With Astria Health close to emerging from bankruptcy, CEO John Gallagher says it’s time for him to step down.
Gallagher approached the nonprofit board of directors last month about stepping away from the position so he could tend to family members who are having significant health issues, he said in a phone interview Tuesday.
The board and Gallagher agreed that he would remain in a consulting role to help guide the organization through its final stages of the bankruptcy reorganization process. The organization filed for bankruptcy protection in May 2019. The aim is to emerge from bankruptcy by the end of the year.
“He has done an outstanding job leading the company through unprecedented growth, and his commitment and dedication to see the process through to the end is much appreciated,” said Mary Ann Bliesner, board chair of Astria Health, in a news release Tuesday.
Brian Gibbons, who has served as president of Astria Sunnyside Hospital for eight years, will serve as interim president and CEO. He will continue to run Astria Sunnyside Hospital.
Astria Health has settled the remaining issues from Lapis Advisers, its largest creditor, regarding the joint reorganization plan the two entities filed this summer, Gallagher said. A hearing for approval of the plan and disclosure statement is scheduled for Friday. The U.S. Bankruptcy Court is expected to approve.
“I think it was good timing to bring the company through (bankruptcy) and exit and be able to move on to the next chapter,” he said.
Gallagher first arrived in the region when he started as CEO of Sunnyside Community Hospital in May 2012. He was at the helm when the hospital, as Regional Health, purchased Yakima Regional Medical and Cardiac Center and Toppenish Community Hospital in the fall of 2017. The organization, now led by Gallagher, was renamed Astria Health at the end of 2017.
Astria Health has become a smaller health care system as it has worked to resolve its financial issues in the past two years. The organization cited problems with its inability to collect revenues in late 2018 into 2019 for its cash flow issues, which led to its decision to file for bankruptcy protection.
The organization has scaled back its presence in the Yakima area considerably in the past year. In January, the organization closed Astria Regional Medical Center, which Gallagher ran while serving as Astria Health CEO for several months. The organization also closed several primary and specialty care clinics in Yakima and Selah over this year.
Astria Health still runs a plastic surgery clinic and an ambulatory surgical center in Yakima. The only remaining primary care center in the area is the Astria Health Center-Ahtanum Ridge primary care clinic in Union Gap.
Gallagher received much community criticism for its decision to close the Astria Regional and the Yakima area clinics.
“When the decisions were not made, they were not made in a vacuum. They were not made by an individual. They were organizational (decisions) we had discussed with multiple folks,” Gallagher said Tuesday. “The decisions that were made on some of these scenarios were not popular, clearly.”
But Gallagher said those decisions enabled the organization to be in a healthier financial position and ensure health care availability, especially in the Lower Yakima Valley, where most of their operations are now based.
In addition, Astria Health is expected to close on a $20 million sale of the Yakima hospital property to a group of local investors next months, enabling the organization to pay down a sizable amount of its secured debt.
Gallagher also praised Astria Health’s staff, saying their work made the organization’s progress possible.
“I think that the system as it is now will allow the company to thrive and continue to be here for the future,” Gallagher said.
As a consultant, Gallagher said his goal is to provide a smooth transition process as the company emerges out of bankruptcy. The board has not yet provided a timeline for hiring a permanent CEO.
“This was a good way to continue to stay engaged with the company and continue to guide them to the end of the process, to make sure we have a continuity, a transfer of knowledge and support for the team,” he said.