Wright Lassiter Named CEO of CommonSpirit

Wright Lassiter will replace Lloyd Dean as CEO of the nation’s largest non-profit healthcare system by revenue, CommonSpirit Health said Thursday.

Lassiter, CEO of Detroit-based Henry Ford Health since 2016, will take over Aug. 1 when Dean retires. The new CEO is tasked with helping CommonSpirit emerge from the pandemic amid labor shortages across the country, which will be a key focus, executives said.

“It’s really rare to find someone who fully shares the priorities of an organization,” new chairman Chris Lowney said in an interview. “Wright is dedicated to delivering results for poor and vulnerable communities by making the patient experience more integrated and coherent, and his time at Henry Ford has shown him to understand that employees are the lifeblood for realizing these priorities. And, of course, he knows that without sound financial guidance, you can’t handle these things.”

The CommonSpirit system of 140 hospitals spread across 21 states recorded more than $1.1 billion in operating losses in the two years following the 2019 merger between Dignity Health and Qatar Health Initiatives. But the Chicago system’s financial position improved in 2021, when it reported an operating profit of $998 million on revenues of more than $33 billion and an operating margin of 3%.

“The industry faces many obstacles that every organization has to face. The advantage of CommonSpirit lies in its scale, which has both advantages and disadvantages,” Lassiter said in an interview. “I am confident that we will be able to build on the success that Lloyd and his team have achieved through the financial success of the organization and the impact on quality, safety and wellbeing.”

In 2021, the system received $690 million in funding for COVID-19 relief, a one-time gain of $523 million from the sale of a joint venture interest, the acquisition of the Yavapai Regional Medical Center in Phoenix, and what is now called Virginia Mason Franciscan Health in the Pacific. Northwest and recovering patient volumes.

The Catholic system is more than halfway to its four-year $2 billion cost savings goal. Historically, economists have been skeptical about the effectiveness of health system leaders, given how difficult it is to standardize operations, blend cultures and management models, reduce duplication, and align IT systems.

“We have identified a long list of synergies, many of which are financial, and we are methodically and successfully working on them. I think this is reflected in our upgrades to our ratings and forecasts,” Lowney said.

In November, Fitch Ratings upgraded CommonSpirit from stable to positive from stable to positive, noting its $17.7 billion in cost savings and unrestricted cash flow progress supported by a $3.4 billion return on investment and a one-time increase sales.

CommonSpirit exceeded its $400 million synergy goal in 2021 by reducing its real estate footprint, cutting corporate labor costs and consolidating HR, IT and revenue cycle departments, the company said in its annual earnings report.

According to executives, CommonSpirit has implemented Virginia Mason’s Lean Management strategy across various CommonSpirit departments. According to CommonSpirit’s earnings report, reducing CommonSpirit’s divisions from 13 to nine has accelerated decision making and fostered best practices across the supply chain, workforce, pharmaceuticals, clinical engineering, revenue cycle and support services.

While CommonSpirit’s debt-to-cap ratio has fallen from 55% to 44.2% year-over-year, it remains highly leveraged and will remain so for several years, analysts warn. Like other systems, it will be held back in 2022 by higher labor and supply costs.

But the size and liquidity of the organization allows it to do so. Analysts say this will spread IT costs over a larger asset base and increase capital expenditures.

“The significant size, diversity and national reach of CommonSpirit testify to a creditworthiness above face value in supporting the achievement of CommonSpirit’s goals,” Fitch wrote in its report. “However, the system will need to continue to make progress on effective cost management, revenue growth in key markets and synergies.”

In fiscal year 2019, Dean earned more than $16.7 million in total compensation, making him one of the highest paid executives in nonprofit healthcare systems. This includes a base salary of $1.9 million, bonuses and incentives of $8.2 million, and more than $6.5 million in deferred compensation and other reportable compensation per the latest Form 990 available.

Prior to joining Henry Ford, Lassiter was CEO of Alameda Health System in Oakland, California. According to Henry Ford’s latest available tax filings, Lassiter earned over $5.3 million in total compensation in fiscal year 2018, of which $1.6 million was base pay.

In 2021, Lassiter led five partnerships, including one between Henry Ford and Michigan State University, that will close health disparities across the state. Earlier this year, Henry Ford and his development partners committed to investing $4.2 billion in Detroit’s neighborhoods. It is planned to build new housing, medical and research facilities, retail stores, industrial buildings, educational centers and parks.

“There is a clear opportunity to change the way we approach historically marginalized communities, health equity and inequality, and health care costs and transparency,” Lassiter said. “The board is determined not just to be one of the largest healthcare organizations, but to use its size and influence to make an impact.”

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