Tom Fritz, CEO of Inland Northwest Health Services, retires at the end of this month, concluding a 16-year tenure as head of the diverse organization that operates St. Luke’s Rehabilitation Institute, Northwest MedStar, and a handful of other business units.

In addition to working to make INHS consistently profitable, Fritz has overseen a transition through which it went from having two owners—Providence Health Care and Empire Health Foundation—to being aligned with just Providence.

We sat down with Fritz as he prepares for his last month at the helm of INHS.

Journal: The best place to start would be a state-of-the-organization assessment from you. Talk a little about the health of the organization and where it stands as you prepare to depart. 

Tom Fritz: I’m just extremely proud of everything we have done for the company as a team. To be retiring at this time, which was my goal, we’re in such great health as a company financially. We own all of our assets. We don’t have debt; we have a little bit at the Wells Fargo building since we bought it a few years ago, but that was a great acquisition for us. We got it at a great price, and it gives us a return already. 

Our financials over the last 16 years have been stellar. Each year, we’ve continued to grow. Each year, we’ve added staff. The one thing I’ve always appreciated in this role is that we pay good, family-wage jobs. It’s really important for our community. Right now, we’re running at about 1,100 employees. 

We have major expansion at St. Luke’s with outpatient sites, major expansion with MedStar over the last 18 months. We’re just a few transports short of 5,000 transports this year, and historically, we’ve done 3,500 max annually. Technology-wise, with our IRM Engage group, we cut five more contracts last week. We’re all over the nation, and every week, somebody new wants to do business with us. 

Our chief financial officer and our board have done a great job in supporting us and helping us to grow the business. It’s been incremental growth. It hasn’t been an aggressive growth with acquisitions. 

I couldn’t feel better about the company and how solid we are. 

Journal: It was a year ago, almost to the day, that we got together and talked about Empire Health Foundation divesting itself of INHS and Providence becoming your company’s only member. How has that transition gone over the past year?

TF: I think it was Dec. 3 that we sat down with you. We kind of agreed to use this year to explore things and not make any significant changes. We made new board appointments, and our board has been very positive in terms of continuing to grow what we’ve been doing. 

We know this is going to be a multiyear transition. With all of the changes in health care, especially with the Affordable Care Act, this is a great thing for INHS, especially for a place like St. Luke’s, a specialty hospital. We really have to have that kind of connection and relationship to have an ongoing ability to keep the service alive for the community. 

We did pretty much everything we said we’re going to do. We did a lot of due diligence and are trying to be strategic, take our time, and not make decisions hastily. 

Journal: When you look at your different business models, what do you see as your greatest vehicle for growth from a revenue standpoint? 

TF: Clearly, right now, it’s the technology piece. That could change, I suppose, with other market changes, but it’s been a significant growth opportunity for us. As you know, it’s really difficult for us here at St. Luke’s, because the Accountable Care Act is really more of an anti-hospital thing, so you have more and more barriers to helping people get in the hospital. But the technology and MedStar have much more opportunity. 

With MedStar, you’ve seen us add more bases. There’s a lot of opportunity for that business, but again, that’s going to be more difficult from a revenue side because a lot of it is going to be Medicare, and a lot of it is going to be changes in the future.

With technology, we’re limited to where our customers are. We’re able to do things in a way where we’re very responsive. We’re still very entrepreneurial. That’s the intent: to keep those business lines entrepreneurial. Right now, with all the changes, there’s more demand for integration of data, which we’re experts at. 

Journal: It might be helpful for our readers to explain where you fit on the IT side in health care.

TF: You know, initially, we were asked to integrate all the stuff for the hospitals here in Spokane. Then we started doing all of the physicians in the region, then all of the hospitals in the region. 

We’ve continued to be a third-party integrator and the neutral party that could hold data and protect it, with all of the HIPAA (Health Insurance Portability and Accountability Act) compliance. We have an integrated record. With all of the changes going on, we’re in discussions on the creation of a health information exchange. 

It changes so much. It’s like your Apple iphone. What we can do today is so different from what we could do 12 months ago on some of the technology, especially in terms of integration of competitive products. We have the dilemma in our industry of all of these proprietary systems. We’ve played an interesting role in integrating that.

We’ve recently been approved by the federal government for an integration model that I personally have been involved in for the last few years. It’s a significant opportunity for us and Providence to do things to help others connect. 

