RALEIGH — Bill Atkinson, the chief executive whose relentless drive built WakeMed into a powerful regional health care player over the past decade, is leaving the hospital system just as it enters one of the most challenging periods in its 53-year history.
Atkinson, the third CEO to ever lead the hospital, was removed from his position by WakeMed’s board of directors late Wednesday. The board cited “differences in the future direction of the organization” as the reason for his departure.
Atkinson’s last day will be Tuesday – the same day that open enrollment begins for subsidized insurance under the Affordable Care Act. He also departs just as WakeMed is preparing to report its first annual financial loss in years.
“As we move into the next phase of healthcare reform and respond to the continued growth of this community and region, there are going to be challenges and opportunities for WakeMed,” William H. McBride, the board chairman, said in a statement. “The Board of Directors looks forward to welcoming a new leader to successfully guide us through this new era of healthcare.”
The board declined to comment further. Atkinson also declined to comment Thursday.
His departure comes after a tumultuous few years for WakeMed, which has faced intense competition from crosstown rival Rex Healthcare and a federal investigation into its Medicare billings practice. The removal of Atkinson will likely increase speculation about WakeMed’s future and whether it can remain a stand-alone hospital in an industry that is undergoing rapid consolidation.
Hospital systems have been rushing to buy or affiliate with other medical groups to achieve greater bargaining power with insurance companies. Hospitals also face reduced Medicare reimbursement rates and penalties for excessive readmissions under the Affordable Care Act, which could potentially cost systems such as WakeMed millions of dollars in lost annual revenue.
“The danger is, as you move into one of the biggest health care rollouts in modern history, do you have a leadership vacuum there,” said Adam Linker, policy analyst at the N.C. Justice Center. “You’re going to have to be doing a lot of adjusting on the fly over the next year or two – really starting on Oct. 1 – and to not have a strong leader in place like Atkinson is worrisome.”
Atkinson, 59, arrived at WakeMed in 2003 with a reputation as both a visionary and a workaholic who operated on just a few hours of sleep a night. He had been CEO of New Hanover Health Network in Wilmington, where he increased the hospital system’s reserves and added two hospitals and about 1,000 employees.
Under Atkinson’s leadership, WakeMed became a top-level trauma center and a destination for heart care. It also expanded its facilities throughout Wake County and into Johnston County.
Today WakeMed is the largest hospital in Wake County, with 8,500 employees and 870 beds. The hospital has also taken on a much more prominent role in the community, supporting various nonprofits and touting its works through extensive marketing campaigns.
“When he came to WakeMed he brought a whole new perspective,” said Billie Redmond, a former WakeMed chairwoman who left the board two years ago. “He moved us into ambulatory care, moved us out into the community, advanced our certification around trauma. He’s really just an incredible concept person.”
Where Atkinson was less adept was in building and maintaining relationships with physicians – an area that has taken on increased importance. Several physician groups, including heart doctors, cardiothoracic surgeons and neurosurgeons, have switched allegiances from WakeMed to rival Rex, a subsidiary of UNC Health Care, in recent years.
Wake Heart’s departure
The most significant departure was Wake Heart & Vascular, a group of heart surgeons who were responsible for a significant chunk of WakeMed’s profits.
“We at Wake Heart thought UNC was a good partner, and we still do,” Dr. Bill Newman, a founder of Wake Heart & Vascular, said Thursday. “We wanted a larger system and a partner who had the same vision that we did going forward – working together in a complementary way.”
The departure of Wake Heart, combined with lower reimbursement rates for Medicare, help explain WakeMed’s deteriorating financial position. The hospital reported a $15 million operating loss in the quarter that ended June 30 and last month announced plans to lay off more than 100 workers.
Wake Heart’s move to Rex was also a factor in WakeMed’s decision in May 2011 to launch a $750 million hostile takeover bid for Rex. The bid resulted in an unseemly public spat between UNC and WakeMed, with Atkinson criticizing his rival for not shouldering its share of the charity care burden in the county. He also said Rex had an unfair advantage because of the financial benefits it receives from being owned by the state.
The rivals ended their public battle in May 2012, with WakeMed able to declare a significant victory. The settlement included a requirement that UNC build and operate a $30 million, 28-bed psychiatric facility in Wake County, easing some of the charity care burdens WakeMed has carried for decades.
But Atkinson’s passion and outspokenness – while a key factor in his success as a hospital administrator – has also put WakeMed in some difficult spots.
In December 2012, the hospital system agreed to pay $8 million to settle an investigation into its practice of billing Medicare for expensive overnight care when the patients had been treated and discharged the same day. But days before WakeMed went before a federal judge for approval of the settlement, hospital officials were forced to clarify statements that Atkinson had made that appeared contrary to the proposed agreement with prosecutors.
Atkinson also drew headlines this month when he took aim at the embattled state Department of Health and Human Services. Atkinson made a claim that the state is focusing more on inspecting abortion clinics than permitting a new mental health facility in which WakeMed was partner. The state and UNC, which is operating the facility, denied the claim, and Atkinson retreated.
WakeMed has not named an interim CEO. It plans to conduct a national search.
Linker, the N.C. Justice Center policy analyst, said WakeMed remains in an enviable position despite the challenges it faces. It is in a growing area, with a reputation for providing quality care to both the insured and uninsured.
“They have a pretty strong brand in the Triangle, and they seem to be pretty well-positioned,” he said. “There’s nothing wrong that they can’t fix.”
Bracken: 919-829-4548; Twitter: @brackendavid