More High-Level Execs Leave PeaceHealth

With PeaceHealth expected to face financial losses, insiders speculate that possible deterioration of the Catholic nonprofit’s bond rating could prompt renewed merger talks with Providence.

PeaceHealth the healthcare giant based in Vancouver, Wash., appears to be on a downward spiral, with news that two more high level executives have handed in their resignations. These departures are the latest in a string of firings and resignations of mid- and top-level management over recent years, which some within the healthcare chain tie to decreasing influence of nuns who once governed PeaceHealth, in favor of more typical business managers.

Gary Chiodo, former system vice president of corporate compliance who’s since joined Oregon Health & Science University as chief integrity officer, and Terri Nichols, who had been system director of risk management, are among the latest executives to leave. Earlier, The Lund Report learned that Gary Hall, who was vice president for facilities and construction, and Margaret Beals, director for accreditation and regulations, had departed amidst allegations of deadly infections that prompted a federal investigation of the nonprofit Catholic healthcare giant’s Longview, Washington, hospital. Dr. Mark Adams, who joined PeaceHealth as its community chief medical officer, also left in March, having not even lasted a year. Employees learned about Adams’ departure from a cryptic note saying he was no longer with the organization, but nothing was said about what led to his departure.

PeaceHealth has about 18,000 employees across Oregon, Washington state and Alaska.

PeaceHealth Struggles Financially

Amidst such dire news, insiders have told The Lund Report that PeaceHealth is having yet another poor year, and is running significantly behind its budget projections by $15-20 million for this fiscal year which ends June 30. That could, in theory, could lead to a further deterioration in its bond rating, and some speculate it could signal that PeaceHealth will look to merge with Providence Health & Services by the end of 2017

In fiscal 2016, PeaceHealth ended the year with a $115.6 million deficit.

In 2015, PeaceHealth and Providence Health & Services announced they had signed a letter of intent to work together on new projects, saying they shared common values, mission and heritage, but flatly denied a merger was afoot. Before Alan Yordy, former CEO, was forced out of PeaceHealth in late 2014, he told employees that due diligence and negotiations were underway to merge with Providence Health & Services.

In a memorandum obtained by The Lund Report, he wrote that if the deal happens, “PeaceHealth would not be ‘buying Providence – Providence would become part of PeaceHealth.”

Beth O’Brien, then PeaceHealth’s chief operating officer, seems to have been in charge. “The board has determined that the affairs of the company can best be managed by creating a new senior executive position to be called the chief operating officer,” according to board minutes obtained by The Lund Report. All management operations were given to O’Brien, "having all PeaceHealth executives who formally reported to the president and CMO now report exclusively and directly to the COO.”

Last fall, O’Brien left PeaceHealth after the health system experience declining profit margins while many top-level executives have lost their jobs under her leadership despite attempts by CHANGE -- despite attempts by PeaceHealth’s board to turn management decisions over to CEO Elizabeth Dunne. O’Brien was recently named interim CEO of Mercy Medical Center, part of the Trinity-New England, which runs a 182-bed acute care hospital in Springfield, Mass.

Labs Sold to Quest Diagnostics

In mid-February, PeaceHealth announced it was selling its clinical laboratories to Quest Diagnostics, a story first reported in The Lund Report.

Around 500 employees who work at PeaceHealth Labs in Springfield could find their jobs at risk, with the majority of layoffs likely to occur before the end of April, according to confidential sources. Those who could be laid off include phlebotomists whose duties include blood draws and lab work, along with couriers. Quest may offer jobs to some of these employees. Since the sale, numerous employees, primarily phlebotomists, have resigned, accepting positions at Legacy Health and Kaiser Permanente, among other healthcare organizations.

Diane can be reached at [email protected].

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