By Tara Bannow

The Bulletin

Back when Joe Sluka was still in the running for St. Charles Health System’s top post, he visited Central Oregon so hospital leaders could size him up. While he was here, he did some sizing up of his own.

He got up early before his interviews and had breakfast at St. Charles Redmond. Then up to the Madras hospital for a cup of coffee. Then to Prineville for more coffee.

“I had a lot of coffee that day,” he said with a laugh.

Finally, lunch at the flagship Bend campus.

At each stop, he simply talked to people: caregivers, food preparers — whoever happened to be around. He didn’t tell them why he was there. For all they knew, he was just a guy passing through.

“I just asked, ‘What do you think about St. Charles?’” he said. “Everyone that I talked to just loved the organization. That meant a lot to me.”

That Sluka took the initiative to visit all four hospitals impressed members of St. Charles’ board of directors, as did his reputation for implementing an innovative way of rolling out reforms at his health system in South Dakota and his experience weathering financial storms. The board voted unanimously to make the 48-year-old New Jersey native St. Charles’ new chief executive officer. He assumed the role Dec. 1, 2014, replacing Jim Diegel, who stepped down at the end of November after holding the position since 2006.

“That was unique,” Board Chairman Dan Schuette said of Sluka’s decision to visit the other hospitals before his interviews. “We’re still growing up to be a system, and we’re getting much better at it, but just the aspect that he reached out to the other hospitals made it a big deal.”

Similar health systems

Sluka’s first few months on the job have been spent getting out and getting to know as many people in Central Oregon’s health care community as he can. He regularly travels back and forth between the hospitals and attends staff meetings.

But on a recent Wednesday morning, Sluka was in the thick of hospital drama — racing to attend to an unanticipated inspection . That morning, he had driven his wife and son to the airport well before sunrise for their flight back to South Dakota, where his wife is staying until the end of summer, after their son graduates from high school. The family had spent the weekend visiting college campuses for his son, who has his sights set on three colleges in Oregon.

“Hopefully he’ll be going to college somewhere in Oregon,” Sluka said, “but if not, we’ll get him off to college wherever he goes.”

When he’s not working, Sluka expects he and his wife will be visiting their son in college and their daughter, who the couple just learned is expecting her first child. She works in admissions for a hospital in Washington state, about seven hours from Bend.

“I’m sure a lot of our time will be spent being first-time grandparents and figuring that whole thing out,” Sluka said.

Sluka came to Central Oregon from Rapid City, South Dakota-based Regional Health, a nonprofit health system with more than 40 clinics, including five hospitals, peppering South Dakota’s Black Hills region. There, he served as executive vice president and chief administrative officer for the past four years. He spent a total of 13 years with the health system, including as the vice president of managed care.

Regional Health, while larger than St. Charles, has a similar layout. Both have larger, flagship hospitals — Bend and Rapid City — and smaller ones in the surrounding cities. Regional Health’s Spearfish hospital is a 40-bed facility, and the health system has three other critical access hospitals, rural hospitals with no more than 25 beds. St. Charles Redmond is a 48-bed acute care hospital, and the Madras and Prineville hospitals are critical access hospitals.

The two health systems also have struggled with declining reimbursement for the services they provide, particularly at the rural hospitals, Sluka said.

In the face of significant financial challenges, Regional Health in recent years has eyed a series of cost-cutting measures, including consolidating its smaller hospitals and offering early-retirement opportunities to longtime employees. The health system’s financial troubles truly began at the height of the recession in 2009, said Mark Thompson, Regional Health’s chief financial officer. Rather than laying people off, administrators decided to dole out temporary pay cuts, he said.

“That was not fun, but it was something we needed to do back then,” Thompson said.

But even in tough times, Sluka was “extremely respectful” to everyone affected by the decisions, said Rod Marchiando, director of Regional Health’s value improvement system.

A focus on lean

Sluka’s legacy at Regional Health centers around his leadership in implementing an approach, called lean practices, that was first met with skepticism among providers. It’s designed to put those in the trenches providing patient care in charge of creating the changes they want to see in the health system.

The methods, which started in manufacturing and were popularized by Toyota Motor Corp., are designed to find efficiencies by reducing waste and caregiver frustration and improving quality of care.

