Nelson leaves Empire Health

Turnaround executive Jeff Nelson has left Empire Health Services after bringing the Spokane hospital operator back to profitability and arranging the pending sale of Deaconess Medical Center and Valley Hospital and Medical Center.

“It was pretty obvious his tenure with Empire was not going to be long-term. His duties were diminishing,” said Ronald F. McKay, board chairman of Empire. “It’s in both our interests that Jeff make the move that he’s making.”

Robert Quist, hired earlier this summer to run Valley, will assume the role of Empire president and CEO.

He has been effectively running the hospitals for the past month as Nelson focused on shepherding the sale process of Empire to Community Health Systems Inc.

Empire hired Nelson in October 2004 to rescue the nonprofit hospital system plagued by losses, including a $35 million hit that year spurred by soaring numbers of uninsured patients.

Nelson was paid $690,000 by Empire in 2005 for his successful efforts, according to the latest Empire IRS information. He returns to his work with Tatum Partners Inc., a group of executives-for-hire that parachute into leadership posts of troubled companies. Though Nelson spent three years working full-time at Empire, his family remained in their home in the Minneapolis area.

While at Empire, Nelson shook up management and made a series of quick and tough business decisions. Among them: closing many of its pediatric services and sending patients to Sacred Heart Children’s Hospital, and closing the on-site day-care operation at Deaconess.

By the end of 2005, Nelson had successfully steered Deaconess to profitability, marking the turnaround with a surprising $500,000 donation from Empire to the Hurricane Katrina relief effort.

His work for Empire ultimately led to a decision by the board to sign a nonbinding letter of intent to try and sell the hospitals to for-profit Community, the country’s largest publicly traded hospital company.

McKay said Nelson’s departure was a clean break and that Empire no longer has business dealings with Tatum.

McKay called the pending sale of Empire, a system with 2,400 employees that treats 225,000 patients a year, a board initiative that was moving right along.

The sides are in the final stages of performing due diligence.

Barring any surprises, Community and Empire could sign a final agreement and present the deal as a proposal to the state regulators who must approve sales of nonprofit hospitals.

A potential price has not been announced.

McKay said the due diligence work has gone smoothly.