Memorial Health System announced today that CEO Larry McEvoy has stepped down from his job.
Mike Scialdone, current CFO, will lead the hospital while negotiations are underway with University of Colorado Health. Scialdone has more than 20 years experience in the health care industry, and has worked at Penrose-St. Francis Health Services and at for-profit systems around the nation.
The hospital offered few details about what brought about the change, saying only that he and the Memorial Board of Trustees had reached a “mutual agreement,” said Jim Moore, board president.
“It was determined that he no longer fit the requirements of the CEO – something that came out from the negotiations with the University of Colorado Hospital,” Moore said. “He did an outstanding job, but the position has changed. The role he was hired to fulfill no longer is appropriate at Memorial. And that was something that came out of the negotiations with the University of Colorado Hospital.”
McEvoy will leave the hospital system May 4. Details of his severance package are still being worked out, said hospital spokesman Brian Newsome, but the rough agreement will pay McEvoy for 18 months.
McEvoy doesn’t have another position. In a statement, McEvoy explained his decision.
There are two main reasons for my departure and its timing. First and foremost, the job I was hired to do no longer exists. For now, we are not designing, creating and planning,” he said. ” Second, I leave to make space for our future as we go through the anticipated transition to UCH. I do not wish to become a distraction. All our effort must rise from and toward the new day with University of Colorado Health.”
McEvoy said his plans were undecided at this point, but said he would keep doing what he felt passionate about.
“And that’s building health care that works for both patients and the community,” he said. “Some people think you can’t have both – but th ebest economic program is one that focuses on health care that works for everyone. That’s what I’ll do, something in that sphere.”
McEvoy said he was proud of steering Memorial onto a new path and new governance model, although he admitted the decision was controversial in the community.
“There’s a lot to be proud of,” he said. “The people I worked with – and their willingness to step up and carry the organization through rough times and onto brighter days.”
There’s a lot to regret, as well.
“But I’m going to focus on what the future holds, and I wish Memorial and its staff good luck in the future,” he said.
Moore praised McEvoy for his leadership skills, and his guidance of the health system for the past four years.
McEvoy said the decision only appeared sudden.
“There has been a constant conversation throughout this process how to bet situation the hospital so it can succeed, and that conversation has been both political and politicized,” he said. “This was the best scenario in how to support the hospital. It’s just played out over time.”
McEvoy, a medical doctor with expertise in the emergency room, was hired in 2008. He hired Mike Scialdone to be the CFO, just as the bottom dropped out of the auction rate securities market. Memorial suddenly saw its interest rates on its debt skyrocket – and the two orchestrated refinancing agreement with city council. That year, the hospital posted a loss in profits, mostly due to the costs of renegotiating the debt.
McEvoy had two years with positive budget margins, but the hospital saw declining patient volume and declining profit margins in 2011, which ended with a budget deficit. The hospital retained its credit rating, but received a negative outlook from Moody’s, based largely on the uncertainty surrounding the hospital’s ownership.
As CEO, McEvoy came under fire almost immediately for the hospital’s budget problems and for his push to create an independent, nonprofit Memorial, free from city ownership and control. He very nearly succeeded, after a citizens’ commission agreed after nine months of deliberation that his was the best option for the city-owned hospital.
But city council changed hands, and the new council was less open to the McEvoy’s plan, which included partnering with other hospital systems around Colorado. Instead, they created their own task force, and decided to lease Memorial. The University of Colorado Hospital system was chosen to run the hospital.
City council member Tim Leigh has been openly calling for McEvoy to step aside, and said it was a “cathartic moment,” for Memorial.
“No change could occur under his leadership,” Leigh said. “This will be a change for a better. It’s good that he stepped aside, a great thing for the hospital.”
Leigh also called for the removal of Carm Moceri, the hospital’s COO. He said he still believes Moceri should leave his post.
“I definitely think the people who are in neogitiaotns for the hospital believe that the change should occur at a deeper level than just the COO,” he said. “McEvoy’s departure was just a step in a process, a change for the better. We should all breathe a collective sigh of relief – because now people know that this change is real. We’re better off, and I don’t mean any disrespect to Dr. McEvoy.”
The problem is one of skills, Leigh said. It’s why he approves of Scialdone’s appointment as interim CEO.
“I have been saying for months that he should lead the hospital,” Leigh said. “He gets the numbers, understands them better than anyone else. Larry McEvoy is a doctor. It’s just a different skill set. I’m delighted to have him lead the organization.”
For his part, Scialdone said he will focus on “maintaining and improving the integrity of Memorial’s health care, its operations and its financial position.”
He said he is committed to guiding Memorial through the transaction with UCH and then through the transition process.
“That’s my focus right now,” he said. “I think this is an exciting alignment for the system. We want to be prepared to give any and all information that they’ll need for a smooth transition. And I’m going to do all I can to ensure that we’re ready for it.”
Scialdone said he wasn’t suprised McEvoy resigned.
“I think Larry’s been looking at, evaluating his role for some time,” he said. “He’s given a great sense of vision to the organization. We didn’t spin off into an independent, nonprofit, but Larry saw early on that we needed an ownership and governance change to be successful. He was the catalyst for that change. I applaud the job he did.”
And his future at Memorial?
“I plan to be around through the transition,” he said. “To be totally honest, my total focus is going to be on maintaining, improving the quality and integrity of memorial’s operations. As we go through the transition, I’ll evaluate what opportunities are here. If ther are the right opportunities, the right fit, it’s definitely an exciting prospect to me. But now, my job is to guide the hospital through this transition.”