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BayCare CEO ready for new start

Frank Murphy, the hard-charging hospital executive who didn't mind ruffling feathers as he built the biggest health care network in the Tampa Bay area, said Wednesday that he's ready to move on.

Murphy, 56, will retire sometime in 2004 as president and chief executive of BayCare Health System Inc. in Clearwater after helping to select and train his successor. He said he intends to spend several months studying his options, then launch a new career while remaining in the bay area.

High energy and devoted to new-age management techniques, Murphy has treated BayCare employees to videos featuring his seven children, each talking about their personal improvement goals.

A staunch Catholic who once studied for the priesthood, he infuriated St. Petersburg City Council members and many residents four years ago when he failed to disclose that merging the city's Bayfront Medical Center with Catholic hospitals would lead to restrictions on abortions. Bayfront eventually dropped out of the hospital network.

But as BayCare developed, even former skeptics say Murphy has ruled with a light hand, allowing its seven member hospitals to operate relatively autonomously.

"The fact hospitals were able to combine for strength while maintaining their autonomy is the most significant part of BayCare's success," said Dr. Michael Wasylik, an orthopedic surgeon who is president-elect of the medical staff at St. Joseph's Hospital in Tampa, a BayCare hospital. "They've been able to save money in some areas so they can make improvements elsewhere."

Such comments convince Murphy that the timing is right to make an exit.

"I told myself I'd work in health care for 25 years, then switch to something else," said Murphy, who has a master's degree in hospital and health services administration from Ohio State University. "One objective will be to get the brain kicked into a whole new field for the next 15 to 20 years. So it won't be health care, but it will be an area closely related to human services."

Murphy, who has been active in a number of community organizations, currently serves on the board of United Way Tampa Bay and is vice chairman of the Tampa Bay Partnership.

BayCare's board will conduct a national search for Murphy's replacement. Murphy earned about $600,000 last year; Cathy Karl, chairwoman of the BayCare board, said the group expects to offer about the same salary to his successor.

Murphy started as a hospital executive 27 years ago in Kentucky and came to Clearwater in 1990. He said he extended his health care career for a few years past his self-imposed deadline in order to ensure that BayCare, which he helped start six years ago, was on stable footing.

"I wanted to make sure there was good, solid governance at BayCare," he said. "You want to leave when it's right for the organization and right for you. The management is well-established, the boards have a great track record and there are good feelings in all key areas."

Murphy spearheaded the creation of BayCare in 1997, knitting together hospitals as diverse as South Florida Baptist in Plant City, Morton Plant in Clearwater and St. Anthony's in St. Petersburg. Also included are St. Joseph's, St. Joseph's Women's and Tampa Children's in Tampa and North Bay Hospital in New Port Richey.

In addition to its hospitals, BayCare owns outpatient surgery centers, home health services and a medical equipment supply company. With nearly 16,000 employees, BayCare is one of the region's largest employers.

In 2002, Murphy said, BayCare had 112,000 hospital admissions, performed more than 4-million lab tests, made 400,000 home health visits and cared for more than 300,000 emergency room patients.

BayCare's revenues of $1.32-billion last year were a 28 percent increase over the $1.03-billion reported by its member hospitals in 1998. The network's operating income increased to $50-million from $4.8-million over the same period. Because of poor returns in recent years on stock market investments, net income declined in 2002 to $62.2-million compared to $83.8-million in 1998.

Meanwhile unreimbursed cost for charity care has increased to more than $87-million last year, compared to $59-million in 1998.

Murphy said that despite the overall network's success, BayCare has never had a year in which all seven of its hospitals have been profitable. "Profitability varies by community and by the hospital's situation," he said. "But as we sit in a room together, we know we've got to work together toward a common mission."

Karl, BayCare's chairwoman, said that was the objective behind forming the organization. "BayCare has a diverse portfolio," she said. "For any hospital to stand alone would be risky. The fact we're all together means we are there to help each other out."

In the mid 1990s, Murphy, then chief executive of Clearwater's Morton Plant, had been one of consolidation's biggest champions. Faced with cuts in Medicare reimbursements, increasingly powerful managed care companies and growing competition from for-profit hospital chains, independent community hospitals felt threatened. A regional hospital network seemed the solution.

BayCare promised to cut costs by consolidating back-office services such as billing and purchasing. Murphy said $90-million has been saved through such strategies to date.

By negotiating as a group of seven hospitals, rather than individually, BayCare believed it could land better managed care contracts. Murphy said Wednesday that has proven to be the case.

"We've had a few battles and bruises, but no all-out wars" with managed care companies, he said. "I'd say we've got a good relationship with insurers. They're our customers. We've got to serve the Blue Crosses of the world, but in a way we can afford to do it." In fact, Blue Cross Blue Shield had no contract with BayCare for three months ending early this year after contract negotiations deadlocked.

And though HCA Inc., the nation's largest hospital chain, continues to be a presence in the Tampa Bay area with nine hospitals, BayCare helped its member hospitals maintain market share.

But the formation of BayCare had its pitfalls. There were widespread layoffs of nurses and managers as cost-cutting measures kicked in. Early on, physicians groused about changes to lower-quality surgical supplies.

The biggest challenge came two years after BayCare's formation, when it was revealed that abortion services at Bayfront Medical Center in St. Petersburg had been severely restricted once it joined with Catholic hospitals in BayCare.

City Council members, who exercise control over the private Bayfront hospital because it sits on public land, were angry that they had not been told about the change before they approved the merger. There were lawsuits and heated council debates, with Murphy stalking out of one meeting. Eighteen months after the issue erupted, Bayfront was dropped from BayCare and returned to independent status, ending the standoff.

"We felt at the time that we were somewhat misled and there were efforts to withhold material from us," said Jay Lasita, a council member who served during the Bayfront-BayCare controversy. "Of Murphy's tenure, that was probably the darkest chapter. But looking at the length and breadth of his term, I think he's to be commended overall."

Murphy, a go-to guy who doesn't spend a lot of time on regrets, said he's apologized to people for the Bayfront incident.

"We didn't communicate properly, and I have to take responsibility for that," he said. "But we still have a good working relationship with Bayfront. We thought it would be best if we could be together. If that's not possible, that's when we move on."

_ Kris Hundley can be reached at hundleysptimes.com or (727)892-2996.

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