(Story updated at 3:58 p.m. CT)
Rulon Stacey has resigned as CEO of Minneapolis-based Fairview Health Services after just 15 months in the post.
A statement from Fairview indicated that the departure was due to a combination of professional differences and personal considerations.
Stacey was hired in 2013 after the academic medical center went through several high-profile controversies. The not-for-profit system was widely criticized for aggressive collection practices employed by third-party contractor Accretive Health. Fairview also called off a proposed merger with South Dakota-based Sanford Health after the deal met resistance from Minnesota officials.
Fairview is a partial owner of PreferredOne, an insurer that captured 60% of customers on Minnesota's exchange during the first year of exchange operations. But the health plan pulled out of the MNsure marketplace before the second open-enrollment period because of financial issues.
Those problems before Stacey arrived suggested “an atmosphere of significant turmoil in the system,” said Allan Baumgarten, a healthcare consultant based in Minneapolis. But Stacey was viewed as a leader who could right the ship.
“I was surprised,” Baumgarten said of Stacey's departure. “Presumably (board members) made their pick with a goal of restoring some stability.”
Fairview has no immediate financial problems. Through the first nine months of 2014, Fairview had a $107.7 million operating surplus on $2.7 billion of revenue, according to the not-for-profit system's latest bondholder documents (PDF). That equaled a 4% operating margin, down slightly from 4.3% in the first nine months of 2013 but still an above-average figure overall.
However, Fairview is part of the CMS Innovation Center's Pioneer ACO program, the government's learning laboratory for accountable care under the Patient Protection and Affordable Care Act. And the system has not yet achieved any savings, which may have raised questions about how ready Fairview is to take on the risk required under the Pioneer model.
“You could sort of take that as a proxy measure: How much progress are they making in terms of reorganizing systems of care and care management?” Baumgarten said.
Several months ago, speculation circulated that Fairview and two other area provider systems, HealthEast Care System and North Memorial Health Care, were trying to merge, Baumgarten said. North Memorial is another part owner of PreferredOne, and the three systems together offer Preferred Health, a commercial health insurance plan for employers.
“Fairview has always had dreams of being bigger,” said David Feinwachs, former general counsel for the Minnesota Hospital Association.
Before joining Fairview, Stacey spent nearly two decades as a hospital executive in Colorado where he helped broker a merger between Poudre Valley Health System and the University of Colorado Hospital in 2012.
The Fairview board has formed an “office of the CEO” to provide oversight until a new top executive is found. Board Chair David Murphy, former board Chair Chuck Mooty and Dr. Brooks Jackson, a board member and dean of the University of Minnesota medical school, make up that leadership group.
Calls to Murphy and other board members were not returned Tuesday afternoon. Fairview spokeswoman Cindy Fruitrail said board members were not available Tuesday for interviews.
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