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Essentia CEO to retire next year; wide net cast for replacement

Essentia Health will look outside its system to replace top executive Dr. Peter E. Person when he retires next year.

“We’re looking for someone who’s running or been in top leadership in organizations,” said Richard Blair, chairman of the Duluth-based health system’s board. “And we have very competent people here, but they don’t quite meet the criteria we’re looking for.”

Essentia announced on Tuesday that Person, 63, will retire sometime in 2015 after 20 years in executive leadership roles for the health system and its predecessors.

A national search for a new CEO of the sprawling nonprofit is expected to take several months, Blair said. A specific retirement date for Person will depend on how that search goes, he added.

The board wants to continue to have a doctor in the leadership role, Blair said.

“This ensures we have a richer perspective on how decisions made in the board room impact what happens in the exam room,” he said in a statement.

Person was a homegrown CEO.

He joined Duluth Clinic as an internist in 1981, but soon added administrative roles to his clinical practice. He was named president of the Duluth Clinic in 1995 and CEO of SMDC Health System in 1997, when Duluth Clinic and St. Mary’s Medical Center merged. When Essentia Health was formed in 2004, he stayed as CEO.

He continued seeing patients until 2000, when he became a full-time administrator after earning his MBA from the University of St. Thomas.

Essentia Health now reaches from Northwestern Wisconsin to Idaho, with 12,500 doctors and employees serving more than 400,000 patients annually in 66 clinics and 18 hospitals.

Person, who is married and has two children, received $2.19 million compensation in 2011, the last year for which data are available.

Lawrence Massa, president of the Minnesota Hospital Association, said Person has been an advocate and an innovator, particularly for health care in rural communities. For example, Essentia was among the first to embrace accountable care organization status. ACOs are compensated by the quality of service they provide rather than the volume. Last year, Essentia was one of two health systems in the country accredited by the National Center for Quality Assurance for achieving its highest level as an ACO.

“Other health systems around the country and also the big health systems within Minnesota have a lot of respect for what Essentia’s been able to do under Peter’s leadership,” Massa said.

Dr. Ray Christensen, who has a practice in Moose Lake and is associate dean for rural health at the University of Minnesota Medical School’s Duluth campus, said Essentia under Person has focused on bringing rural communities the services they want.

“As a rural physician, I always felt very happy that Essentia was there,” Christensen said.

The expansion into rural areas hasn’t always been smooth. Talks with hospitals in Moose Lake, and Ely broke down. Essentia nearly lost its affiliation in Sandstone two years ago, and its affiliation with International Falls ended last fall. The hospital affiliation in Virginia was approved in 2012, after a long and sometimes contentious process.

But Essentia deserves credit for taking on tough challenges, Christensen said.

“Virginia was a tough call,” he said. “Everyone was looking at it. Most people walked away from it, I think.”

Doctors who also are hospital CEOs are a minority on the Minnesota Hospital Association board, Massa said, but “more and more big systems are looking to physicians as their leaders.”

Both the Mayo Clinic in Rochester and the highly respected Cleveland Clinic have physician CEOs, an Essentia Health news release said.

Christensen said he applauded Essentia both for looking for another physician-CEO and for seeking external candidates.

Blair said he hopes the board can find “a Dr. Person that’s 15 years younger.”

Person said he has no definite plans for retirement other than spending more time with family and relaxing.

He noted that the average tenure of a hospital CEO is 4½ years.

“It’s been quite a run,” Person said. “And I think that at age 64 (next year) it’s time to bring in a fresh perspective, and certainly the individual will have experience and probably a little bit more energy.”