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Virginia Mason Franciscan Health Co-CEOs Share Merger Success

Analysis  |  By Melanie Blackman  
   April 29, 2021

Gary Kaplan, MD, FACP, FACMPE, FACPE and Ketul Patel share how the Washington-based provider organizations advanced from a strategic alliance to a merger, how the dual-CEO model is working for them, and why their respective leadership styles complement each other.

Despite a global pandemic that battered the healthcare industry, Seattle-based Virginia Mason Health System and CHI Franciscan merged in early 2021 to form Virginia Mason Franciscan Health (VMFH), an integrated health system with 11 hospitals and nearly 300 sites of care across Seattle and the Puget Sound region in Washington.

Gary S. Kaplan, MD, FACP, FACMPE, FACPE, who previously served as chairman and CEO of Virginia Mason, and Ketul J. Patel, who previously served as CEO of CHI Franciscan Health, are now co-leading the newly formed health system.

The choice to operate under a dual-leadership model was notable, as the structure has spelled trouble for other healthcare organizations in the past.

Related: CHI Franciscan Health, Washington State Settle Antitrust Suit

Recently, Kaplan and Patel spoke with HealthLeaders about the merger of two Washington-based health systems, how the dual-CEO model is working for them, and why their respective leadership styles complement each other.

From a strategic alliance to a merger

Before merging, CHI Franciscan and Virginia Mason originally formed a strategic alliance and clinical affiliation in 2017. Through the arrangement, Patel said the organizations aimed to:

  • Expand an existing radiation oncology partnership
  • Create a joint ambulatory site on Bainbridge Island
  • Have CHI Franciscan learn from Virginia Mason's production system and pilot one of its Marion campuses around it

"Having that partnership allowed us to get to know each other. We thought after we spent time with our respective boards that we would be much better together than separate," Patel said. "Our plan moving forward from a strategic perspective is going to be exceptional because we're one organization as opposed to two."

Kaplan echoed Patel's sentiments, adding that while the strategic partnership was positive for Virginia Mason, joining together would only strengthen the shared goals of both organizations.

"When we wanted to create single standards of care, create access sites across western Washington, and when Virginia Mason looked at its future as a small system in an environment that was increasingly characterized by large consolidated systems, we felt that it was a better long-term opportunity to serve the people in our communities by coming together," Kaplan said.

The two organizations signed a memorandum of understanding for joint operation in June 2020, and announced a final merger agreement in January, becoming VMFH, which will operate as part of CommonSpirit Health.

According to Kaplan and Patel, several of the goals from merging the two organizations include:

  • Providing the highest quality, highest-value care to more patients
  • Building scale over a greater geographic area while offering more services
  • Leveraging standardized best practices across the consolidated organization
  • Building on the organization’s foundation as a destination site of care

Co-leading a newly formed health system

For VMFH, the co-CEO structure is a temporary model that is being used to accelerate the integration of the two organizations.

"We want to bring the strongest elements of both systems together and build on the best of both organizations," Kaplan said. "Rather than create the kind of ‘dissynergy’ that sometimes happens when these kinds of comings together occur, we felt that we could accelerate the progress early on and go with a model where we are sharing this responsibility for the time being."

Patel added that even though he and Kaplan are co-leading the organization, it's important that both of them make sure that collectively there's only one voice coming from the office of the CEO, which they have successfully managed to do thus far.

"There's a tremendous amount of respect between the two of us. We felt that what the most sense in the beginning, given the scale of the organization and what we wanted to do in terms of learning from [the] legacy organizations, was this dyad CEO model," Patel said.

Related: CHI Franciscan, Virginia Mason Sign Memorandum of Understanding for Joint Operation

Through the co-CEO roles and Kaplan’s continued support, Patel said he has quickly navigated the learning curve related to Virginia Mason's operations.

Kaplan said the established relationship with CHI Franciscan from the strategic alliance laid a strong foundation for his relationship with Patel, which he said has evolved and is predicated on “trust and embodying a shared vision for what we can accomplish."

He also mentioned that the two have become friends, which he considers “healthy because when times get tough, it's relationships that are the glue that holds people and organizations together."

Both Kaplan and Patel reiterated that they work in sync as leaders: complimentary in how they approach issues and yet willing to offer different viewpoints to the other.

Kaplan, who served as CEO of Virginia Mason for over two decades, describes his leadership style as being collaborative and open-minded. He added that he leads with curiosity and aims to help people achieve their highest potential.

Patel, who served as CEO of CHI Franciscan since early 2015, said his and Kaplan's leading styles share a lot of similarities, adding that as a leader he strives to always be learning from the board members, management, and staff of the organization.

Merging and the first 100 days

After signing the non-binding memorandum of understanding last summer, Patel and Kaplan immediately took steps to start forming the new organization, earlier than most organizations would, Patel said. The two executives had more than 200 leaders from each legacy organization meet over the summer and established 50 planning teams to collaborate on creating an integration plan ahead of the January closing date.

When Patel and Kaplan put together the new board following the merger, they selected leaders from both legacy organizations to guide VMFH.

"Our team has come together, we're spending a lot of time together, getting to know each other, building those relationships and that trust, and that's critically important work,” Kaplan added, "All of this is going on, of course, while we're taking care of patients across our communities, particularly during COVID."

As of late April, VMFH has administered almost 300,000 vaccines across the community, Kaplan said. The organization partnered with Amazon to set up mass vaccination clinics in Seattle, and it has worked with public health departments across both Seattle and the Tacoma regions.

Related: CHI Franciscan, Virginia Mason Announce Final Merger AgreementDue to the ongoing pandemic, VMFH endured stressors across the organization, but Kaplan said that staff remained a priority during trying times.  

"We want to be a supportive organization that's there for our team members as well as for our patients," Kaplan said. "In many ways, the expression I like to use is that we're changing the tires while the car is going down the freeway."

Kaplan added that while there was a risk for the organizations by beginning to come together before a final merger agreement was reached, both leaders thought it was better to start the process early so that on day one, they could operate fully rather than waiting another handful of months.

Reflecting on the challenges related to merging during a pandemic, Patel said what boosted him were the "relationships that were already formed” as well as the “team whose exclusive focus was on the deal coming together."

"We're proud of our teams with everything that's happened over the course of the last year," he added. "It was so much sacrifice and there's certainly so much focus on making sure our patients are being taken care of in an integrated way, and so we want to recognize [them.]"

“We want to bring the strongest elements of both systems together and build on the best of both organizations.”

Melanie Blackman is the strategy editor at HealthLeaders, an HCPro brand.

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