St. Charles has been undertaking smaller lean projects for years. A Bulletin article from January 2011 said the health system was in the process of recruiting more employees to become lean facilitators and oversee more projects. Sluka said St. Charles has done a good job of practicing lean in various parts of the system, but his approach would take it to the next level by ingraining it throughout the organization. He plans to start rolling it out this month.

St. Charles’ lean projects have been isolated to various “pockets” within the hospital system, Schuette said.

“Now, the lean pathway we’re on is a complete cultural change for the organization,” he said.

Much of the work will take place in intense, so-called rapid improvement events. For 4½ days, nine people — mostly caregivers and almost no administrators — will sit in a room together and come to agreement around a problem that needs solving, a goal and a series of metrics that will get them to that goal, Sluka said.

Initially, that tactic was met with skepticism at Regional Health, especially among physicians, said Dr. Terry Altstiel, a general surgeon and chief medical officer for Regional Health Physicians.

“You wonder if it’s going to be the flavor of the month,” he said. “Something that sounds good, you get started, find out it’s hard work, and it just goes by the wayside.”

But lean held its ground, and it’s still being used even after Sluka has moved on. The model’s first major success was around treatment for sepsis, an inflammatory reaction to infection that can trigger multiple organ failure and death. It’s one of the most common causes of death in hospital intensive care units, striking more than 1 million Americans annually and killing between 28 percent and 50 percent of those people — more than the number of prostate cancer, breast cancer and AIDS deaths combined, according to the National Institute of General Medical Sciences.

One year after a rapid improvement event around sepsis, Regional Health had reduced the number of sepsis deaths among its patients by 15 percent, Sluka said.

Rapid improvement events aren’t what Altsteil would describe as “fun,” but, he said, “You come out the other end with really innovative ideas, and it’s very, very effective.”

Lean, which Sluka launched at the end of 2012, has had a “transformational” effect at Regional Health, Marchiando said.

“It’s difficult because a lot of times you’re changing the work that individuals and the team may have actually created,” he said, “but it really does it in a fashion that is very respectful and allows them to come up with improvements on their own.”

The idea of letting front-line caregivers determine changes was originally promoted at St. Charles by Sluka’s predecessor, Diegel, Schuette said. Sluka’s work will extend that philosophy. he said.

“The input from the lowest-paid employee at St. Charles has got good insight about what that person does and how it fits,” Schuette said. “I think culturally it’s an extension of what we’ve been trying to do.”

Multi-industry experience

Before joining Regional Health, Sluka was the executive director of the now-defunct Western Health, a health insurance provider for businesses that was a subsidiary organization of Regional Health. It’s helpful as a health system administrator to have an insurance background, he said, because he understands reimbursement from the side of the insurer that’s providing it and from the side of the hospital that depends on the reimbursement.

Reimbursement models of the past, in which the insurance company was given a bill for each service provided, put entities at odds with each other, Sluka said.

“Now we’re starting to see more alignment,” he said. “So what’s best for the patient, which is most important, becomes what’s best for the payer and for the provider.”

Oregon is further along in that model than other states, including South Dakota, he said. In fact, one of the things that drew Sluka to the state was its coordinated care organization model, in which the state provides money to groups to administer Medicaid, or the Oregon Health Plan, in specific regions. It’s a new model for Oregon, one that requires local health care providers to work together to ensure each is shouldering an appropriate portion of the risk involved.

“It’s really great to see all the providers around the table,” Sluka said.

Oregon was aggressive in expanding Medicaid to everyone earning up to 138 percent of the federal poverty level, even using other government assistance programs to determine eligibility. Sluka was active in a grassroots effort to expand Medicaid in South Dakota, a measure that ultimately failed.

Before Western Health, Sluka was the chief operating officer of HF Medical Management in Akron, Ohio, a care management company that worked with physicians and health plans to ensure quality of care and financial return. That role helped him gain an understanding of the physician perspective, he said. He also served as executive director and chief operating officer for MedPartners, a national physician practice organization that has since dissolved.

Sluka holds a Master of Business Administration degree from Case Western Reserve University’s Weatherhead School of Management and a bachelor’s degree in business from Richard Stockton College.

If his reputation at Regional Health — where leaders described him using words such as “integrity” and “honor” — is any indication, Sluka’s impact on St. Charles won’t go unnoticed.

“You’ve got a good man,” Altstiel said. “He cares about people, and he’s going to make the hard decisions when it’s necessary, and he’s going to make your system better.”

— Reporter: 541-383-0304,