Jody Lomeo, the Kaleida Health CEO who oversaw the hospital group's building boom that included the construction of a new children's hospital and expansions at other facilities, plans to step down at the end of this year.
Lomeo, 51, said Tuesday morning that he planned to leave his post for personal reasons. He has been Kaleida's CEO for the past six years, as the hospital group's business has grown but its profit margins have shrunk and hospital operators nationwide have been squeezed by declining insurance reimbursements. Kaleida expects to report its first deficit in six years during 2019, but is projecting to break even this year.
Frank Curci, the Tops Markets CEO who serves as Kaleida's chairman, said the hospital group's directors had offered Lomeo an extension of his contract, which expires in December 2020, but he declined.
"There is no smoking gun," Lomeo said in an interview.
"I'm not running to something. I'm not running from something," he said. "For me and my family, it felt right."
"It is time for me to get back to my family and spend more time at home," he said in a statement announcing his plan to step down. "My three boys and my wife have sacrificed so much for me over the years. In fact, they have prioritized their lives to support me. I owe it to them now to be there as they all enter the next phase of their lives."
Kaleida's board plans to hire an executive search firm and launch a national search for Kaleida's next president and CEO in the coming months. Kaleida said it would consider internal, local and national candidates.
Lomeo joined Kaleida as interim CEO in January 2014 and was named president and CEO in April of that year. Before that, he was CEO of Erie County Medical Center. Lomeo said Kaleida's board has asked him to consider staying on as a director after he steps down.
Kaleida finished 2018 with a $10 million surplus and revenues of $1.85 billion, according to its most recent financial statements. But Kaleida's surplus was down more than 60% from 2017, when it had a $27 million surplus on revenues of nearly $1.7 billion. Lomeo earned total compensation of nearly $2.5 million in 2018.
Kaleida now has more than $2 billion in annual revenue, up from $1.4 billion in 2015. The hospital group has 13,000 employees and more than 2,000 physicians.
Kaleida has been taking steps to cut costs as its margins shrink. The hospital announced in October that it would close its inpatient beds at DeGraff Hospital in North Tonawanda and move them to Millard Fillmore Suburban Hospital in Amherst, while keeping open the DeGraff emergency room. In August, it closed the Geriatric Center of Western New York, also at DeGraff, at a time when the need for elder care is growing along with the aging population. Kaleida has since put part of the DeGraff property up for sale.
Lomeo said his departure was not related to Kaleida's financial challenges, including declining reimbursement rates.
"Let me be very clear," Lomeo said in an email to Kaleida employees. "I am only making this announcement based on my family. There is no truth to the rumor that I have another job. I have no other plans other than being a husband and dad. Moreover, there is nothing negative regarding Kaleida Health that went into this decision. In fact, I am more confident today in our future than I was in 2014 when I first joined the organization."
Curci said Lomeo has been asked to help with the transition.
"We offered an extension and we asked him to stay, but we couldn't get him to change his mind," Curci said.
"It takes an incredibly special person to do what he is doing," Curci said. "He is ensuring that the organization has a smooth transition and that the board has a succession plan in place for when he leaves."
Under Lomeo, Kaleida built the $270 million John R. Oishei Children's Hospital to replace the system's older children's hospital on Bryant Street. The move meant that three of the region's major hospitals – Children's, Buffalo General Hospital and Roswell Park Comprehensive Cancer Center– were now on the Buffalo Niagara Medical Campus.
During Lomeo's tenure, Kaleida also expanded and added programs at its main suburban hospital, Millard Fillmore Suburban, and also added services at Buffalo General and the Gates Vascular Institute inside the hospital.
"This is all about building on the success that we have had over the past six years," Curci said.
"Having time and a plan will help ensure that we do it right," Curci said. "Succession planning is incredibly important for all organizations, especially for large and complex ones like Kaleida."
Lomeo has been married to his wife, Mary, for more than 25 years and they have three children, one in college, another in high school and the youngest in eighth grade.
"I am not going anywhere," Lomeo told Kaleida employees in the email. "I am here to see this calendar year through and to ensure a smooth transition. It is business as usual in all that we do."