Journal: My perception is that your role in the beginning was seeing that the paper records became electronic records, and now your role is helping with the access and integration of electronic records. 

TF: Yes, that’s correct. Where we were, everything was manual. There were a lot of errors with that. The concern was there were patient deaths because we’d take orders off of a record wrong because we couldn’t read a physician’s handwriting, then the wrong medication would be given to a child or an adult and things would happen. 

The National Institutes of Health came out with a report called “To Err Is Human” that said we’re killing more patients in hospitals than in automobile wrecks and other kinds of things because of medical errors. And they were mostly prescription errors. We were the first in the nation—Sacred Heart, Deaconess, and St. Luke’s—to do bar code scanning of medications. We reduced errors substantially. We reduced costs. Those things were just godsends in terms of helping patients. 

And you’re right. We still have everybody on proprietary products, but before we were trying to get everybody on the same product. Now, we’re saying, ‘Look, we don’t care what suite of products you’re on. And by the way, we don’t want you to change because it costs too much.’ Why do that when it works, at least it works for them? 

The challenge is, how do we preserve what we’ve built? How do we leverage what we’ve built? And how do we make it more efficient?

Journal: It was 16 years ago when you took this position. What was the condition of the organization at that time?

TF: Sixteen years ago, the system never operated in the black. It was an anchor around the hospitals’ necks. It had never had a clean audit. We were in the process of potentially doing layoffs the first month I got here. We worked very hard to turn it around. We worked very closely with the board, with many of the employees. 

Within a short period of time, we were in the black. We had clean audits ever since, and we have turned a profit ever since. The good thing is, we’ve been able to invest that back. That’s why we own all of our assets. 

When I took over the company, we still had $32 million to $35 million in debt on this building (St. Luke’s) alone. We didn’t own any of the aircraft. We were spending so much money. 

We’ve been able to pay all of that off. We did it a number of years ago. 

We’ve been able to stay fiscally responsible, and we’ve been able to build a business model with quality in all of our business lines, especially with patient care at St. Luke’s and patient safety with MedStar. 

Journal: What was your background when you came into the position?

TF: I have a couple of master’s degrees, one in psychology and one in public administration. I started my career in the UCLA hospital system in California. I have my behavioral health background , and then I had an interest in running state hospitals. I ran Eastern State Hospital for a number of years, and I was state director of mental health and substance abuse. I definitely have a hospital background, and I became aware of INHS when I was running Eastern State Hospital. I think it’s been helpful having that unique background. It’s a unique company. 

I also have a background in the Marine Corps. I was involved in a search-and-rescue helicopter squadron. So, being involved in MedStar was a very comfortable place for me. 

Journal: What do you see as the biggest challenges for the organization moving forward?

TF: Well, I think a lot of it has to do with the implications for the Affordable Care Act. We still haven’t seen changes in reimbursement with the new models. That’s probably the biggest, especially for St. Luke’s and MedStar. 

We’ve already had substantial changes in physical medicine and rehab over the last six or seven years. It’s really limited the number of patients who can get access to rehab. It’s become complex. We clearly treat some complex cases, and those in the past who could use rehab don’t get access today in the way they did before.

To me, I think that’s the biggest risk—that they are going to put more barriers out there for people before we have infrastructure to take care of them. I’m not opposed to the fact that we probably should be using fewer in-patient beds, but we should have other models in place. It could be a partial hospitalization model or medical home model, but to just cut people off so they don’t get access is the problem that probably disturbs me the most. 

Journal: What traits would you like to see in your successor?

TF: We focused a lot on collaboration and being partners and being entrepreneurial in terms of helping the business units grow. 

The more collaboration we do, especially on the data side, the more it will help patients. It’s important to focus on collaboration and not to focus on some proprietary system. 

To me, that’s where we really do the best for the community and serve them in the manner that we all want to serve them.

Journal: What are your plans going into retirement?

TF: I’m going to take a little time off. It’s interesting for me, because we made the announcement a few months ago, and I was a little worried about that. But I’m glad we did that. For one, it’s given me an opportunity to transition.

I really had no idea how much stress I was under. That’s been a real eye opener for me. 

I’ve got a lot of opportunities, but I don’t want to jump right into something again. I want to take some time off and spend it with my family and appreciate some of the things that I’m not able to do.

I want to be able to outdrive my wife on the golf range. She can outdrive me right now. I make it out for three fundraisers a year. She makes it out three times a week. I want to do the things that are fun.