(Updated 4 p.m. ET):
Ascension is splitting the title of president and CEO of the organization and unifying its two-pronged structure, resulting in the departure of three top executives including Patricia Maryland, according to an internal memo obtained exclusively by Modern Healthcare.
Joe Impicciche will serve in the new role of Ascension president, leaving Anthony Tersigni with only the CEO title.
Dividing the organization limited collaboration and created "unintended hierarchy and silos," Tersigni wrote in the memo. The reorganization aims to delegate decisionmaking appropriately as Ascension looks to streamline operations.
It will also facilitate the growth of its subsidiaries both within and outside of the company, Tersigni wrote.
Impicciche will also serve as chief operating officer, overseeing both healthcare operations and services; he had been executive vice president and general counsel since 2004.
Maryland, CEO of Ascension Healthcare, will cap her 15-year tenure at the nation's largest Catholic health system on June 30. Her position will be eliminated as Ascension combines its "solutions" and "healthcare" divisions. Dr. David Pryor, executive vice president and chief clinical officer, and John Doyle, president and CEO of Ascension Holdings and Ascension Holdings International, will both retire at the end of the current fiscal year.
"A flattened organization will allow us to create faster decisionmaking and a much more aligned organization so we can move more quickly," said Maryland, who, along with Pryor and Doyle, will continue to serve Ascension through an advisory role via its consulting subsidiary.
Maryland said she always had a two-year window in mind for her current role, and she relayed to Tersigni that following her departure there would be a reorganization opportunity.
Similar moves are happening throughout the industry as health systems face a new operating environment. They look to boost the pace of change and remove redundant leadership roles as margins narrow.
Dallas-based Baylor Scott & White Health named Peter McCanna president in 2017, with McCanna assuming some of the responsibilities of CEO Jim Hinton. In reverting to a co-leadership model put in place just after the organization's 2013 merger, the 49-hospital system could adapt quicker, Hinton said.
Ascension's restructuring aligns with the overall industry, said Kevin Holloran, a senior director with Fitch Ratings.
"This is a continuation of both Ascension's growth and the ever-changing sector," said Holloran, adding that the reorganization will not have any rating impact.
Ascension said in March of last year that it is preparing for these changes by reducing its 151-hospital footprint across 21 states and trimming its leadership structure. It is actively searching for ways to build out its urgent-care, skilled-nursing, home health and telemedicine businesses.
Ascension's ancillary businesses, housed under its "solutions" division, have been increasingly profitable. It will continue to use its health system as a testing ground for some of its investment, consulting, revenue-cycle management, group purchasing, facilities management, risk management, leadership, physician practice oversight, venture capital and automation arms that Ascension looks to commercialize in the U.S. and abroad.
"We can't just depend on our hospitals to carry us long term," Maryland said last March said during the American College of Healthcare Executives' 2018 Congress on Healthcare Leadership in Chicago.
The existing executives will take on more responsibilities related to consumer experience, clinical governance, home care, strategic contracting and cultivating leadership, among others.
The market executives will continue to lead their respective markets in the role of senior vice president, according to the memo. As previously shared, Mike Mullins will transition out of the Kansas and Oklahoma market and interim leadership is in place.
Also, although not part of the memo, Dennis Holtschneider recently left his post as executive vice president and chief operations officer of Ascension after about a year and a half to lead the Association of Catholic Colleges and Universities.
Jim Beckmann, who has been the senior vice president of Ascension Holdings, will take over for Doyle and lead its international strategy.
Four leadership groups will replace Ascension's Office of the President, Leadership Community Council, President's Advisory Council, Solutions Leadership Council and Strategic Opportunity Assessment Committee.
The new groups will be the Ascension-wide leadership team, the operational leadership team, the clinical leadership team and the CEO council.Part of the motivation is to transition from a top-down model to one where change is driven from the front lines, according to the memo.
As planned, the reorganization has come at a cost. Ascension's operating income fell 81% from fiscal 2017 to 2018, from $552.7 million on $22.71 billion in total operating revenue to $104.8 million on $23.16 billion in operating revenue, according to Ascension's year-end financial report.
The health system drew $36.4 million in income from operations in the first quarter of 2019, compared with $11.5 million during the prior-year period, as its operating margin dipped slightly to 0.9%.
