The com­pany ad­mit­ted no wrong­do­ing but agreed to pay $2.5 mil­lion in dam­ages to the state and was barred from do­ing busi­ness there for at least two years.

It wasn’t the first time the hospi­tal sys­tem has been crit­i­cized for ag­gres­sive billing prac­tices, said David Feinwachs, for­mer gen­eral coun­sel of the Min­nesota Hospi­tal As­so­ci­a­tion and a Fairview critic. In 2005, Fairview signed an agree­ment with the at­tor­ney gen­eral’s of­fice aimed at curb­ing ex­cesses. “They keep mak­ing the same mis­takes over and over again,” Feinwachs said.

The Ac­cre­tive de­ba­cle also wasn’t Fairview’s only re­cent tan­gle with the at­tor­ney gen­eral’s of­fice. Last March, Swan­son raised con­cerns about merger talks be­tween Fairview and San­ford that had not pre­vi­ously been dis­closed. Swan­son ques­tioned the pro­pri­ety of an out-of-state en­tity tak­ing con­trol of the Univer­sity of Min­nesota Med­i­cal Cen­ter.

Dur­ing a hear­ing, Swan­son grilled hospi­tal of­fi­cials about the deal and sug­gested that the ne­go­ti­a­tions were de­lib­er­ately con­ducted in se­cret. State leg­is­la­tors in­tro­duced a bill to pro­hibit the Univer­sity of Min­nesota Med­i­cal Cen­ter from be­ing owned by an outof-state or­ga­ni­za­tion.

Amid the up­roar, San­ford pulled out of ne­go­ti­a­tions. Look­ing back on the episode, Cindy Mor­ri­son, San­ford’s ex­ec­u­tive vice pres­i­dent for mar­ket­ing and pub­lic pol­icy, ar­gued that the po­ten­tial deal got hi­jacked by forces be­yond the con­trol of the two not-for­profit health­care sys­tems. “I think what hap­pened was med­i­cal and po­lit­i­cal agen­das got in­volved,” she said.

Baum­garten agreed that the po­ten­tial deal didn’t get a fair vet­ting. “It was po­lit­i­cal the­ater,” he said.

Swan­son’s of­fice de­clined an in­ter­view re­quest for this ar­ti­cle.

Stacey al­ready has taken steps to build a bet­ter re­la­tion­ship with Swan­son. Dur­ing his first month on the job, he sat down with the at­tor­ney gen­eral to clear the air. “We’ve done ev­ery­thing we can to start out on the right foot,” Stacey said.

Stacey also said ex­pand­ing Fairview isn’t an im­me­di­ate pri­or­ity. “I’ve had no dis­cus­sions or thoughts on what ex­pan­sion there may or may not be in our fu­ture,” he said. “We’ve talked ex­clu­sively about what we can do to get our own house in or­der, and then if we think at some point in the fu­ture, in a year or two or three or five, that that’s the right thing, we’ll ex­plore that.”

But if Stacey’s track record is any in­di­ca­tion, he is likely to take a bold ap­proach to ex­pand­ing Fairview’s foot­print.

Stacey earned un­der­grad­u­ate and grad­u­ate de­grees from Brigham Young Univer­sity and a doc­tor­ate in pub­lic ad­min­is­tra­tion from the Univer­sity of Colorado. He started his ca­reer with the U.S. Air Force Med­i­cal Ser­vice Corps. Stacey sub­se­quently worked as CEO of St. Vin­cent Gen­eral Hospi­tal in Leadville, Colo., then be­came COO at St. Fran­cis Hospi­tal and Health Cen­ter in Chicago. In 1996, he be­came CEO of Poudre Val­ley Hospi­tal Sys­tem.

In re­cent years, Stacey has emerged as a na­tional health­care leader. In 2011, he was named chair­man of the Amer­i­can Col­lege of Health­care Ex­ec­u­tives. That same year he pub­lished Over Our Heads: An Anal­ogy on Health­care, Good In­ten­tions, and Un­fore­seen Con­se­quences. Cur­rently, he chairs the board of the Baldrige Per­for­mance Ex­cel­lence Pro­gram, which hands out the na­tional hon­ors.

Last week, that pro­gram suf­fered an em­bar­rass­ment when Bay­lor Re­gional Med­i­cal Cen­ter at Plano in Texas turned down the pres­ti­gious Mal­colm Baldrige Na­tional Qual­ity Award in the wake of sev­eral med­i­cal mal­prac­tice law­suits al­leg­ing that a for­mer Bay­lor neu­ro­sur­geon op­er­ated while un­der the in­flu­ence of al­co­hol and drugs. It was the first time an or­ga­ni­za­tion has ever de­clined a Baldrige Award.

‘In­ca­pable of talk­ing any smack’

Dr. Todd Whit­sitt has known Stacey since he first ar­rived at Poudre Val­ley. The car­di­ol­o­gist re­calls that in their younger days, they played pickup bas­ket­ball. “He’s very com­pet­i­tive,” Whit­sitt said. “He wouldn’t outwardly show it. He’s com­pletely in­ca­pable of talk­ing any smack.”

That com­pet­i­tive streak was re­flected in Stacey’s ten­ure leading Poudre Val­ley. At the time he took over, he be­came the hospi­tal’s fifth top ex­ec­u­tive in four years. His mild man­ner masked an ag­gres­sive ap­proach that saw the not-for-profit sys­tem ex­pand from a sin­gle hospi­tal into a re­gional pow­er­house with more than two dozen fa­cil­i­ties in three states.

Stacey’s ex­pan­sion­ist vi­sion was not al­ways wel­comed. His plan to open the Med­i­cal Cen­ter of the Rock­ies in Love­land, Colo., was greeted with skep­ti­cism about whether the area could ac­com­mo­date an­other hospi­tal.

But Stacey’s strat­egy was val­i­dated when the hospi­tal opened on Valen­tine’s Day in 2007. It now has roughly 150 staffed beds and more than 800 em­ploy­ees.

“Ru­lon’s just a vi­sion­ary leader,” said Kevin Unger, who serves as pres­i­dent and CEO of Poudre Val­ley Hospi­tal. “With health­care re­form, and all the pres­sures that are push­ing on us right now, I think growth is es­sen­tial.”

If Fairview is go­ing to ex­pand, how­ever, Stacey al­most cer­tainly will have to take a dif­fer­ent ap­proach than he used at Poudre Val­ley. That’s be­cause Min­nesota has had a mora­to­rium for three decades on build­ing new hos­pi­tals. Con­struct­ing any fa­cil­i­ties would re­quire the bu­reau­crat­i­cally ar­du­ous process of get­ting an ex­emp­tion from the state.

But growth through merger also could prove prob­lem­atic. Feinwachs ques­tioned whether Min­nesota reg­u­la­tors would al­low fur­ther con­sol­i­da­tion of the hospi­tal mar­ket. “A cou­ple more con­sol­i­da­tions and we are right in the mid­dle of some rag­ing an­titrust vi­o­la­tions,” he said. “There are not many people left to marry up here be­fore you start in­breed­ing.”


On a tour of Fairview Ridges Hospi­tal in Burnsville, Minn., Stacey chats with mem­bers of the mul­ti­dis­ci­plinary team.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.