CHI St. Luke's Health CEO resigns amid merger talks
- CHI St. Luke's Health CEO Michael Covert has issued his resignation and will step down at the end of August, the Houston Chronicle reports. He joined the organization in 2014. Covert was key in expanding St. Luke's operations to 17 hospitals.
- St. Luke's parent company, Catholic Health Initiatives (CHI), announced in 2014 it would cut 1,500 positions nationwide. More than 1,200 have already been eliminated in CHI's Texas region, including many at St. Luke's.
- A replacement has yet to be named but CHI expects to identify an interim CEO within two weeks. The resignation comes as merger talks entered the "final stages" earlier this month between CHI and Dignity Health, as reported by San Francisco Business Times.
Covert's resignation comes at a time when health systems are feeling financial pressures — and CHI is no exception. The health system experienced a $483 million operating loss in fiscal year 2016, attributing the loss to lower patient volumes, higher labor costs, increased pharmacy prices, and reduced reimbursement in Medicare and Medicaid. Moody's Investors Service in March downgraded CHI's long term debt ratings, the latest in bond degradations for the nonprofit health system.
The health system is far from the only provider in recent times to experience decreased operating incomes and make personnel cuts. Summa Health is eliminating 300 positions and faces an expected $60 million operating loss this year. Memorial Hermann announced similar cuts for similar reasons earlier this week, and its CEO Benjamin Chu resigned abruptly last week. KentuckyOne Health, another CHI property, saw its CEO Ruth Brinkley resign last month amid pressure to streamline operations in the wake of a decline in admissions. In its report for the third quarter of FY 2017, CHI said that divesting KentuckyOne facilities should bring in $534.9 million.
Brinkley and Covert's resignations are the latest in what is becoming a string of hospital CEO resignations this year. In May, Cleveland Clinic CEO Toby Cosgrove announced he'll be stepping down later this year, days after University of Utah Health Care CEO Vivian Lee announced her resignation. Elsewhere, Ronald DePinho stepped down as MD Anderson Cancer Center's president in March while Summa Health's CEO Thomas Malone resigned in January.
While the reasons for resignation may be different, fiscal troubles have taken their toll on most of these organizations. CHI's financial restructuring comes as it explores a merger with Dignity Health. If the merger goes through, it would create one of the largest nonprofit health systems in the U.S.
- Modern Healthcare CHI St. Luke's Health CEO Covert to step down in August
- Houston Chronicle In a surprise, St. Luke's CEO resigns
- Becker's Hospital Review CHI St. Luke's Health CEO Michael Covert suddenly resigns
- San Francisco Business Times Dignity Health, Catholic Health Initiatives merger talks enter 'final stages'
- Healthcare Dive Catholic Health Initiatives scraps 620 positions in Texas
- Healthcare Dive Catholic Health Initiatives suffers $483 million in operating losses in 2016
- Healthcare Dive KentuckyOne Health CEO's resignation latest in trend among pressured providers
- Healthcare Dive Dignity, CHI are talking. Could a merger be on the horizon?
- Healthcare Dive CHI says divesting Louisville hospitals, facilities should help bottom line
- Healthcare Dive Moody's hits Catholic Health Initiatives with yet another ratings downgrade
Follow Jeff Byers on Twitter