Capping its first year of operations with a disappointing earnings release last week, Iasis Healthcare Corp. announced its board had chosen a new chief executive officer.
The shift in the top ranks is the latest in a series of management appointments that the 15-hospital chain has announced in recent weeks.
David White, 53, now chairman of Iasis' board of directors, will also become its CEO effective Dec. 1.
Wayne Gower, the company's former president and CEO, will remain president and will become its chief operating officer.
Gower, 53, told MODERN HEALTHCARE that in his new role he will focus on operations while White, as CEO, "will have to take on certain organizational chart responsibilities that a CEO does."
Observers suggested the move was engineered by Joseph Littlejohn & Levy, the New York investment firm that owns 85% of the company's stock and holds a majority of seats on its board.
"I think there were some bondholders, some of the larger ones, who had been concerned about the management depth of the company and probably raised that issue with JLL," said Alex Geier, a healthcare analyst at UBS Warburg in Stamford, Conn.
Paul Levy and Jeffrey Lightcap, both senior managing directors of Joseph Littlejohn & Levy and members of Iasis' board, did not return repeated calls for comment.
David Peknay, a healthcare analyst at credit-rating agency Standard & Poor's, said the company's management has been evolving since it was founded.
"Typically, when a change of this sort is made, it can be perceived that there was a problem or that a change needed to be made, but it's difficult to ascertain that here because the company clearly has been beefing up its management team as they are only a bit over a year old," Peknay said.
Gower said he does not see his change in status as a signal that the board is unhappy with his leadership abilities, and he is comfortable working closely with White, he said.
The two have worked together before. Both at one time worked for Brentwood, Tenn.-based Community Health Systems and each presided over a group of hospitals at HCA-The Healthcare Co. in Nashville.
Gower said White's inclusion will allow the company to pursue different strategic paths and possibly an initial public offering next year.
White is president and CEO of LifeTrust, an assisted-living company headquartered in the same Franklin, Tenn., office park as Iasis. He will give up that post when he moves to Iasis.
White was on vacation last week and unavailable for comment.
Iasis was founded in 1998 but purchased its 15 hospitals--10 of them from Tenet Healthcare Corp. and five from Paracelsus Healthcare Corp.--a little more than a year ago.
Since then, it has been working to install new administrators at its hospitals. Earlier this month, Iasis also named a new division president for its Arizona and Florida hospitals, a new operations controller, and a new division chief financial officer for Arizona and Florida.
For the year ended Sept. 30, the company reported a net loss of $40.1 million, or $14.7 million if preferred stock dividends are taken out of the equation. In the previous year, Iasis reported net income of $983,000. Its revenue for fiscal 2000 increased to $815.2 million from $181.7 million, primarily because of the purchase of the 10 Tenet hospitals in October 1999. The company took a hit of $10.6 million for the year on its physician practices, which are closing.
Iasis also has had a tough time turning around losses at Rocky Mountain Medical Center in Salt Lake City, which it bought from Paracelsus and reopened last April. In the fourth quarter, the 120-bed hospital lost $4.2 million.