Wegmiller says he was merely trying to be practical and logical, but there's no denying that he and others made a big splash in the Twin Cities and nationally after a series of moves and deals he participated in during the 1960s through the 1990s.
“He was one of the founding fathers of what we now call integrated delivery systems,” says Ken Paulus, president and CEO of Allina Health System, Minneapolis, the successor health system to the one Wegmiller formed starting in the 1980s.
Initially, Wegmiller and a few others were breaking out of the standard ways of doing things by creating multihospital systems. Later, they added other forms of healthcare services such as post-acute care and even insurance.
“I am now sitting at his desk. Literally,” Paulus says. “He really blazed a trail for a lot of other regions. The rest of the nation followed.”
Wegmiller gave up the hospital CEO life in the 1990s to work in executive compensation consulting and now has three roles. He co-founded and serves as chairman of the Scottsdale Institute, a not-for-profit where health system executives can share experiences in information technology management. He is chairman, CEO and a co-founder of C-Suite Resources, which provides market intelligence, education and strategy support to companies that serve the healthcare industry. And he is chairman emeritus of Integrated Healthcare Strategies, a Minneapolis-based consulting group specializing in compensation and workforce strategies.
Now 74, Wegmiller says his urge to merge hospitals back in the 1980s grew out of a job he took earlier in his career when he was working for a hospital that is now part of Fairview Health Services, based in Minneapolis.
“One of my first assignments was to work with a team that was developing the idea for a second hospital,” Wegmiller says of that stint during the 1960s. The job was to study all of the various aspects of the hospital's operations to figure out what types of services would be offered at each of the hospitals.
He says that work, studying the efficiency of the various services a hospital offers, got him thinking about the value of consolidating hospitals rather than operating them separately.
Still in his 20s, Wegmiller in 1965 was named CEO of the new hospital, Fairview-Southdale. He recalls making moves others might not have considered because he was relatively inexperienced. “I didn't know any better,” he says.
He observed that the combined hospitals began to enjoy economies of scale that independent hospitals couldn't, he says. He speculated that “if this works for hospitals, why not bring in other elements of the care system, like home healthcare?” he says. “Some people thought that was (either) crazy or innovative.”
Wegmiller was already gaining a reputation in the industry for innovation, and in 1969 was named the first recipient of the American College of Healthcare Executives' Robert S. Hudgens Memorial Award for Young Healthcare Executive of the Year. It was at the Hudgens award ceremony that Ken Ackerman first saw Wegmiller.
The award “set the framework for everything else Don did in his career,” says Ackerman, chairman of Integrated Healthcare Strategies and the person who nominated Wegmiller for induction into the Health Care Hall of Fame.
Ackerman says he turned to Wegmiller for assistance in the years when Ackerman ran Geisinger Medical Center in Danville, Pa., the flagship facility of Geisinger Health System.
“He's a visionary,” Ackerman says. “He's been a great leader in the field, a mentor to young healthcare executives throughout his career and he's made tremendous contributions to healthcare,” he says.
Wegmiller remained at Fairview until 1976 when he joined six-hospital Health Central system, Minneapolis, as chief operating officer. After being named CEO of the system in 1978, “he launched a dramatic six-year expansion that resulted in the system's growth to 23 owned and managed hospitals and more than 300 service-sharing hospitals in 11 Midwestern states,” Ackerman wrote in his nomination letter.
It was during this period that Wegmiller's strategies started to plow new ground, and as early as 1982 he was promoting the idea that consolidation and the elimination of beds was going to be necessary for the hospital industry to thrive. He told Modern Healthcare at the time that 1,000 hospitals would fail during the 1980s because of poor management and governance, unviable patient mix, capital investment errors and productivity problems.
Five years later, Wegmiller's views on the industry's future hadn't changed, when he said, “We all anticipate there will be a capacity shakeout in the next five years and many hospitals not part of systems will close.”
He fell far short on his prediction that 1,000 hospitals would go away, with the number of community hospitals tracked by the American Hospital Association falling by 375 to 5,455 in 1989 from 5,830 in 1980. His 1987 prediction was more accurate as the net number of community hospitals—which were disappearing through mergers, acquisitions or closings—fell to 5,292 in 1992 from 5,611 in 1987. By 2011, the number of community hospitals had dropped to 4,973.
The 1986 merger of Health Central with HealthOne, also based in Minneapolis, created the predecessor organization for one of the first fully integrated delivery systems, what is now Allina Health.
“The $300 million organization that emerged was clearly ahead of its time,” Ackerman wrote in his nomination letter.
“The evolution in healthcare is to integrate services, rather than fragment them,” Wegmiller told a local newspaper at the time of the HealthOne deal. “That's what we see as the primary strength of the merger.”