A changing of the guard is happening in healthcare.
In the past 18 months, some of the country's best known--and longest serving--healthcare chief executives have stepped out of the day-to-day management of their organizations. Still others have announced they will follow suit this year or next.
The latest to leave was Boone Powell Jr., who relinquished his role as CEO of five-hospital Baylor Health Care System in Dallas after 20 years in the top job. Effective May 1, Powell serves in the newly created position of system chairman.
Like Powell, all of these CEOs belong to a generation of healthcare managers that came of age with the Medicare program. In fact, most of them began their careers before 1965 when Congress established Medicare.
They have helped transform the industry from one dominated by freestanding hospitals to one populated by large integrated delivery systems.
As administrators, they thrived in the fat-and-happy days of healthcare when reimbursement money flowed, and they hunkered down when government and private payers tightened the purse strings.
Having reached the pinnacle of their profession, they can offer a view of healthcare like few others.
Gordon Sprenger makes one thing clear: He's not retired quite yet.
"They expect me to be a fully engaged CEO until July 1, 2001," Sprenger says.
That's when the now 63-year-old will hand over the reins of Allina Health System, the 19-hospital system headquartered in suburban Minneapolis that he has helped build since its inception in 1994.
Poised to step into Sprenger's shoes is David Strand, who recently was promoted to be Allina's chief operating officer.
Sprenger's retirement will bring down the curtain on a 40-year career in healthcare administration that was first inspired by a five-month stint as an orderly in a Minneapolis hospital.
"I've seen it from all sides," says Sprenger, who served as chairman of the American Hospital Association board in 1996.
How times have changed.
Nowadays, Sprenger says, CEOs must have a different set of skills from what they used to.
For example, Sprenger says, if he were in the early stages of his career, he would spend time surrounded by Internet gurus to better understand the potential for connectivity between patients, physicians, health plans and doctors.
He reminds younger CEOs to take the long view of healthcare.
If executives don't step back, they'll "just keep treading water and not see the opportunities that all of this change will give us in healthcare," Sprenger says.
The greatest management skill, Sprenger says, is anticipation. CEOs, he says, must be able to predict what change lies ahead and then position themselves to capitalize on it, not be bowled over by it.
"(To) people who find change suddenly in their face, I say: `Where have you been?' "
Donald Brennan has never been a hospital CEO.
But when Brennan, 63, retires at the end of the year, he'll be stepping down as president and CEO of Ascension Health, the country's largest not-for-profit healthcare system.
Headquartered in St. Louis, Ascension, which has $6 billion in annual revenue and 71 owned or affiliated hospitals, was created last year through the merger of Daughters of Charity National Health System, St. Louis, and Sisters of St. Joseph Health System, Ann Arbor, Mich. Brennan had been president and CEO of Daughters since 1995.
But unlike other system CEOs who worked their way up from hospital chief executive posts to system leadership, Brennan started his career in 1962 as an accountant at the University of Colorado Medical Center in Denver. He moved up through the financial ranks there before moving in 1974 to Seattle's Group Health Cooperative of Puget Sound, an HMO, where he became CEO in 1976.
Brennan's start in finance is an experience that has proved valuable to him even to this day.
"I still . . . understand the importance of having a very disciplined approach to managing the costs and revenue use," Brennan says.
Brennan got his first taste of running a healthcare system in 1980 when he was named CEO of the Seattle-based Sisters of Providence Health System, now called Providence Health System.
"It was a wonderful journey, but certainly not a scripted journey," Brennan says. In retirement, Brennan will return to Seattle, where he has maintained a home during his years working in St. Louis.
Looking back on his 38-year career, Brennan marvels at the tremendous changes in technology.
For example, when he was at the University of Colorado, preparation for a kidney transplant was very complicated. Now "kidney transplants are commonplace," he says.
Another evolution Brennan has observed is the shift from a "rugged individualist" form of management to a team-like approach.
"The world has gotten so complex in healthcare that the successful organization . . . has moved very much to the recognition of successes built around strong people working in effective teams rather than the era of the rugged individual," Brennan says.
While Brennan doesn't yet have specific plans for his retirement, he won't be too far removed from the healthcare scene.
"This is an exciting time for healthcare, a changing time," Brennan says. "I don't plan to just play golf. I'd like to do a little bit of that, but not a lot."
Boone Powell Jr.
Boone Powell Jr. comes from something of a royal family in healthcare.
