Health & Medical
Converging interests
How Dave Gallatin guided Excela Health through a merger and transitioned to growth mode
By Brian Horn
Smart Business Pittsburgh | July 2008
Page 1 of 3
Dave Gallatin had no training as a health care executive, but that
didn’t stop him from taking the reins of three merging hospitals
that were losing a combined $27 million from operations.
Sure, he had a long association with Westmoreland Regional
Hospital and the former Westmoreland Health System, serving on
its board of trustees since 1983 with terms as vice chairman and
board chair, but he had no formal training in leading a health care
organization.
Yet, when Westmoreland and Frick hospitals, which merged in
2001, joined forces with Latrobe Hospital, the board decided he
was up to the challenge of leading what would become Excela
Health as CEO.
“Serving as a chairman of the board, it became clear to the board
that our CEO was really not able to integrate that merger very well,
and the financial performance really deteriorated very rapidly from
2000 to late 2002,” he says. “The board felt it was time to look for a
new leader.
“What happened was, we actually started very quickly with merger
discussions with Latrobe Hospital in late 2003. It became clear that it
wasn’t an appropriate time to look for a new CEO since we knew we
were going to be in transition, so I agreed to stay on through the merger process, and I am still here today.”
In 2005, Excela Health formed and things began to turn around for
the merged hospitals. The operating margin was a positive 1.5 percent, growing to 2.2 percent in 2006 and to 2.4 percent in 2007.
After the acquisition of Mercy Jeannette Hospital on May 1, the
organization now employs 4,500 employees and is projecting revenue
of $450 million for 2008, an increase from the $372 million posted in
June 2007.
“I’m really pleased and proud that right after the merger, we turned
the corner,” he says. “And we’ve been producing profits from operations really from day one, which has allowed us the luxury of saying,
‘OK, now that we’re not losing money from operations, again, what
can the organization become? What is the next level for this organization? How do we become truly a long-term provider of care for the
communities that we serve?’
“So, our mindset went from going from managing a monthly P&L
[profit and loss statement] to I had to transition to managing a five-year strategic plan.”
Here’s what Gallatin learned from guiding the organization through
the merger process and transitioning it to growth mode.
