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Renown Health readies its next steps

JOHN SEELMEYER
jseelmeyer@nnbw.biz

David Line wasn’t entirely sure he would have time for a bite of cake to celebrate his birthday last week.

The chairman of the board of directors at Renown Health barely had enough time for sleep, let alone birthday celebrations, as the region’s largest healthcare organization concluded the first act of a months-long drama that led to the departure of four top executives.

And even as Line spent a day in media interviews and an evening in gatherings with Renown’s key constituencies, the organization’s leadership was putting into place the first of what promise to be many changes in the way Renown is governed.

The headline news last Tuesday was the departure of Jim Miller, Renown’s longtime chief executive officer. Also shown the door were Kelly Testolin, Renown’s general counsel; Andy Pearl, its vice president of system development; and Phil Schweber, its business development administrator.

While the executive shakeup came as a flash of lightning, storm clouds had been building for months during which Line sometimes worked 60 hours a week on Renown business at the same time that he stayed in touch with operations at InfoSearch International, a five-person research firm he owns in Reno.

Days before the Super Bowl in early February, Line and the other eight volunteer members of the Renown board of directors had been caught by surprise by testimony in a lawsuit brought by 14 cardiologists who previously had worked for Sierra Nevada Cardiology Associates.

The cardiologists claimed that Renown acted fraudulently when it acquired the cardiology practice in late 2010.

Even before the trial, Renown settled a complaint with the Federal Trade Commission.

The federal agency found that Renown’s acquisition of Sierra Nevada Cardiology Associates, followed in close order by its 2011 acquisition of Reno Heart Physicians gave it control of 88 percent of the cardiologists in the Reno-Sparks area.

State officials, too, had investigated whether the acquisitions stifled competition. That, too, was settled by Renown.

Last autumn, Line had begun thinking through contingency plans for the future of Renown.

Those plans took on more urgency when the testimony in the cardiologists’ lawsuit led board members to believe that executives hadn’t told them the full story during the acquisition negotiations.

In fact, the news was so alarming that Renown almost immediately began talks that led to an out-of-court settlement.

Meeting on Super Bowl Sunday, board members agreed that they needed more information.and they decided to hire a law firm — one from outside the close-knit Nevada legal community — to take a fresh look.

Steven Sunshine, a partner in the Irvine, Calif., office of the 1,071-lawyer firm of Bryan Cave LLP, led that review.

“We didn’t want them to retry the case,” Line says. “The real questions were these: Who had the information? When did they have the information? When was it passed on?”

Bryan Cave delivered its report on March 27.

The next day, the board met and agreed that the executives involved in the cardiology deal needed to leave.

Announcement of the decision, however was delayed by the calendar.

The next day was Good Friday — the wrong day for this kind of news. Then came Easter weekend. Then April Fool’s Day. Finally, the news was made public on April 2.

At the same time all this was unfolding, board members were working quietly to begin preparing the organizational changes that were announced at the same time that the executives departed.

A key piece: Creation of a physician-collaboration committee to begin rebuilding trust between Renown and the region’s physicians.

“This is a critical piece,” says Line, chairman of the Renown Health board. “We need to become a physician-centric organization.”

The committee will be led by Leslie Smith, a physician who serves on the Renown board.

Line was working quietly, too, to find an interim chief executive officer and interim legal counsel so that key positions wouldn’t be vacant long.

After Renown was turned down by one promising candidate for the interim CEO position, Line was told he should take a close look at Donald C. Sibery, a 35-year veteran of healthcare management and consulting.

Sibery started work at Renown today.

Line will serve as interim president, juggling the demands of Renown’s duties with those of a small-business owner.

Sheryl Beutz-Harter, a lawyer with Bryan Cave LLP in its Kansas City office, was named interim legal counsel.

A one-time IBM executive, Line says his business experience provided guidance during Renown’s difficulties.

“I’ve done this in the past, “ he says. “I knew what needed to be done.”

One the things that needed to be done, Line decided shortly after becoming chairman of the Renown board two years ago, is an overview of Renown’s governance.

One early decision: Renown’s board believes it needs fresh viewpoints from outside experts.

As a first step, it named veteran California healthcare executive Michael J. Peterson to the Renown board.

Peterson, who recently served as chief operating officer of Stanford Hospital, becomes the 10th member of a Renown board that is dominated by Reno-area business owners and professionals.

Line was sustained during the months of grueling, sometimes-emotional work by his belief in the importance of Renown’s mission.

“I have a passion for healthcare. I don’t believe we can have a quality community without some building blocks, and quality healthcare is one of them,” he says. “Sitting on this board, we make life-and-decisions all the time.”