Boston Children's Hospital trustees have reached inside the organization to name Sandra L. Fenwick, an operations whiz who has been the driving force behind reining in costs, as the next chief executive of the nation's largest pediatric research institution.
Fenwick, 62, who is now president and chief operating officer, will take over the top job at Harvard-affiliated Children's next Oct. 1 from Dr. James Mandell, the hospital is set to tell its 8,500 employees Thursday morning.
Mandell, a 67-year-old urologist, will retire after leading the 397-bed hospital for 12 years, the longest tenure of any current Boston hospital chief executive.
"We want Children's to be the change agent in pediatric medicine for the country and the world," Mandell said Wednesday. "I think Sandi will be a great leader at the national level."
The unanimous vote by 19 members of the board of trustees, which includes physician representatives, signaled a desire for continuity as the hospital adjusts to sweeping changes in the health care market while seeking to remain a leader in pediatric care. Children's draws about $250 million a year in research funding, more than any other pediatric hospital.
"We are probably in the greatest period of change I've seen in over 30 years, not only in academic medicine in Massachusetts but in the whole country," Fenwick said in an interview, citing hospital consolidation, looming federal funding cuts, and new payment models. "I think we've positioned ourselves to be sustainable financially so we can continue to serve all our patients and their families and to demonstrate the safety and quality we provide."
The changing of the guard at Children's is the latest in a series of moves that have reshaped leadership of most of the region's prestigious academic medical centers in the past several years. New chief executives include Kate Walsh at Boston Medical Center, Elizabeth G. Nabel at Brigham and Women's Hospital, Howard Grant at Lahey Clinic, Kevin Tabb at Beth Israel Deaconess Medical Center, and Eric Beyer at Tufts Medical Center.
In choosing someone who has worked closely with Mandell — "we finish each other's sentences," Fenwick said — Children's trustees took a different approach from hospitals like Brigham and Women's, Beth Israel Deaconess, Lahey, and Boston Medical Center, all of which chose new leaders from the outside. Before Fenwick's promotion, only Tufts Medical Center opted for an inside candidate when it tapped Beyer to succeed Ellen M. Zane last year.
"Sandi has a fantastic record," said commercial real estate developer Stephen Karp, chairman of the Children's board. "She has the complete confidence of the board, including the doctors on the board, which is critical to success. She understands the cost implication of things, and she's a strategic thinker. We've seen her work in some very difficult times."
Karp said board members began discussing the Children's succession at a retreat over the summer and immediately focused on Fenwick. After asking her to make several presentations to trustees outlining her vision and plans, the board saw no need to consider other candidates, he said.
Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, who has worked with Fenwick over the years, said the Children's approach is sound.
"It's a decided advantage to know the political climate, to know all the actors, and to know the institution," Widmer said. "Sandi's been an extraordinary leader in seeing the reality that all hospitals are going to need to drive costs out of the system while trying to preserve excellence. We're going through a transformation in this state, and we're going to lead the country."
The transformation has not been without pain at Children's. Since it posted an $82 million profit for the 2011 fiscal year — the most recent year for which financial figures have been reported to Massachusetts officials — the hospital has been under intensifying cost pressures.
Mandell and Fenwick told employees in September that 255 management and hourly-wage jobs would be eliminated, about 2.6 percent of the workforce, in a move that included 45 layoffs as well as reassignments and leaving vacant positions open. They cited changes in health care that have shifted care from inpatient to outpatient services, and from Children's main hospital in Boston's Longwood Medical Area to satellite sites in Waltham, Lexington, Peabody, and Weymouth.
Another factor, they said, was "volume erosion" as health insurers directed more patients to lower-cost competitors through limited network insurance plans.
Fenwick has led aggressive moves to reduce expenses during the past two years since Children's was identified by state Attorney General Martha Coakley as one of the most expensive hospitals in Massachusetts. Among other moves, it cut fees to insurers and Medicaid managed care programs by lowering charges for lab tests, doctors appointments, imaging, surgery, and admissions. Children's has also reduced prices at its suburban sites as part of an effort to trim $150 million from the hospital's fiscal 2013 budget.
A native of New Britain, Conn., Fenwick earned a bachelor's degree from Simmons College and a master's degree from the University of Texas School of Public Health in Houston. From 1976 to 1996 she worked for Beth Israel Hospital in Boston, rising to vice president in charge of network development and clinical services planning and development.
After a two-year stint as senior vice president at Beth Israel's parent CareGroup Inc., Fenwick joined Children's in 1999. She was promoted to chief operating officer later that year, and added the title of president in 2008. She lives in Weston with her husband, Geoffrey.