Brian Bauer, the CEO of Community Health System's Fort Wayne hospitals, has been fired in the wake of a failed physician effort to find a buyer for the eight hospitals.
The removal is the latest sign of trouble in the most profitable market for CHS, which has been facing hard financial times itself.
Bauer was removed Monday as CEO of Lutheran Health Network because "current circumstances put him in an untenable position and he is unable to continue in his leadership role," CHS Division 1 President of Operations Marty Bonick said in a letter to physicians and employees.
The letter noted that Aaron Garafola, CEO of Lutheran Health Network's Dupont Hospital, also was no longer in his position.
Bauer's ouster comes three weeks after Franklin, Tenn.-based CHS rejected a $2.4 billion offer from a buyout group that disgruntled physicians in Fort Wayne had brought forward to buy the profitable CHS division. More than 100 physicians supported the buyout effort.
The CHS board of directors said the offer was at least $1 billion too low and told the physicians not to bring another offer.
The physicians said in an editorial Sunday that Bauer had been put in "an untenable position" by advocating for staffing and facilities improvements that were largely ignored by CHS and gave rise to the buyout effort.
"While this is precisely what leaders must do, it has led to Brian's being criticized at a time when he should be praised for having the courage to say what needs to be said," said the members of the physician group known as Fort Wayne Physicians.
The physicians haven't given up on their quest. They have been waging a public relations campaign. In an interview last week, Dr. Vince Scavo, who was one of 10 physicians who took the buyout offer to CHS, said CHS neglected Lutheran's capital and staffing needs for years and had lost the trust of physicians and employees in Fort Wayne.
Scavo said there was no alternative to CHS selling the system.
Bauer had been CEO of Lutheran Health and its flagship Lutheran Hospital since 2013.
Bauer's removal has heightened tensions in Fort Wayne, CHS's most-profitable market, said Dr. John Crawford, a Fort Wayne city councilman who runs an anesthesiology practice in Fort Wayne that practices at the Lutheran network hospitals, rival Parkview Health and other facilities in town.
More than 100 physicians in Fort Wayne have supported the efforts of the Fort Wayne Physicians to lead a buyout group for Lutheran and businesses in town have vowed to send their employees elsewhere if CHS won't sell, Crawford said. Moreover, a total of 300 physicians own about 20% of Lutheran through an equity transfer made years ago.
"If you wanted a revolution rather than a resolution, this (Bauer's firing) was the way to do it," Crawford said.
In a statement, CHS spokeswoman Tomi Galin said Bauer had been replaced because his position had become untenable. She reiterated CHS's commitment to spend $500 million in the coming years at Lutheran for new information technology and upgraded facilities — promises that the Fort Wayne Physicians said had been too little, too late.
The Bauer firing was first reported by Fort Wayne station WANE.
Fort Wayne is struggling CHS's most profitable division with revenue of about $1.1 billion annually and earnings before interest, taxes, depreciation and amortization of $350 million, according to a recent report by J.P. Morgan.
Fort Wayne notwithstanding, CHS posted a net loss of $1.7 billion in 2016 and is in the process of selling 30 hospitals to reduce a $15 billion mountain of debt.
Bauer has been replaced by Mike Poore, who is a Vice President of Operations for CHS's Professional Services Corp., the Bonick letter said.
Healthcare consultant Mike Young has been appointed interim chief operating officer of Lutheran, the letter said.
Young will lead stategic initiatives, including a $500 million capital commitment that CHS recently made to the Fort Wayne operations, the letter said.