Picking up the beat: Eugene Woods is ready to expand the state's largest hospital system amid concerns that it packs too much power.

• Author: Martin, Edward
• Position: Cover story

The words are as brooding as the Big River. "There'll be no sunshine in the rain, no shelter from the pain ..." His newsboy cap shading his brow, taut torso in a tight, black T-shirt, the singer coaxes Mississippi blues from his guitar, pouring out lyrics that he says were inspired by the devastation of Hurricane Katrina. A sax moans, and the hybrid sound carries traces of soul, even reggae.

As notes of "The Levee" fade, he flips his guitar behind his back, joshes with members of his band, called The City, and walks out the door of Shangri-La Productions. The studio on the south side of Lexington, Ky., is 400 miles from his day job.

In Charlotte, balding without his cap, in a tailored suit and blue-striped tie, Eugene Woods, 52, plays a different gig. Hired last April, he orchestrates Carolinas HealthCare System, a health care behemoth with more than 62,000 employees in 39 hospitals and 940 medical sites in three states. It recorded more than 12 million patient interactions last year, and revenue will approach about $10 billion this year. That is more than double the turnover of Duke University's health care system. Only the system's third CEO since 1981, Woods will be installed in May as chairman of the American Hospital Association, the principal lobbying voice for 5,000 hospitals.

At CHS, he's inheriting a financial powerhouse with an enviable spread between revenue and expenses and a manageable debt load that have earned it one of the industry's strongest credit ratings. While it's a not-for-profit institution that doesn't have shareholders or pay dividends, the system's excess income--including operating income and investment earnings--toppled a combined $730 million in 2014 and 2015, according to a Standard & Poor's report in September. The business is fundamentally different from the one chartered in the 1940s as a public hospital to house the indigent sick, a role it played until 1981 when former CEO Harry Nurkin broadened its mission and kicked off a dizzying ascent to the top ranks of the nation's health care systems.

"We have a saying, 'No margin, no mission,' and that mission is, we take care of all God's children," says Edward Brown III, chairman of CHS' governing board. The authority sought a "charismatic leader who could take the organization to a whole new level."

Woods takes charge at CHS during a time of unprecedented change, with the nation deeply divided over key industry issues: Is health care a right or a privilege? Are hospitals, doctors, insurers and drug companies overregulated? Should private-market forces play a bigger role? "We recently began surveying hospitals nationwide to see how ready they are for these massive changes," says Kevin Schulman, a physician and health care professor at Duke University. "They are not."

Among the greatest challenges facing hospitals are government mandates and growing pressure to treat sick people collaboratively, while limiting time spent in hospitals. When longer stays are necessary, the mission involves joining with a team of caregivers to heal patients and avoid repeat visits. "It may sound funny to consumers, but we don't want you to come to the hospital," Brown says. "We want you to stay well."

Woods uses as an example chronic obstructive pulmonary disease, the wrenching inability to process sufficient air to live. CHS looks at about 40 different factors and begins plotting post-release treatment even as the newly admitted patient is in intensive care. "Doctors, pharmacists, nurses and others work with them so when they go home, with diet, exercise and medication, we keep them out of the hospital," he says. "We're now seeing a 43% reduction in cost, and a 45% reduction in emergency-room visits." Systemwide, 90% of so-called "patient days" occur outside the hospital.

Healthy spread

Carolinas HealthCare System operates 39 hospitals in three states, a fraction of the territory covered by Eugene Woods' previous employer, Texas-based Christus Health.

Pressure for such collaborative...