His father, the late Boone Powell Sr., was inducted in 1988 to the Health Care Hall of Fame after serving for more than three decades as CEO of Baylor University Medical Center, Dallas, and starting the country's first residency program for hospital administrators. The elder Powell died in 1996 at the age of 84.
The younger Powell, 63, followed in his father's footsteps. He took over in 1980 as CEO of Baylor and a year later became the founding CEO of the Baylor Health Care System.
Although Powell has relinquished day-to-day management duties at the system, he will remain active as the system's chairman, focusing on public policy and philanthropy. The system's new president and CEO is Joel Allison, who had served as president and COO.
Powell got his start in healthcare administration in 1961 as associate administrator at Hendrick Medical Center, Abilene, Texas. He worked there for 19 years, the past 10 as CEO, before taking the helm at Baylor.
Powell says he never thought it would happen that payers would clamp down on reimbursements like they have. And he is critical of the federal Balanced Budget Act of 1997.
"When we correct, we overcorrect, and I think that has happened . . . and we don't get back on keel until we get into real dilemmas, we get into crisis," Powell says.
He says working in healthcare isn't like it used to be because of the issues of financing.
"There is more time spent on the internal factors and less on the mission because it has become an absorbing issue for all of us to steer through these changes," he says.
As John King likes to say, he quit his day job in February 1999.
That's when King, 61, followed through on a 2-year-old transition plan and relinquished his job as CEO of Portland, Ore.-based Legacy Health System.
He turned over the reins to his successor, Robert Pallari, who had been Legacy's president and COO.
But King is still involved. He has a four-year contract to be an adviser to Legacy's CEO and board chairman.
King, who had been head of the system since 1991, says he told the board when he was hired that he planned to retire by the time he was 60.
"I want to have some freedom and flexibility in my life," says King, who now splits his time between homes in Phoenix and Portland, Ore.
King, who got his first hospital administration job in 1963, says emotional fatigue can set in for longtime executives because "these are pretty confining jobs, they are demanding jobs. There is also a little bit of the attitude, `I have been there, I have done that, I have demonstrated to myself that I can successfully lead an organization,' " King says.
Reflecting on his 36-year career in hospital administration, King says the role of the CEO has changed during that time.
When he started, the chief executive primarily managed the business and operations side of a hospital, while physicians were almost completely left alone to oversee the clinical side of the house. Now CEOs are accountable for both clinical quality and operations.
"That makes the job much more complex," King says.
Nevertheless, the CEOs of King's generation faced many of the challenges present in healthcare today. For example, King says, there were labor shortages, nursing shortages, physician shortages and union problems.
"Those are not brand new problems," he says.
King points out that the healthcare industry moves in phases. For example, in the 1960s and '70s CEOs focused on building and growing their organizations but then, in the 1990s, moved toward building integrated delivery systems.
"People are going to have new challenges, " King says, "but they are going to have new opportunities." Some of the challenges, King says, are improving quality and reducing medical errors. He is optimistic about that happening. "A lot of organizations are going to rise to that occasion," he says.
As for the issue of medical errors, which has taken center stage in Washington this year following an Institute of Medicine report, King says: "That genie is out of the bottle, and we're going to have to respond as an industry."
Sister Mary Roch Rocklage
Sister Mary Roch Rocklage believes the evolution to systems from freestanding hospitals was good for the industry.
But she doesn't make that assessment without acknowledging a downside to it all. Some, she says, "got hung up in the structure and the corporateness of it."
That's why, Rocklage says, people have to be continually reminded of this one thing: "The system is not our ministry of healthcare; it's only the structure that facilitates it."
It's worthy advice that comes from a woman who has spent 37 years working in healthcare.
Although Rocklage, 65, stepped down last year as president and CEO of St. Louis-based Sisters of Mercy Health System, she retained her role as chairwoman of the system board.
Rocklage was replaced by Ronald Ashworth, who had been the system's COO.
"I don't think it's good to stay too long," she says.
Rocklage is a longtime proponent of healthcare systems. She says she was the one who first raised the question of whether her own religious congregation, the Sisters of Mercy-St. Louis, should organize its hospitals into a system, because she saw the "need for more focused leadership." Rocklage was president of the religious congregation from 1979 to 1985.
The congregation agreed, and in 1986 the Sisters of Mercy Health System-St. Louis was started with Rocklage as its founding CEO.
"I'm very glad we did it," Rocklage says. "Unless you were effectively organized . . . you really could not be an effective presence to help shape healthcare."
Rocklage sees a weakness in healthcare today: a loss of a sense of connectedness among people who work in the field. In the past, Rocklage says, there was a feeling that everyone was in it together. But now the different factions, from nurses to physicians to payers, are fragmented and going their own way.
