Tenet Healthcare CEO to step aside in September, turn over decision-making to handpicked successor

The chief executive of Tenet Healthcare Corp., one of the nation’s largest investor-owned health care systems, will step down at the end of this month, the company said Monday.

Ron Rittenmeyer will turn over day-to-day operations Sept. 1 to Saum Sutaria, Tenet’s president and chief operating officer. Sutaria will continue to report to 74-year-old Rittenmeyer, who will remain the Farmers Branch-based company’s executive chairman through 2022.

This transition is part of a long-term succession plan Rittenmeyer championed when he took over. He found his replacement in Sutaria after the two ushered the company through the COVID-19 pandemic together.

“During the past several years, Saum and I have worked closely together through extraordinary times including COVID, and at each step, he has continued to demonstrate excellent leadership in framing the right strategic and tactical pathway,” Rittenmeyer said.

Sutaria, a doctor and health care consultant that worked at McKinsey for 18 years, joined Tenet in 2019 as COO and was quickly promoted to president. He joined the board in 2020.

Despite the title change, Rittenmeyer emphasized that his working relationship with Sutaria will remain the same.

“I think it’s important for people to get the message that I’m not leaving,” he said. “Some people think that this is my retirement, that I’m saying goodbye, but that’s not true.”

The end of Ritteneyer’s CEO tenure comes as Tenet enters the second phase of a turnaround plan that Rittenmeyer shepherded when he stepped into the role in 2017.

“When Ron became CEO, he dug very deep to transform and drive the company toward a healthier future,” said Bob Kerrey, lead director of the Tenet board. “The Tenet of today is an entirely different organization with strong performance and a better business mix that speaks to all the changes in quality, talent and operations brought during the last four years.”

The new CEO will have big shoes to fill. Rittenmeyer is largely credited with turning Tenet, the eighth largest public company headquartered in Dallas-Fort Worth, around after years of losses and costly legal payouts.

Rittenmeyer’s strategy when he took the reins hinged on a company culture shift toward ethics and quality of care. He also quickly divested in non-core operations, generating about $1 billion in cash, according to a Bloomberg Intelligence report.

The company has since invested in ambulatory centers, acquiring up to 45 surgical centers in December 2020 in a $1.1 billion deal. Earlier this summer, Tenet sold five of its Florida hospitals to Dallas-based Steward Health Care in another $1.1 billion deal.

“He stepped in and I think he did a remarkable job,” said Glen Losev, a Bloomberg Intelligence analyst who covers Tenet. “He put down the template for what needs to be done and how the company should be run. And there’s still a year-and-a-half left of what he’s going to do.”

His time at the company hasn’t come without controversy. Rittenmeyer has been a lightning rod for criticism, with his skeptics taking aim at his hefty pay packages that annually rank him as one of Dallas-Fort Worth’s highest-paid CEOs and for decisions that led to an ongoing nurse strike in Massachusetts.

The CEO’s pay rose nearly $10 million to $24.3 million in 2019, a 62% increase from his compensation a year prior. Rittenmeyer’s pay was disclosed shortly after the company furloughed 3,400 hospital employees because of a COVID-driven halt of elective surgeries that resulted in lost revenue.

Last year, Rittenmeyer’s pay fell 31% to $16 million. But Tenet’s CEO to worker pay ratio in 2020 was 452 to 1, with a median wage of around $54,000 paid to the company’s 110,000 employees.

Tenet is currently in a lengthy battle with the Massachusetts Nurses Association, a union representing 800 nurses who walked off the job in March demanding staffing improvements. The strike, the longest of its kind in over a decade, eventually made its way to the company’s headquarters where supporters delivered a 16-foot-long petition.

Rittenmeyer is the fourth high-profile CEO in the last few months to announce plans to step aside.

In June, Southwest Airlines CEO Gary Kelly said he will transition to an executive chairman and turn over chief executive duties to Robert “Bob” Jordan starting Feb. 1. Lennox International Inc. chairman and chief executive officer Todd Bluedorn will step down in mid-2022 after 15 years at the helm of the company. Cinemark CEO Mark Zoradi will retire at the end of this year, turning over the helm of the publicly traded movie theater chain to chief financial officer and chief operating officer Sean Gamble.

CEO exits are occurring with greater frequency this year as companies recover from the pandemic’s economic shock.

U.S. companies announced 104 CEO changes in June, up 5% from the 99 who left their posts in May, according to outplacement and executive coaching firm Challenger, Gray & Christmas Inc. In the three-month period from April to June, 336 CEOs left their posts — a 51% increase over the same quarter last year.