With money tight, two rural Iowa hospitals have hit on a neighborly way to trim costs. They're sharing a chief executive officer.
Since Dec. 1, 1999, Mike Trachta began splitting his week between 44-bed Marengo (Iowa) Memorial Hospital and 22-bed Keokuk County Health Center, Sigourney, saving each $20,000 on salary in the process.
The hospitals, about 35 miles apart, jointly employ Trachta through a management agreement with University of Iowa Health Care.
Trachta, 29, began at Marengo as its part-time administrator in August 1998, becoming its full-time CEO 11 months later. During that time, he took the hospital from an operating loss of 7.5% in fiscal 1998 to an operating profit of 2.5% in 1999.
That track record caught the attention of the Sigourney hospital, which was losing its CEO to early retirement at the end of 1999 and was facing financial challenges of its own. The hospital posted a 5% loss in 1999.
In November 1999, the hospital boards agreed to share Trachta as top executive.
"We believe it's an innovative way to save money while maintaining community access to local services," Trachta said.
In this almost perfect reversal of the largely failed co-CEO arrangements favored by some merging hospitals in recent years, management teams and locally controlled boards of each hospital are to remain separate.
Large systems often use a single CEO to oversee two or more hospitals in the same area, but examples of unaffiliated hospitals sharing CEOs are few and far between.
If a similar arrangement in South Dakota is any guide, clinical integration may be in the cards for the Iowa hospitals.
Carol Varland does double duty as CEO of 84-bed Gregory (S.D.) Community Hospital and 16-bed Community Memorial Hospital, Burke.
"We call ourselves Burgery, because we feel like a system (even though) technically we are competitors," she said. Gregory and Burke are about eight miles apart.
Since Varland took on joint leadership in 1996, the hospitals have consolidated most services, including deliveries, home health, lab, laundry and surgeries.
Despite the potential to save money by sharing leadership, observers said, double-duty CEOs will not become a hot trend anytime soon.
David Sniff, head of the hospital constituency group of the National Rural Hospital Association, said, "The economics of (sharing a CEO) are obvious to anyone . . . (but) it's not simple to do for all the noneconomic reasons."