"Everybody is kind of pulling in their oars, and they're in it for themselves," she says.
James Crews, 62, started his career as a research chemist for a company in Minneapolis. But that didn't last three years before Crews changed his life's path and headed off to the University of Iowa, where he earned a graduate degree in hospital administration.
"I got in because I like people," says Crews, who retired May 1 as CEO of the seven-hospital Arizona division of Banner Health, based in Phoenix.
But much about healthcare has changed since Crews' career began in 1964, and so have some of his feelings about his chosen work.
"I just think it's the right time to retire," Crews says. "I have to say, it's not as much fun." Crews says he had planned to retire when he was 60, but the board of his former health system, Phoenix-based Samaritan Health System, asked him to postpone his departure. He did and, since then, helped create Banner Health, which came to life last year when Lutheran Health Systems, Fargo, N.D., acquired Crews' Samaritan in a $345 million deal.
For the remainder of this year, Crews will work as a special adviser to Banner. Replacing Crews was Charles Welliver, who had been COO of Banner's Arizona operations.
Banner was the seventh merger deal for Crews during his 36-year career.
For Crews, healthcare is a different world now from when he first began his career in healthcare administration at age 27. Among the biggest differences: the added emphasis on financial success.
"We went into the business because we wanted to do good, and we found out over the last part of my career that in order to do good, you have to do well (financially)," Crews says. "There's so much pressure."
The effects of the 1997 federal budget law on the hospital industry have been "devastating," Crews says, not to mention the pressures of managed care.
The one thing he thought he would never see during his career was a payment structure that rewarded less treatment. But "that's what's happening," Crews says.
"There is an economic pressure to do that," he adds. "That has probably been the most disturbing thing for me."
When Scott Parker retired in 1998 after a 36-year career in healthcare, one thing baffled him.
He was amazed that during all that time the U.S. had not done a better job of providing healthcare coverage to the poor.
"Medicaid was theoretically going to be the answer, but it fell woefully short," says Parker, who retired as CEO of Intermountain Health Care, based in Salt Lake City, after 23 years at the helm.
Parker was replaced by William Nelson, who had been Intermountain's president and COO.
As a past president of the International Hospital Federation, Parker traveled extensively during his career and saw what other countries were doing to get care to the poor.
"We are a nation yet to come to grips with our responsibilities," Parker says.
He says he has stopped predicting when the country might find a better way to extend healthcare coverage to the poor.
"It's going to take a courageous . . . president and Congress to make it happen, and that remains to be seen," Parker says.
Parker, 65, who was AHA board chairman in 1986, says he sometimes questions whether he could have done more about getting coverage to the poor.
Born and raised in Salt Lake City, Parker's career came full circle when he was named in 1975 to be Intermountain's founding CEO.
He offers a piece of advice to those CEOs who follow him and others in the field: "Stay optimistic. There are always the doomsayers predicting calamity and disaster. They've always been there, but they are never right."
Fred Brown, the former president and CEO of St. Louis' BJC Health System, is part of a generation of hospital executives that had to make the transition from running freestanding hospitals to managing integrated delivery systems.
With their managed-care and physician components, not to mention multiple hospitals, these integrated systems grew to be complex exercises in management, Brown says.
And its not getting easier.
"The new level of managers is really going to be challenged by those types of issues, at the same time (they're) trying to manage costs," says Brown, who began his career in hospital administration in 1965. "The challenges ahead are going to be just as tough as the challenges we had in a different era."
Brown, 59, stepped down from the helm at BJC in December 1998 after five years in the top job. Brown, who says his leaving was of "mutual agreement" with the BJC board, went on to serve as the 1999 chairman of the AHA's board of trustees. He will continue to serve as vice chairman of the BJC system through the end of this year.
Brown was replaced by Steven Lipstein, who had been executive vice president at University of Chicago Hospitals and Health System.
When Brown started working in healthcare, "bricks and mortar" were the focus. Nowadays, Brown says, CEOs must focus on the transformation of medicine from the technology age to the biotechnology age and on the impact new technologies and more advanced drugs will have.
That means a new strategy for CEOs.
"The CEOs of the future are really going to have to position their organizations so patients and consumers will have a lot of input," Brown says.
He concedes that the balanced-budget law and other cost-management issues have made the job of CEO "very tough."
Despite the sometimes rough road, Brown still encourages others to go into healthcare administration. "The kinds of opportunities and the ability to make a difference are still there," Brown says. "That's what always drove me."