Scripps Sees ‘Sober Warning,’ Slashes CEO Positions
Organizational overhaul prompted by signs of ‘harder times to come.’
Scripps Health failed to meet its operating budget last fiscal year for the first time in 15 years, prompting the San Diego-based health system to restructure its executive team and look to cut corporate services costs by $30 million.
Although the system remains on solid financial footing, the news came as “a sober warning of harder times to come,” Scripps president and CEO Chris Van Gorder wrote in a memo to staff and physicians last week. The memo, which Scripps released in full to HealthLeaders Media, was as much a rallying cry as it was a bulletin of somber news.
“We can sit back and fool ourselves into thinking change is not really needed, and risk the consequences,” Van Gorder wrote. “Or like our founders, we can have the courage to boldly move ahead and do what’s needed for our patients, our community and their legacy.”
The memo outlined several organizational changes coming to Scripps in the next 30-60 days, including the following:
- CEOs: Rather than keeping a CEO at each Scripps hospital, the system will establish three regional CEOs.
- COOs: In the absence of a CEO, COOs will take over daily operations at each hospital.
- Corporate services: Scripps will look to cut costs on corporate services by $30 million. It will evaluate a shared-services model for corporate services to improve accountability.
The southern region—which will get one of the three new CEO positions—includes Scripps Mercy San Diego and Chula Vista, overseen by current CEO Tom Gammiere. The northern region will include sites in Encinitas, Green, and La Jolla, which are overseen by CEOs Carl J. Etter, Robin B. Brown Jr., and Gary G. Fybel, respectively. The third region will comprise Scripps ancillary services.
It appears Etter, Brown, and Fybel are the most likely candidates to fill the new northern-region CEO and ancillary-services CEO positions. It’s possible, though, that Scripps could bring in outside talent, promote from within, or even shift Gammiere to the northern region. This is an overhaul, after all.
Scripps Not Alone
In his memo last week, Van Gorder noted that Scripps is far from the only healthcare organization to face the kind of financial pressures that prompted these changes.