After 14 months in the job, Garman Lutz resigned Thursday from his post as CEO of the troubled Empire Health Services, the nonprofit organization that operates Deaconess Medical Center and Valley Hospital and Medical Center.
Empire’s board met Thursday morning and appointed board vice chair Roberta Greene, co-owner of Empire Ford and a former city councilwoman, as interim CEO.
The board will conduct a nationwide search for a permanent top executive capable of turning the hospitals around.
The two hospitals lost $7.5 million in the first six months of this year due to rising costs, fewer paying patients, less help from government programs and more uninsured patients requiring charity care.
Empire hired consultants PricewaterhouseCoopers and eliminated 150 full-time jobs, but still lost money in July and August.
“I’ve taken it as far as I can take it,” Lutz said in an interview Thursday afternoon, just before an e-mail went out announcing his resignation to 2,300 Empire employees. Empire is Spokane County’s second-largest private employer.
“Garman has helped guide EHS during a time of tremendous and frequently turbulent change in health care,” Greene said in a statement. “He has been instrumental in leading the recovery that is under way at Empire Health Services.”
Lutz, 59, a former certified public accountant, had been chief financial officer of Empire Health Services 13 years when Tom White resigned as CEO in July of 2003. At that time, Empire had been experiencing financial losses, layoffs, pay cuts and union organizing. The board made Lutz interim CEO and, eventually, permanent CEO.
Lutz helped restore some of the wage cuts to employees, before the hospitals’ financial picture grew bleak again. Loss of jobs in the region and the resulting loss of employer-sponsored health insurance are threatening all of Spokane’s hospitals, including competitor Sacred Heart Medical Center.
“I’ve been on the (Empire) board five or six years,” said Foothills Auto Group vice president Chris Marr. “It’s been in the last year that it’s like the table’s been turned over. During that period, Garman helped us navigate through a lot of changes. The decision on his part is that we need to find someone to help us make those changes that are still needed.”
Lutz plans to work as a consultant to the new CEO, but has no specific agreement with the Empire Health Services board on how he would be compensated.
He also hopes to speak out in the Spokane business community about the importance of health care to the region.
“Livable wages and good access to health care, we’re definitely behind those goals,” Lutz said.
Mike Taylor, president of Taylor Engineering, a civil engineering consulting firm, is chair of the board. Dr. Bruce McClellan will replace Greene as vice chair.
“It is now vitally important that we strengthen our finances so that we can continue to meet the needs of patients and employees as well as remain a vital force in the regional economy,” Taylor said in a statement.
One hopeful sign: A contract with Group Health Cooperative, effective today, allows Group Health members to get care at the Valley Hospital and Medical Center.