The Search Is On

James Tally is leaving Children’s Healthcare of Atlanta, and COO – and BTB 2007 Woman of Excellence honoree – Donna Hyland is on the short list to replace him.

Matt Bolch

October 1, 2007

Replacing a long-serving, successful CEO is never easy.

But that’s the task facing the Board of Trustees at Children’s Healthcare of Atlanta (CHOA). James E. Tally has led CHOA from its creation in 1998 through the difficult merger between Egleston Children’s Health Care System and Scottish Rite Children’s Medical Center, establishing a single culture for the organization that has vaulted CHOA to among the best regarded children’s medical facilities in the country, most recently being ranked in late August as No. 14 in U.S. News & World Report’s “America’s Best Children’s Hospitals.”

Prior to being named CEO of the combined hospital system, Tally was chief administrator and later CEO at Scottish Rite from 1984 to 1997. He is well-regarded in the community and has been responsible for much of the organization’s success over the past decade, although he’s quick to deflect any accolades onto the board, other executives and frontline employees.

Tally announced in July that he’s stepping down sometime next year after a replacement has been named. He turns 65 later this month, and while numerous projects always swirl around an organization as large as CHOA, the culmination of a five-year, $265 million capital campaign provides a good opportunity to step back and let someone else take over, he says.

Today, CHOA is a three-hospital, 538-licensed bed facility with more than 6,800 employees and 20,000 volunteers. Portions of the campaign funds will be used to pay for critical infrastructure improvements, including more than $30 million for upgrades at Hughes Spalding, which CHOA took over management of from the cash-strapped Grady Health System in February 2006. Currently, more than $250 million has been raised.

CHOA provided more than $81 million in un-reimbursed care last year, accounting for three out of every five pediatric inpatient Medicaid cases in the Atlanta area. The biggest challenge the new CEO will face, Tally says, will be dealing with the ongoing financial challenges of running the health care system.

While the search process has just begun, it appears that COO (and Business to Business 2007 Woman of Excellence honoree) Donna Hyland has emerged as an early leading candidate.

Citing the search process, Hyland declined to be interviewed for this article.

Challenges for new CEO

Following in the footsteps of such a long-serving and effective leader as Tally can be a challenge in itself, says Christopher M. Kane, partner in the health care practice at Tatum LLC, the executive services and consulting firm based in Atlanta.

“Nationally, hospital CEO turnover is approximately 15 percent annually,” Kane says. “Tally’s tenure as CEO is unusual in an industry with an increasingly demanding business environment.”

With 250 children’s hospitals in the United States, according to the American Hospital Association Guide, the candidate pool should be deep. Kane believes the CHOA board probably will choose someone from another children’s hospital if an internal candidate is not picked.

But in cases of long executive tenure such as Tally’s, “Frequently, the internal candidate does prevail,” Kane says. “You don’t want to recruit someone who isn’t a good fit, and you don’t necessarily want to rock the boat. The person Children’s picks as its next leader, whether internal or external, will have to take advantage of both regulatory and philanthropic opportunities.”

The new CEO also must contend with the Atlanta region’s growing number of pediatric patients.

According to Claritas, a national firm that provides population data and projections (information to which hospitals throughout the nation subscribe), the metro Atlanta region is expecting an additional 120,000 children to be born or move into the area by 2010, a number eclipsing the current pediatric populations of Alabama or South Carolina. The growth in population primarily is because of more young people moving to metro Atlanta, and the always increasing number of Latino immigrants of child-bearing age settling in Atlanta.

According to the National Association of Children’s Hospitals and Related Institutions, from 2000 to 2005, Children’s Healthcare of Atlanta saw a 25 percent increase in visits to its emergency rooms and a 19 percent increase in overall visits to hospital facilities. In 2005, Children’s ranked No. 1 out of 31 children’s hospitals nationwide in the number of admissions.

A helping hand

Tally expects the CEO search will take about six months, culminating in a selection in the first quarter of 2008. He has no part in the process, although, he says, “I expect my opinion will be solicited by the board at some time.” He says the next CEO must be a relationship builder and a visionary who can create and sustain important ties to the community and who focuses on providing the programs and services necessary to meet the needs of a growing and increasingly diverse community of children in Georgia.

Once the new CEO is selected, Tally will stay on for a few months to help smooth the transition, taking cues from the board and the new CEO on when to exit.

The new CEO will need to get up to speed quickly as the health care organization crafts its “ Vision 2018” plan, which will assess needs and opportunities for the next decade.

CHOA’s board and a group of community leaders and volunteers currently are working on the project. Four areas have emerged as early focal points for future efforts: clinical care, research, teaching and wellness initiatives.

The organization has elevated its cardiac, cancer, blood disorders and transplant programs to top five rankings by Child magazine, so CHOA is looking to expand other clinical areas, including its pediatric neurosciences program, to address illnesses such as epilepsy and brain tumors.

On the research front, CHOA expects to collaborate more closely with Emory University and Georgia Tech on quality and safety initiatives to drive clinical excellence. CHOA also wants to expand its teaching program with Emory and the Morehouse College of Medicine to develop more fellowship and residency programs. Research shows that 75 percent of physicians who train in Georgia stay here to practice, and the organization wants to ensure there are enough pediatric specialists and subspecialists to meet a growing demand for pediatric care.

Finally, the hospital system is looking to develop more robust wellness services to keep children out of the hospital in the first place. Child magazine ranks Children’s as one of the top three pediatric hospitals in the nation, and Fortune has listed the hospital as one of the “100 Best Companies to Work for” for the past two years, the only children’s hospital to be listed.

In addition to three pediatric hospitals, Children’s Healthcare of Atlanta operates 17 satellite locations, including five immediate care centers and two primary care centers. In 2006, the facility had 22,700 hospital admissions, 35,550 inpatient and outpatient surgical procedures, 170,980 emergency department visits and 120,140 immediate care visits.