A Time for Reflection – And Some Perspective on the Future

Today, I am officially entering into “CEO Emeritus” status, after 26 years as President of Montage Health , and a full 38 years since I started with the organization as a pulmonary and critical care physician in the intensive care unit. Naturally, I have been in a reflective mood over the past few months, but as I look ahead to the next chapter, I also have some observations about the challenges facing healthcare today and what our industry needs to do to prepare for the future.

Healthcare organizations often find themselves at the center of a crisis, whether it’s a pandemic like COVID-19, the spread of HIV and AIDS in the 1980s, or the fires and floods that periodically strike our communities. Today, the healthcare sector is confronting a different kind of crisis in the form of severe economic headwinds. At the federal level, Congress has passed a budget that would lower the federal government’s Medicaid spending by $880 billion over the next decade. ?The impact on California’s population is potentially devasting – around one in three Californians rely on MediCal, the state’s version of Medicaid, and in Monterey County the number is closer to 50%. The state does not have the surplus to make up for the federal funding cuts.

Medicare is also in the congressional crosshairs. Proposals under consideration may not cut benefits to seniors, but they would further reduce payments to providers, which would threaten patients’ access to care. At Montage Health, 80% of the patients that come through the doors are covered by Medicare or Medicaid. A reduction in funding of either program, or potentially both, would pose an enormous challenge to our local institution and to the industry as a whole.

In California, the Office for Health Care Affordability recently proposed an arbitrary price increase cap of 1.8% in 2026, and less in succeeding years, on 11 hospitals deemed “high-cost outliers” (including Community Hospital of the Monterey Peninsula, the flagship of Montage Health). With inflation running at around 2.8%, the costs of healthcare labor, pharmaceuticals, technology and other essentials are bound to climb even faster. A pricing cap of 1.8% or less will quickly prove unsustainable for the affected hospitals and is almost certain to lead to a reduction in staffing, services, and patient access.

“Leadership or Crisis”

So how do healthcare organizations continue to meet our commitments to our communities in the face of such challenges? As I indicated earlier, navigating crises is a big part of what we do, whether they occur naturally or are imposed upon us. A distinguished friend and Montage Health Trustee Emeritus, Secretary Leon Panetta, has said, “we can govern either by leadership or by crisis.” In other words, we can let events buffet us, or we can be clear-eyed, make the tough decisions leadership requires, and plan ahead for any challenges the future may hold.

That is what sustains my faith in our industry and especially in the organization I have helped lead. The key elements of the culture we have created will serve us well through any future crisis: resilience, kindness, authenticity, and transparency in leadership. That is what has enabled us to earn and maintain the “social capital,” the trust of the people we serve. That is what motivates and inspires teams to pull together in the face of unpredictable challenges.

Making the Tough Calls

I think back on some of the big decisions we confronted that could have gone either way:

• When our region was faced with an exodus of independent primary care physicians, we created a medical group under the Montage Health umbrella. Many local private practice physicians resisted, thinking we were taking their business away but, over time, the majority came to appreciate the benefits afforded by working within our integrated delivery system. Since the creation of Montage Medical Group, patients have benefited from the continued growth of primary care, medical and surgical specialists to meet the community’s needs.
• During COVID, we required vaccinations of any employees whose job required that they work on site. It wasn’t a popular stance, but 99% of our staff stepped up, got vaccinated, and enhanced the safety of their patients and co-workers.
• When our community faced a growing mental health crisis among young people, we presented a plan to deal with it to a major benefactor, and the result is Ohana, our innovative mental health program and state-of-the-art campus. These are examples of making the tough calls necessary to make visionary leaps.

As I step away, I can do so with tremendous confidence in my successor, Dr. Mike McDermott , and in the terrific team that he will now lead. For my part, I want to leave while there is still “gas in the tank.” I know how difficult it is to give up a leadership position, but I believe that if you love your children, you let them go when it’s time and allow them to grow and thrive. That’s how I feel about Montage Health. I may no longer be the one putting in 10-to 12-hour days, worrying about power outages or staffing shortages, but I will always care deeply about this organization and this community in which I have spent my entire adult life.

Dr. Steven Packer brings a lifetime of clinical, business, and leadership experience to the management of community-centered healthcare organizations. From 1999 to 2025, Dr. Packer served as President and CEO of Montage Health, an integrated, non-profit healthcare network in Monterey, California. Montage Health originated at Community Hospital of the Monterey Peninsula. Under Dr. Packer’s leadership, it grew to include urgent care clinics, wellness centers, primary and specialty care offices, Monterey County’s first Medicare Advantage program, Aspire Health Plan, and?Ohana - an award-winning youth mental health campus.

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