(Story updated at 6:30 p.m. ET)
Joel Allison, the longtime CEO of Dallas-based Baylor Scott & White Health, will step down from the sprawling, not-for-profit hospital system early next year. He will assist in finding his successor.
Allison's official last day will be Feb. 1, when he turns 69. He will move into a senior adviser role with a focus on philanthropy and other areas outside of the day-to-day business. Baylor Scott & White is launching a national search for its next CEO.
Allison said in an interview Tuesday that he doesn't view the move as retiring but rather as “taking on a little bit different role.”
“When I see retirement, I think of people who stop, go play golf, go fishing,” Allison said. He added, though, that he will certainly golf and fish when he can.
In 2013, Allison spearheaded the merger between Baylor Health Care System and Scott & White Healthcare, creating today's massive system that covers large swaths of central Texas. Baylor Scott & White is the largest not-for-profit health system in Texas with 48 hospitals, a health insurance company, more than 5,800 affiliated physicians and 40,000 employees.
Baylor Scott & White also has revenue and assets that put it among the largest healthcare systems the country, according to Modern Healthcare's financial database. The organization recorded $7.5 billion in revenue (PDF) in its 2015 fiscal year, ended June 30, and posted a robust 8.9% operating margin. This year the system is on pace for $8 billion in revenue (PDF).
The merger between Baylor and Scott & White took about two years to complete after the systems started talking about a deal. Allison told Modern Healthcare after the deal closed that he and other executives knew there would be risks to combining two sizable hospital systems. But they felt the changes in reimbursement and care coordination, spurred by the Affordable Care Act, kept the negotiations moving forward.
“Before we merged, we had on our strategic list the need for a financing mechanism, because it was our belief that we as providers were going to be taking more and more risk,” Allison said in 2014. “So we were looking at developing a health plan from within, acquiring one, or partnering with one. When the discussions came about with Scott & White, we said this will help us get to where we wanted to be as an integrated delivery network.”
Scott & White's health insurance company also complemented Baylor's accountable care organizations and medical homes—ways in which hospitals, doctors and other clinicians care for a group of people by emphasizing preventive and primary care and avoiding expensive hospitalizations. Allison said Tuesday the transaction has sped up its movement to payment models with cost and quality incentives.
“The merger really focused on becoming an integrated delivery network, and that has been very, very positive,” Allison said. “The organization is in a great position.”
Allison, one of Modern Healthcare's 100 Most Influential People in Healthcare for 11 years, made more than $3 million in fiscal 2014 after adding up salary, bonuses and other forms of compensation, according to Baylor Scott & White's most recent tax forms. His total compensation from 2012 to 2014, the height of the merger talks and integration, totaled almost $8.7 million.
Allison joined Baylor's health system in 1993 as chief operating officer and was promoted to the corner office in 2000. Allison and his wife, Diane, will live in Waco, Texas, and he will carry out his advising duties from an office in Temple, Texas.
“We're empty nesters,” Allison said. “We have six grandchildren, and they're growing up fast. While I've been blessed with good health, we're not guaranteed more than one day at a time.”