When Robert O'Leary packs it in at Premier next month to become president and chief executive officer at PacifiCare Health Systems, it will be in some sense a long-planned departure for the founding chairman of the 1,800-member hospital alliance.
O'Leary hasn't run the San Diego-based Premier on a day-to-day basis since he ceded his CEO position to Richard Norling in September 1998.
At that time, O'Leary kept the title of chairman but gave daily decisionmaking power to Norling, who had come to Premier as its chief operating officer a year earlier. Norling had been CEO of Fairview Health Services, Minneapolis.
As president of then-American Healthcare Systems, O'Leary helped engineer the 1996 merger of AmHS with the competing hospital alliances SunHealth and Premier Health to create what's now Premier.
"I think Rob has done a great job in bringing the merger to fruition and integrating the organizations," said Daniel Kane, president and CEO of 520-bed Englewood (N.J.) Hospital and Medical Center.
A founder of the original Premier Health alliance when he was president and CEO at 500-bed Mount Sinai Medical Center in Milwaukee 12 years ago, Kane brought Englewood Hospital into the fledgling alliance when he assumed leadership there two years later.
The most surprising element of O'Leary's departure is that he is leaving for a new job, Kane said.
"When he stepped down as CEO to be board chairman, it was with the idea that he'd be easing out of the day-to-day burdens of running the organization. I think this was the transition envisioned at the time," Kane said. "I'm more surprised to hear that he is going to PacifiCare because I thought he might just decide to smell the roses, but I guess he's a Type A personality."
Barry Freedman, president of Mount Sinai Medical Center in New York and a Premier board member, said he isn't sure whether there are plans to replace O'Leary at Premier. "The board hasn't met to discuss this yet, but the board is very delighted with its CEO and very delighted with the progress of the company," Freedman said.
"We're happy for Rob and wish him well, but the reality is, we're prepared to move on."
Kane said he wonders if Premier needs a full-time paid board chairman. Nonetheless, Premier spokeswoman Pat Poston said the board of directors will elect a new chairman to replace O'Leary later this summer.
Premier without O'Leary will be noticed even by the foot soldiers of hospital purchasing departments.
"He's made my job much easier, and I can show some real results," said Chris Lattimer, director of materials management at 238-bed Camden-Clark Memorial Hospital, Parkersburg, W.Va.
A Premier member since the merged alliance's inception, Camden-Clark purchases about 90% of its supplies through the alliance. Membership has kept supply costs down to some of the best prices in the industry, according to Lattimer.
"His leadership has reshaped the entire price structure of supplies and services for the whole healthcare industry because, I think, everyone else followed Premier's lead," he said.
O'Leary "leaves Premier well-positioned to go forward with its current strengths," Poston said.
In March, the company agreed to buy a $550 million stake in Medibuy.com, an electronic commerce company based in San Diego. The deal was one of several this year that augur the growing role of the Internet in keeping hospitals supplied. Premier and its rival, Irving, Texas-based VHA, are expected to increase their reliance on electronic commerce for group purchasing.
For-profit hospital chains Tenet Healthcare Corp. and HCA-The Healthcare Co. have also invested in Internet ventures to support their materials management.
As part of Premier's investment in Medibuy.com., Norling would become chairman of Medibuy once the company makes its initial public offering, expected later this year.