Houston-based Catholic Health Initiatives St. Luke’s Health CEO Michael Covert submitted his resignation and will step down on Aug. 31, the organization announced Tuesday.
Covert, who also served as the parent company’s senior vice president of operations, joined CHI St. Luke’s in 2014 and helped grow its network to 17 hospitals. He was previously the CEO of Palomar Health, a three-hospital system based in Escondido, Calif.
CHI plans to name interim leadership for CHI St. Luke’s within the next two weeks, but did not elaborate any further on Covert’s resignation.
The Texas division of CHI, including CHI St. Luke’s Health and CHI St. Joseph Health, recently laid off 459 employees as part of its ongoing restructuring plan.
CHI has suffered a deteriorating cash position and years of poor operating results, Moody’s analysts noted when it downgraded CHI’s rating in March one notch to Baa1 from A3 with a negative outlook, two notches above speculative grade that’s colloquially referred to as “junk.” The third-largest not-for-profit hospital system by revenue cited lower patient volumes, higher labor costs and pharmacy prices, and lower reimbursement from government payers as the main drivers of its financial results.
CHI saw its finances improve in the second quarter, narrowing its operating loss to $75.6 million, down from $93.7 million in second quarter of last year. It reported an operating loss of $483 million in 2016, compared to an operating surplus of $24 million in 2015.
The 103-hospital system aims to refinance about $1 billion of its in short-term and long-term debt, analysts said. Its debt totals around $9 billion.
CHI is pursuing a turnaround plan in the midst of merger talks with Dignity Health, which would create the nation’s largest not-for-profit hospital company by revenue with combined annual revenue of $27.8 billion and a total of 142 hospitals.