Co-leadership arrangements may grease the skids for a merger, but they often fall apart quickly in practice.
An exception is Allina Health System in Minneapolis, where co-executives Gordon Sprenger and K. James Ehlen, M.D., managed to lead jointly for more than four years.
Sprenger came from HealthSpan, a hospital system, while Ehlen led Medica Health Plans, a managed-care company. The companies merged to form Allina in 1994.
Their job-sharing ended last month when Allina's board decided the integrated system with $2.3 billion in annual revenues was ready for a single leader. The job went to Sprenger.
Though the arrangement ultimately ended, Ehlen and Sprenger's experience shows that given the right combination of circumstances and personalities, co-leadership can work. It stands in contrast to a co-presidency established at neighboring HealthSystem Minnesota in St. Louis Park, which lasted less than a year (July 1, 1994, p. 34).
The arrangement was also short-lived at Advocate Health Care, created in January 1995 through the merger of EHS Health Care of Oak Brook, Ill., and Lutheran General Health System of Park Ridge, Ill. The companies merged under one board with co-chief executive officers-Richard Risk, EHS' president and CEO, and Stephen Ummel, Lutheran General's president and CEO. After only one year, Ummel left Advocate to join Ernst & Young's Health Care Consulting Group.
For more than four years, Sprenger and Ehlen worked in adjacent offices, took turns representing the organization at public functions and consulted each other on every decision. After a while, they even shared an executive assistant.
"We were transposable; we made that very clear from the first day," Sprenger said.
Monday morning management meetings were followed by one-on-one discussions to work through issues. The two men always showed a unified front, never even bringing their differences of opinion to Allina's board, said board chairman Terril Hart, M.D.
"Their commitment was they would keep talking and keep gathering information until they came to an agreement themselves," Hart said.
Said Sprenger: "There were times we had a different perspective, (but) we always worked through it and came to a common focus. I think that is one of the responsibilities you assume when you have a co-leadership position."
Board members were skeptical at first, however. "People on the board said, 'Tell me one other company in the country where this has worked,' and there were no good examples," Sprenger said.
The arrangement worked because the two men had distinct bases of knowledge. "It was an apples and oranges merger, so we really needed the backgrounds of both persons," Hart said.
When consulted, Sprenger has discouraged co-leadership arrangements for mergers between hospital systems. He said the structure is "not a way to solve problems when you're merging two like entities.
"When you have the same skill sets, you have the conflict that you both feel you know the answers," he added.
Personal chemistry also worked in their favor. During the six months of due diligence before the merger the two men realized they clicked on a personal level and shared the same values and vision, Sprenger said.
"I think we got over the ego of running our organization and sharing it with someone," Sprenger said. "Neither one of us resented having the other person in the office."
Indeed, Sprenger is not bent on hierarchical distinctions. Eight years ago he removed the word "chief" from his title. "I see myself more as a coach, a strategist, a mentor," he explained.
Rather than feeling it was a move to save jobs, employees generally were reassured, Sprenger said. "What employees were most interested in was they have leadership who understood what they were involved in," he said.
The expense of two salaries was not an issue, because the system did not have a chief operating officer. To set compensation, comparative CEO and chief operating officer compensation was added, and the amount was divided between the two executives.
Sprenger and Ehlen jointly recommended to the board in recent months that it was time for a single CEO.
"What's happened over these four or five years is we've both gotten to know the total business," Sprenger said. "Jim and I felt that we had gone long enough now, that we needed that single focus of leadership."
According to Hart, Sprenger was chosen to lead because he has more operations experience. Hart said Sprenger, who turned 62 last week, has committed to postponing retirement until at least mid-2001, giving the system time to carry out a new business model.
Ehlen, who is 55, said at the time of the merger that he hoped to spend the rest of his career at Allina.
Ehlen was unavailable for an interview at deadline. His last day with the company is May 31.
In a recent written statement, Ehlen said: "Although Gordon and I have worked extraordinarily well together, we both recognized from the beginning that the shared leadership structure would not support Allina's management needs indefinitely."