Helix Health's CEO resigns Oakey departs amid merger talks

Merson is successor

November 12, 1997|By M. William Salganik | M. William Salganik,SUN STAFF Sun staff writers Dennis O'Brien and Diana K. Sugg contributed to this article.

As Helix Health was in negotiations with Johns Hopkins that could merge the state's two largest hospital systems, its president and chief executive officer, James A. Oakey, abruptly resigned, Helix announced yesterday.

Oakey is leaving for personal reasons, the Helix announcement said. He will be replaced by Michael R. Merson, a former Helix CEO.

Patricia K. Smyth, who chairs the Helix board, said it was "not true at all" that Oakey's departure was related to the talks with Hopkins. She refused further comment on the change in Helix's leadership, saying, "I want to guard Jim Oakey's privacy and that of the board."

Oakey could not be reached for comment.

Dr. Edward D. Miller, CEO of Johns Hopkins Medicine and dean of the medical school, and Ronald R. Peterson, president of Johns Hopkins Health System, praised Oakey in a statement for building "one of the best community hospital systems in the state."

"As for the discussions between Johns Hopkins Medicine and Helix Health, it is up to the management team at Helix to suggest what this will mean. Because of reciprocal confidentiality agreements regarding the discussions, we cannot comment further about them," the statement said.

While declining to comment specifically on Hopkins, Merson said yesterday, "We're always exploring a variety of options in the market, and everything we've been doing, we'll continue to do."

The switch means a change in leadership style. One person who dealt with both, described Merson as "a methodical consensus builder, while Oakey was the opposite -- he knew where he wanted to be and he wasn't the type to build consensus."

The dollar bill caper

The flamboyant Oakey once startled the staff at Good Samaritan Hospital by loading his briefcase with 2,000 $1 bills and tossing them around the meeting room while telling the doctors, "You know damn well I'm not interested in throwing money around."

One source said the Helix board felt that Oakey had "taken Helix out of the dark ages," but was now looking for a different type of person to "carry the torch forward."

Dr. William Howard, a longtime surgeon at Union Memorial and sometime critic of Helix, said people may have disagreed with Oakey's personality, philosophy or choice of car -- an old Cadillac -- but "he took a two-hospital system and made it into a five-hospital system that is good enough to attract the attention of a place like Hopkins."

"Maybe he thought his job was done and maybe other people with different types of skill would be better apt to put next step together," Howard said.

Merson, the new and former CEO, was present at Helix's birth. After working his way up the administrative ranks at Franklin Square Hospital in Eastern Baltimore County, he was its CEO from 1982 to 1987.

He and other Franklin Square administrators, he said, believed that individual hospitals would form into large "integrated delivery systems." They merged with Union Memorial in 1987 to create Helix.

Merson became the first CEO of the merged system. But, when Good Samaritan joined it in 1994, Oakey, Good Samaritan's president, became CEO of the new entity. At that time, Merson said, the board felt that "a number of the needs were in Jim's style -- strong management and day-to-day leadership and the ability to push changes through."

Merson became vice chairman of the board, he said, working on strategic development and government relations and as an "internal consultant."

1,600 licensed beds

Under Oakey's leadership, Church Home and Hospital joined Helix in 1995 and Harbor Hospital joined in 1996, giving the system's five facilities some 1,600 licensed beds -- about as many as the Hopkins system.

Last year, the Helix hospitals took in more than half a billion dollars -- 11 percent of the hospital revenue in Maryland -- and made $56.7 million, about 19 percent of hospital profits statewide.

While there have been a variety of loose hospital affiliations and mergers between one hospital and another in Maryland, Helix was the first to build a system with so many acute-care hospitals.

In addition, the Helix system includes nursing homes, senior housing and assisted-living facilities and a home health agency. It is a part owner of HelixCare, a doctor network.

"We've been doing a pretty good job to date in beginning to assemble the parts," Merson said. "In the future, we need to do a little more rationalization, to try to avoid duplication."

He believes that Helix will continue to grow and, "while hospitals will be central, the box itself has to continually evolve."

Helix is looking to add more hospitals, he said, but the emphasis would be on "creating more access points," including physician locations, outpatient surgery centers and rehabilitation facilities.

That direction is consistent with the trend in which cost-conscious managed care insurers have pushed more and more services out of traditional acute hospitals to lower-cost settings. In the future, Merson said, some hospitals may have no inpatient acute-care beds at all.

Praise from Pezzoli

Robert E. Pezzoli, president and chief executive officer of St. Agnes Health Center, said Oakey did an excellent job at Helix. Pezzoli said that if personal reasons were behind Oakey's decision to quit, he could understand it, given the pressures of running a health care system in an age of cost cutting and competition.

"I think it's typical of the changes going on in the health care business; it's become a complex business and a high pressure business" as hospitals are squeezed by competitors, insurers and regulators, Pezzoli said.

"You have to be able to supply a wide range of health services on a fixed dollar amount; you used to have time to figure out the best way to do it, but you don't have that time anymore," Pezzoli said.

"It's like driving a battleship; you don't stop it on a dime."

Pub Date: 11/12/97

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