New AMI Chief Executive Helped Revive Texas Firm

Richard A. Gilleland, who steered the turnaround of a Texas health-care firm, has been named chief executive of American Medical International, which has also been climbing from a financial hole.

Gilleland, who will take the position Jan. 16, is also expected to be elected chairman, according to AMI, a Beverly Hills-based hospital chain. He will succeed Royce Diener, who was installed on an interim basis after AMI’s board forced Walter L. Weisman, the former chairman and chief executive, to resign Aug. 30.

Gilleland, 44, is widely credited for the financial revival of Intermedics, an Angleton, Tex.-based producer of cardiac pacemakers and other biomedical devices. After losing $20 million in 1985, the Intermedics board selected Gilleland--then a divisional president at American Hospital Supply Corp.--as chairman in 1986. The firm had earnings of $30 million in 1987 and $54 million in 1988.

“He did a remarkable job,” said Edwin Gordon, an analyst at Tucker, Anthony & R. L. Day Inc. “He pared off non-productive assets and made it one of the top returners in the industry.”

AMI--burdened by debt and squeezed by cost cutting in the Medicare program--lost $97.3 million in the fiscal year ended Aug. 31, 1986, but recorded earnings of $115.3 million in 1988. Gilleland will probably cut costs to boost earnings this year, according to John Hindelong, an analyst at Smith Barney, Harris Upham & Co.

“The game plan will probably include the divesting of some under-performing assets,” Hindelong said.

As part of an effort to raise revenue, AMI in October completed the planned sale of 36 of its 106 hospitals to a new company established under an AMI-sponsored employee stock ownership plan. The new firm, Dallas-based Epic Healthcare Inc., acquired the hospitals for $830 million. Gilleland said AMI may sell other hospitals.

“AMI has a few hospitals that are not profitable,” Gilleland said. “They may need to be buoyed up through better management or they may have to be sold.”

Gilleland, who eliminated 400 positions during his first six months at Intermedics, said he has no plans to make major staff reductions at AMI.

“My priority is to make AMI a stronger company, and that might mean adding people instead of cutting people,” he said. “AMI has excellent management talent. My goal is to try retain and motivate those people.”