Advocate Aurora Health has pared back its CEO office from two to one, with Jim Skogsbergh emerging as the not-for-profit health system's sole CEO.
Newly merged Advocate Aurora's short-lived foray into the co-CEO model lasted just over a year. The Illinois and Wisconsin systems' union became official in April 2018. The health system's announcement Wednesday follows other co-CEO structures, which typically last less than three years.
The change, which Advocate Aurora announced Wednesday, also means Skogsbergh's former counterpart, Dr. Nick Turkal, will leave to pursue other interests.
Although this wasn't the original plan, Skogsbergh said in an interview he still believes the co-CEO model was "absolutely necessary" to launch the Downers Grove- and Milwaukee-based organization.
"I think that was the right decision then," he said. "I think today as I sit here it was the right decision."
Skogsbergh said he and Turkal realized about a year into the merger that the leadership structure necessary to launch the health system might not be necessary going forward. The two encountered a number of redundancies they felt could be eliminated by moving to a single CEO, he said.
The two CEOs brought their idea to Advocate Aurora's board of directors. Skogsbergh emphasized it was not because of disagreements between he and Turkal.
"I know you want a salacious story about we didn't get along and disagreed on major things," Skogsbergh said. "That is simply not the case. We partnered very effectively. But we also have a sense of what's needed for the organization going forward."
The board ultimately decided to make the change after a thorough review with the help of an independent adviser, board Chairwoman Joanne Disch said in a statement.
"We have been fortunate to come together as Advocate Aurora Health under the leadership and expertise of two tremendous individuals, and we express our sincerest gratitude to both Nick and Jim for their outstanding contributions," she said.
Before the decision was announced, Skogsbergh said the board indicated that either he or Turkal would be selected to be CEO and the other would have to leave the organization.
Governance experts have largely been skeptical of health systems led by dual CEOs over the long term, arguing that the model can inflate costs and slow decisionmaking. But over the short term, it can bridge mergers and acquisitions, they said.
Such arrangements are tricky but can be successful in the short term, especially if there's a plan early on that stipulates one person will take over at a set date, experts said.
Advocate Aurora did not have such a plan, as the idea was to have co-CEOs indefinitely, Skogsbergh said. In hindsight, he said it still played out the way it was supposed to.
"We went into this knowing that we would be joined at the hip until the board thought otherwise," he said.
Edison, N.J.-based Hackensack Meridian Health's dual-CEO model lasted about 2½ years and ended under the terms of a succession plan drawn up early into the merger to form the health system.
Newly formed Prisma Health in South Carolina has been led by two co-CEOs since its formation became official in January, but they will both leave the organization when a newly selected CEO takes the helm in mid-August.
Tom Giella, chairman of healthcare services for executive recruiter Korn Ferry, told Modern Healthcare earlier this year that the model can breed mistrust if cost savings in one state are reallocated to another by corporate administrators.
"There's a reason you rarely see co-CEOs in corporate America," he said.
The change will give Advocate Aurora a leg up in its ongoing work to cut labor costs. Turkal made $11.4 million in 2017, a 187% raise from 2016. Skogsbergh made $11.7 million in 2017.
Last month, Advocate Aurora offered early retirement buyouts to about 300 employees who are older than 60 with more than 10 years of service as it works to cut labor costs.
Advocate Aurora ran into some opposition when it reconfigured employee bonuses. It ended its Associate Award bonuses in 2019, which struck a chord with employees who protested total compensation increases for top executives.
The 28-hospital system drew $12.2 billion in total revenue in 2018, up 3.5% from $11.7 billion in 2017. Expenses rose 4.2% during that time to $11.6 billion. The system presented some of its financial and utilization results on a pro forma basis, with separate results from Advocate and Aurora prior to the merger combined for comparison.
The system's operating income fell to $472.4 million in 2018—a 4.5% operating margin—from $554.7 million in 2017, a 5.2% margin.
Prior to Advocate Aurora, Skogsbergh was executive vice president of Iowa Health System and president and CEO of Iowa Methodist, Iowa Lutheran and Blank Children's Hospitals.