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CEO of Catholic Health to retire in 2018

Joseph D. McDonald, chief executive officer of Catholic Health, plans to step down from the hospital system in early 2018 after more than 15 years in the role.

He will leave as an influential leader who played a key role in shaping the region's health care landscape.

McDonald, a transplanted Southerner from Tennessee who arrived in late 2002, is the third president and chief executive of Catholic Health, the organization created in 1998 from the affiliation of Mercy, Sisters, Kenmore Mercy and Cheektowaga's St. Joseph hospitals.

He came here when the hospitals were still struggling to come together as a system. Since then, Catholic Health more than doubled its financial size to a $1.2 billion organization with more than 9,000 employees and about 43 percent of the region's market share. Earnings declined in 2015 and 2016, but McDonald looks back at 14 consecutive positive years in bottom-line revenues and $670 million in facility investments on his watch.

McDonald, who turns 65 in October, has served longer than most hospital chief executives, a job with pressures from complicated reimbursement, regulatory, technology and clinical challenges. By comparison, Kaleida Health, the largest competitor to Catholic Health, has had four CEOs since McDonald came on board.

"All the problems we have are not solved, but they are set up better than when I first got here. I'm pretty happy about that," McDonald said.

McDonald, who earned $1.79 million in total compensation in 2015, the most recent public data, said he will likely retire in the spring, when a new chief executive is expected to be named, but will stay on for a time to help with the transition. His contract runs through 2020, but he took advantage of an out option. A search committee that includes representatives of Catholic Health’s board of directors, religious sponsors and medical staff is in place to choose a successor.

The hospital system under McDonald took on big projects, rebuilding its emergency rooms, updating imaging and information systems, merging with Mount St. Mary's Hospital in Lewiston, readapting Our Lady of Victory Hospital in Lackawanna as a senior community, navigating the state Berger Commission's hospital downsizing efforts, and enhancing its relationship with Catholic Medical Partners, the group that represents hundreds of affiliated doctors.

Employees and visitors tour the new emergency department at Sisters Hospital in 2011. (Derek Gee/Buffalo News file photo)

His tenure also is marked by fierce competition with Kaleida Health and, particularly in recent years, contentious labor relations with the unions that represent a sizable portion of workers at key facilities, including registered nurses.

'Tough act to follow'

What does he look back on with the most pride? McDonald said it's the employee training and development programs he encouraged, such as those for nurses to obtain bachelor's degrees and executives to get master's degrees in business administration.

"We try to support people. I get a lot of satisfaction from that because I benefited from that kind of help," he said.

In the 1960s, while attending Catholic high school, McDonald started working at St. Mary's Medical Center in his native Knoxville. He washed dishes, served meals and cleaned the kitchen among other routine duties.

A nun in charge of the dietary department, who became a mentor, pushed McDonald to take advantage of the hospital's tuition assistance program. He did, attending the University of Tennessee, where he eventually earned a master's degree in business administration.

"I got to work all over the hospital, and it got me interested in all the processes," said McDonald, who immediately after graduating college transitioned into administrative jobs in hospitals that gave him experience in just about every aspect of their operation.

McDonald is highly regarded by his board and sponsors. Months ago, when he first told his board chairman of his desire to leave, William K. Buscaglia Jr. shot back, "no you're not."

"Joe has provided the organization with terrific leadership, and his successor will have a tough act to follow," said Buscaglia.

Buffalo Bishop Richard Malone praised McDonald for his commitment to developing management talent and a culture of accountability while never losing sight of the fact that the hospital system is a ministry of the church.

How to maintain a Catholic identity in health care, has become a recurring subject of debate as changes in health care have led to more lay leadership and partnerships with non-Catholic organizations.

"When I arrived five years ago, one of the things I was told is that I need not worry about the strength of the Catholic Health system," said Malone, who called McDonald a dedicated "servant-leader" who took seriously the mission to serve the poor and vulnerable.

Negotiations took a toll

McDonald said an assortment of factors influenced his decision.

