By Tara Bannow

The Bulletin

St. Charles Health System’s new president and chief executive officer comes from a health system with more than 40 clinics, including five hospitals, peppering South Dakota’s Black Hills region.

There, Joseph Sluka helped spearhead an approach designed to put those who are in the trenches providing patient care in charge of creating the changes they wanted to see in the health system, called Regional Health based in Rapid City.

“It’s the people that are doing the work, the people on the front lines, are the people that come up with the improvements,” he said, “and our job as leaders is to break down the barriers so they can make those improvements.”

It’s that inclusive philosophy of managing a health system that attracted the members of St. Charles’ board of directors, who voted unanimously to extend the job offer to Sluka. He was St. Charles’ first choice for the job when the board extended the offer in late August, said board Chairman Tom Sayeg.

Sluka, who currently serves as executive vice president and chief administrative officer for the nonprofit Regional Health, will officially assume his role at St. Charles on Dec. 1. He replaces current President and CEO Jim Diegel, who announced in January he would step down after eight years of leading the health system once his replacement was determined.

After learning about the opening at St. Charles, Sluka, 48, said he researched the health system and found it to be of high quality and led by people dedicated to patient care. He said he also thinks Bend is a vibrant community, which made the opportunity even more appealing.

Sluka’s base salary will be $635,000 annually in addition to an executive benefits program that includes group health, deferred compensation and a retirement plan, Sayeg said.

Sluka’s base salary at Regional Health was $395,458 in 2012, according to tax documents filed with GuideStar, a website that makes available nonprofits’ publicly available tax documents.

St. Charles officials did not provide Diegel’s current salary for comparison, but spokesperson Lisa Goodman said that Sluka’s salary falls within the 50th percentile for CEO pay at similar-sized health systems.

In 2013, health systems with median revenues of $716 million — St. Charles’ revenue was about $557 million in 2012 — paid their CEOs a median base salary of $539,000, according to a 2013 survey by Integrated Healthcare Strategies.

Regional Health, while larger than St. Charles, is similar to St. Charles in many ways, Sluka said. Both have the 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, which can’t exceed 25 beds.

“The similarities are there between the two organizations, and a lot of these same challenges and issues and opportunities exist here at Regional Health and also I think there at St. Charles,” he said.

Sayeg said the board did not concern itself with finding a candidate from a similar organization; rather, it wanted the candidate to have significant experience in health system operations and improvement, managed care and physician relations. He said Sluka fit the bill on all of those fronts.

“We are very, very excited about his arrival,” Sayeg said. “I think Joe is the right person to lead this system going forward.”

Sluka has been in his current role with Regional Health for four years. He has spent 13 years with the health system, including as the vice president of managed care. Prior to joining the health system, he served as executive director of Western Health, a health insurance provider for businesses that’s a subsidiary organization of Regional Health. Before that, he was the chief operating officer at HF Medical Management in Akron, Ohio, and the executive director and chief operating officer with MedPartners, a national physician practice organization that has now dissolved.

Critical to running a health system is understanding the risk environment that health insurance operates within and how reimbursement to providers is changing, Sluka said. He said his experience in the insurance industry makes him well-suited to help position St. Charles to better handle new reimbursement formats in which private insurance companies and government health plans like Medicaid and Medicare will pay providers in lump sums rather than for each service provided to a patient. That, coupled with declining government reimbursement, has been a challenge nationwide, Sluka said.

Regional Health has been especially hard hit by financial challenges and recently embarked on cost-cutting measures including potentially consolidating its smaller hospitals in Deadwood, Sturgis and Spearfish and offering early retirement opportunities to employees who are at least 60 and have been with the organization for five consecutive years. Sluka said that issue did not contribute to his decision to leave Regional Health, where he helped put together teams of community members, physicians and staff members to try to study potential cost-saving measures in a new reimbursement environment.

“It’s a pretty inclusive process we’re going through,” he said.

Sluka also serves as a board member and past chair of the South Dakota Association of Healthcare Organizations, where spokeswoman Angie Bakke said he is known for his inclusive attitude.

“He brings people in, asks a lot of questions and then he forms a team and they take action,” she said.

In South Dakota, Sluka has led a grass-roots effort supporting a statewide Medicaid expansion to more than 48,000 low-income residents, Bakke said.

“He was part of starting that initial grassroots movement,” she said. “That’s a hard message in South Dakota to deliver, and he took the message to the people that needed to hear it.”

Although South Dakota did not participate in the initial Medicaid expansion, the state’s governor recently submitted a plan to extend the program to a smaller number of residents. The federal government rejected the proposal.

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. He and his wife, Lynn, have two children.

“I’m extremely excited and honored to be selected for St. Charles,” he said. “I’ve looked at the Bend community; it looks like a fantastic community. I just can’t wait to get out there and contribute where I can.”

— Reporter: 541-383-0304,

tbannow@bendbulletin.com

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