When Michael Stern became president and CEO of Tower Health, he came in with a clear read on what the system needed — and a plan that addressed those needs on three fronts simultaneously.
Mr. Stern, who has served as president and CEO of West Reading, Pa.-based Tower Health since early 2025, said the system’s return to a positive operating income — after years of losses — came from a combination of strategies executed simultaneously rather than any single corrective move.
He laid out the approach in a recent interview with Becker’s: rebuild trust and culture while restoring financial discipline, shift from a collection of hospitals to a true integrated system, and restructure leadership for speed and ownership.
That sequence mattered. Mr. Stern said financial results and cultural repair cannot be treated as separate workstreams.
“You can do financial turnarounds all you want, but if you don’t simultaneously focus on the culture, you’re not actually going to solve the issue,” he said. “Trust had been damaged over the previous years and a lot of good people left, and we had to rebuild the connection and confidence while at the same time improving performance.”
Shortly after becoming CEO, Mr. Stern introduced a nine-point culture commitment that he described as “who we are and who we aspire to be.” Its foundation is the belief that every person in the organization is a compassionate caregiver, regardless of role.
“Culture is not a soft issue for us,” he said. “It is a key strategy, and we hold ourselves accountable to really measurable progress.”
The framework, which his team calls the Tower Experience, treats patient experience and employee experience as directly connected. Every person who interacts with a patient — the scheduler, the environmental services worker, the food service employee — contributes to the overall encounter in ways that either build or undermine it.
“Every single person impacts the experience,” Mr. Stern said. “It only takes one bad experience to change the whole experience, but there’s a ton of little experiences inside of that that ultimately make for the Tower Experience.”
He connected that directly to outcomes: “A happy employee tends to make for a happy patient. A happy patient tends to make for a happy employee.”
Among the nine points in the culture commitment, one stands apart in Mr. Stern’s telling: “We should do our best to enjoy our time together.” He described plans for the coming months to be present with employees on all shifts, through the holidays, specifically to recognize what he called the hard work caregivers are doing in difficult times.
The second strategic shift was getting Tower’s hospitals and facilities to operate as one. Mr. Stern said the organization had historically functioned as separate entities with separate identities. That had to change.
“Too often we had operated as a collection of separate hospitals and separate entities, and we had to change the mindset to begin thinking and planning and working as an integrated system,” he said. That meant coordinating care and referrals across facilities, aligning resources and spreading clinical excellence from wherever it originated to the full organization.
The third element was structural. When Mr. Stern became CEO, he chose not to fill the COO role.
“I asked every hospital president and executive vice president, other senior leaders, to basically think and act as their own CEOs of their areas,” he said. “This way, it created alignment and urgency and speed, because it was really important to make crisp, smart decisions.”
From turnaround to growth
With the financial baseline stabilized, Mr. Stern said Tower is now shifting from turnaround to growth. But he was candid about the structural forces working against every health system’s ability to sustain that shift. The cost and reimbursement gap, in his telling, is simply not sustainable.
He described Tower’s costs across labor, supplies, pharmaceuticals and technology as rising between 5% and 15% annually, while blended reimbursement across Medicaid, Medicare and commercial payers is growing at roughly 1% to 1.5% per year. “That math doesn’t math,” he said.
Compounding that pressure is an increasingly adversarial dynamic with commercial insurers. Mr. Stern described a significant rise in claim denials and arbitrary service downgrades in recent years, and said challenging insurance company decisions now consumes meaningful time for his leadership and finance teams. He noted the relationship between health systems and commercial payers has become more litigious in ways that did not exist even five years ago.
“There’s a significant increase in denial rates, arbitrary downgrades, among many other issues,” he said. “These reductions are really impacting organizations. We’re pushing back on the insurance companies, asking to be compensated for the care we provide, and that is causing a lot of consternation.”
Labor is the third pressure. With roughly 65% to 68% of Tower’s total expenses tied to its workforce, competing for talent while managing compressed margins is a constant tension on both sides of the ledger.
Tower Health signed an affiliation with Philadelphia-based Jefferson Health in July. Mr. Stern described the choice of affiliation over a merger or acquisition as deliberate: it allows Tower to remain locally led and accountable to its communities while accessing capabilities — including clinical trials, research and specialized services — that it would not make sense to build independently. A full year of working alongside Jefferson’s senior leadership preceded the formal agreement. The selection of Jefferson came down to shared philosophy.
“Their philosophy is aligned with us, which is keeping care local whenever possible,” Mr. Stern said. He described Jefferson as committed to a hub-to-spoke model, rather than a hub-and-spoke model, that pushes care into communities rather than centralizing it — the approach Tower wanted.
On the capital side, Tower is moving on four investment priorities at Reading Hospital, which Mr. Stern said operates the busiest single-site emergency department in Pennsylvania, with more than 125,000 annual visits. A groundbreaking for an ED expansion took place recently. Plans also call for 19 additional ICU beds to address capacity constraints driven by an aging population, an expanded neonatal ICU and growth of the McGlinn Cancer Institute, each priority derived from population trends and the community health needs assessment Tower conducts every three years.
The system is also making investments at Pottstown (Pa.) Hospital to nearly double behavioral health capacity and create a dedicated emergency department space for behavioral health patients with a separate entrance for greater privacy and individualized care, Mr. Stern said.
“At Phoenixville (Pa.) Hospital, we’re upgrading our maternity facilities and continuing to invest in the hospital and our outpatient services in the surrounding community,” Mr. Stern said. “These investments are about building the next generation of care and making sure patients have access to the high-quality services they need close to home.”
Looking ahead, Mr. Stern described Tower’s size as a competitive advantage in an environment that rewards focus and speed. With more than 10,000 caregivers and multiple facilities spread across a wide geography, the system can move with an agility that larger organizations cannot always match.
“We’re nimble. We make decisions faster, and we really remain close to the communities we serve,” he said. “We need to focus that agility on a small number of priorities that we can execute really, really well.”
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