He has experienced medical issues, among them knee surgery, and his wife, Penny, a nurse practitioner, wants to retire. Meanwhile, weighing on his mind, he said, was the death of two brothers, including an older one in July. On top of all that, his involvement in a very stressful and contentious contract negotiation with the unions representing more than 2,500 workers took a toll.

Catholic Health reaches tentative agreements with union workers at three hospitals

Mercy Hospital workers ratify new contract with Catholic Health

At one point, as talks had dragged on in 2016, the frustrated unions – which represented registered nurses, as well as service, technical and clerical associates – rolled out an inflatable “fat cat,” clutching a nurse by the neck, in front of the headquarters building on Genesee Street where McDonald works.

"I was thinking about this last year as we were having all the labor conflicts. Is this conducive to personal longevity?" I asked myself. "Maybe it's time to think about what the next chapter will look like."

Deborah M. Hayes, area director for the Communications Workers of America, credited McDonald with stepping in and working with the union to reach agreement on a new contract in 2016. Since then, she said, he and his management team have made an effort to improve the relationship.

"It's hard to imagine how far we have come in one year," Hayes said. "I have a lot of respect for the vision and hard work he put into it."

McDonald eschewed the fancy office trappings of a major business executive. Colleagues describe him as warm, genuine and engaging.

"He's a man of high integrity and honesty. He is also a religious man who made serving the poor a part of his focus," said Dennis Horrigan, a health care consultant who previously headed Catholic Medical Partners.

Horrigan said he liked that McDonald was open to opposing viewpoints and, when unexpected events occurred, he made a point of getting involved in the discussions over the root causes of problems.

"That sends a powerful message to doctors and nurses," Horrigan said.

McDonald can also be a bulldog about certain issues.

'Right time for the system'

Among other initiatives, he worked to build up heart surgery at Mercy Hospital and neonatal intensive care at Sisters Hospital, despite criticism that the services duplicated those at Kaleida Health, and that the community would be better off with collaboration in certain medical programs. He also vigorously resisted efforts by the state Berger Commission, concerned over too many empty hospital beds in the region, to close St. Joseph Hospital.

Catholic Health works closely with Roswell Park Cancer Institute in oncology care and has collaborated with Kaleida Health in some areas over the years. But McDonald always advocated competition, saying it improved quality and choice, and often said he was hired for the purpose of ensuring the long-term growth and viability of Catholic Health. He talks admiringly of some of his counterparts at Kaleida Health, but can also voice irritation at the public attention Kaleida Health receives, especially with the growth of the Buffalo Niagara Medical Campus, despite Catholic Health's strengths.

Catholic Health and BryLin exploring possible collaboration

"Each of us (Catholic Health and Kaleida Health) looks at the market from a different perspective. We've had a regional growth strategy with smaller institutions. The community is served by having at least two hospital systems," he said.

Joseph D. McDonald, president and CEO of Catholic Health System, and former Bishop Edward U. Kmiec, spoke out against state-mandated hospital closings in 2006. (Derek Gee/ Buffalo News file photo)

Dr. Michael Cropp, chief executive officer of insurer Independent Health, said McDonald has led with a sense of purpose and consistency in restructuring Catholic Health inside, putting more local control on its governing board, and outside, investing in bricks and mortar in a successful way.

"There were times when we absolutely did not agree on things. But Joe was an absolute straight-shooter. He strongly adhered to his principles," said Cropp, "He made a great contribution to health care here."

Following his retirement, McDonald said he plans to split his time between Buffalo and Knoxville. He said he will do a little consulting, and continue serving on a number of organizational boards, including at WNED, where he is currently vice chairman.

An advocate of a single-payer health system, he also envisions involving himself in public health policy, and would like to see the nation move toward insuring more people under Medicare, the federal health program for individuals 65 and older.

"There is too much waste in health care, and single payer is the only way to get our arms around the costs," McDonald said. "If you look at the Medicare program, it is a pretty dependable system, and we should incrementally lower the age to get into it."

One thing he stresses is that he never wants to be an employee again.

"I've had a good run," he said. "It's the right time for me and my family, and the right time for the system."

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