Fairview Health Services CEO out after just 15 months

The chief executive at Minneapolis-based Fairview Health Services is leaving after just 15 months atop one of the state's largest networks of hospitals and clinics.

Rulon Stacey is leaving due to "a combination of professional differences and personal reasons," according to an announcement Tuesday from Fairview's board of directors.

Stacey led a process of creating a strategic plan for Fairview that called for more integration between the system's community hospitals and clinics, and the academic health center at the University of Minnesota. Fairview owns and operates the U's teaching hospital in Minneapolis.

"As we are transitioning from developing a strategic plan to implementing the plan, the board and Rulon discovered we have differing opinions on how to move forward," board Chairman David Murphy wrote in an e-mail to Fairview staff obtained by the Star Tribune. "In addition, Rulon wants to take some time off to focus on his family, as well as his health and well-being."

A Fairview spokeswoman did not elaborate on the differences, and board members were not available for interviews on Tuesday.

The departure adds to uncertainty at Fairview, which was rocked in 2012 by allegations of overly aggressive tactics by an outside firm that the health system hired to collect patient bills. Merger talks in 2013 with South Dakota-based Sanford Health ultimately failed, but not before the U proposed taking over Fairview.

"This was an organization that was desperately seeking stability after a turbulent one- to two-year period there," said Allan Baumgarten, an independent Twin Cities health care analyst.

Neither Sanford Health nor the U ultimately took over Fairview back in 2013. But in the wake of the failed proposals, the university and Fairview concluded a lengthy renegotiation of their affiliation agreement, with the health system agreeing to contribute millions more in support of the academic program.

The 2013 agreement created co-leaders from Fairview and the U physicians group for the system's flagship University of Minnesota Medical Center in Minneapolis. During Stacey's tenure, the U and Fairview launched a new "University of Minnesota Health" brand for their combined services.

Fairview says it will begin a search to find a replacement for Stacey. In the meantime, the health system's board has created an "office of CEO" consisting of three board members to provide executive leadership until a new CEO is found.

The three office members are Murphy; former board Chairman Chuck Mooty and Dr. Brooks Jackson, dean of the U Medical School.

"Fairview's staff and physicians have made significant progress amid continued change in the nation's health care environment," Murphy said in a statement. "Looking to the future, it is important that the board and management team are completely aligned and fully focused on implementing the plan that has been laid out."

One of the challenges for CEOs at systems like Fairview is to strike a balance between community hospitals that generate revenue, and academic centers with the prestige and services to draw patients, said Baumgarten, the health care analyst.

"Academic medical centers, by definition, are expensive," he said. "And so you might have tensions within an organization where [community hospitals] say, we're bringing revenue and the academic medical center is spending it."

Academics in the system, meanwhile, will counter that "one of the reasons they come to your community hospitals is because we shine a halo … that spills over, and results in a certain attachment of patients to a system," Baumgarten said.

During the first nine months of 2014, Fairview posted operating income of $107.6 million on $2.667 billion in revenue. The results were slightly better than during the same time period in 2013, according to a Fairview financial statement.

In the past 13 months, two bond rating agencies raised the financial outlook for Fairview from stable to positive. A report from Standard & Poor's in January 2014 said the outlook revision followed "improved governance and management and strengthened ties with the University of Minnesota and its associated physician organization."