New Hallmark Health CEO says Partners merger critical

Alan Macdonald is new chief executive of Hallmark Health System.Hallmark Health System

Hallmark Health System, which operates two hospitals north of Boston, on Thursday appointed a new chief executive, who said he remains committed to completing a controversial merger with Partners HealthCare.

Alan Macdonald, who has served as interim chief executive since February, called the merger critical to Hallmark’s ability to invest in new services and compete for patients in the years ahead. “We can maintain our position as a community hospital,” Macdonald said in an interview. “The question is whether or not we can be as strong as we would be with Partners.”

Hallmark and Boston-based Partners proposed merging in 2012 but put the deal on hold after a judge rejected a settlement that would have allowed the deal to go through, and Attorney General Maura Healey said she may consider a lawsuit to stop the transaction if the health systems decide to proceed.

Partners, which operates Massachusetts General, Brigham and Women’s, and other hospitals, recently gave up on its bid to acquire South Shore Hospital in Weymouth. But a decision on the Hallmark deal still could be months away.

“Partners and Hallmark have agreed that it’s time to take a pause and reflect on next steps,” Partners spokesman Rich Copp said. “We will continue our conversation about how best to work together in the future.”

The uncertainty over the Partners deal is one of several challenges that Macdonald, 70, faces in his new role. Hallmark, which operates Lawrence Memorial Hospital in Medford and Melrose-Wakefield Hospital in Melrose, lost nearly $6 million on operations last year, twice as much as it lost in 2013. Macdonald became Hallmark’s executive vice president for strategy and external affairs in 2012 and was promoted to interim chief executive last month.

His career includes 23 years as executive director of the Massachusetts Business Roundtable, a stint as assistant state attorney general, and jobs at Gulf Oil and General Electric.

He has served on Hallmark’s board since the health system was founded in 1997. The system includes 315 hospital beds, nearly 2,800 employees, medical offices, hospice services, and home care.

Like other hospital operators, Hallmark has had trouble filling beds as more patients seek care in outpatient settings. Macdonald said that to draw patients, Hallmark must recruit more physicians and build up outpatient clinics.

“It’s not just about running a hospital,” he said. “It’s really about being in the health care service business.”

Hallmark board chairman James Herrington said the board decided to give Macdonald the chief executive’s job without conducting an extensive search.

“He is a strategic planner focused on strengthening our organization,” Herrington said in a note to employees, “and knows decisively what our organization needs to achieve on our own and as part of a larger organization for our future success.”