Dave Gallatin had no training as a health care executive, but thatdidn’t stop him from taking the reins of three merging hospitalsthat were losing a combined $27 million from operations.
Sure, he had a long association with Westmoreland RegionalHospital and the former Westmoreland Health System, serving onits board of trustees since 1983 with terms as vice chairman andboard chair, but he had no formal training in leading a health careorganization.
Yet, when Westmoreland and Frick hospitals, which merged in2001, joined forces with Latrobe Hospital, the board decided hewas up to the challenge of leading what would become ExcelaHealth as CEO.
“Serving as a chairman of the board, it became clear to the boardthat our CEO was really not able to integrate that merger very well,and the financial performance really deteriorated very rapidly from2000 to late 2002,” he says. “The board felt it was time to look for anew leader.
“What happened was, we actually started very quickly with mergerdiscussions with Latrobe Hospital in late 2003. It became clear that itwasn’t an appropriate time to look for a new CEO since we knew wewere going to be in transition, so I agreed to stay on through the merger process, and I am still here today.”
In 2005, Excela Health formed and things began to turn around forthe merged hospitals. The operating margin was a positive 1.5 percent, growing to 2.2 percent in 2006 and to 2.4 percent in 2007.
After the acquisition of Mercy Jeannette Hospital on May 1, theorganization now employs 4,500 employees and is projecting revenueof $450 million for 2008, an increase from the $372 million posted inJune 2007.
“I’m really pleased and proud that right after the merger, we turnedthe corner,” he says. “And we’ve been producing profits from operations really from day one, which has allowed us the luxury of saying,‘OK, now that we’re not losing money from operations, again, whatcan the organization become? What is the next level for this organization? How do we become truly a long-term provider of care for thecommunities that we serve?’
“So, our mindset went from going from managing a monthly P&L[profit and loss statement] to I had to transition to managing a five-year strategic plan.”
Here’s what Gallatin learned from guiding the organization throughthe merger process and transitioning it to growth mode.