Eight years after taking over a community institution on the brink of insolvency and successfully leading it through a major financial restructuring that included engineering a bold plan relying on the region’s medical establishment and the company’s major creditors to accept what would have been worthless paper had she failed, Elizabeth Gilje is walking away.

“There isn’t a better time than right now,” she stated. “I’m at the very top of my game. We’ve come out of receivership, paid off all the outstanding provider notes, and we did it early. The company is operating in the black, and business is pretty darn good. It’s time for me to take care of me, take care of my family, and do it in ways that are much more than just financial.”

Gilje was originally brought in as a consultant in 1999 after the Washington State Office of the Insurance Commissioner (OIC) took over KPS because of the company’s deep financial troubles. The OIC originally intended to simply liquidate the insurer, and Gilje was slated to oversee its demise. However, significant community and political pressure was also being brought to bear against the OIC in an upcoming election year, aimed at saving the private sector family wage jobs so important to Kitsap County.

Gilje

Gilje was named as president and CEO of the company in receivership, and she went to work turning the insurer around. The first order of business was to somehow convince the firm’s major creditors — mostly local doctors and Harrison Medical Center — to accept millions of dollars in IOUs. Had she failed in that effort, KPS would be history. However, the bottom line was that the creditors had only two realistic options — accept Gilje’s repayment plan, or allow the company to be liquidated and receive pennies on the dollar for what they were owed.

Next, she moved the company out of its numerous unprofitable lines of business, and cut staffing to bare bones levels.

But Gilje also made another major change that many insiders feel was at least as important as convincing the creditors to accept those notes — she re-energized the company’s internal culture, and her personal optimism motivated the remaining employees to believe in the future. The turnaround in attitude and morale began showing up in the form of significantly improved customer service — a longtime KPS Achilles’ heel — and community involvement on the part of the employees.

KPS has a long record of community involvement, but until Gilje began involving the employees directly in the decisions about what causes would be supported, how, why, and at what levels, it had been mostly by writing checks.

In a 2002 interview, Gilje told the Business Journal that the company no longer had the resources to do that, but that even if it did, the receivership situation wouldn’t allow that to happen. So she empowered KPS employees to not only make decisions on what causes they would help, but tasked them with figuring out how to pay for it. “Their response has warmed my heart,” she said at the time. “These are people who believe in our community and they work hard to prove it.”

The firm has also received numerous “Best Places to Work” and customer service awards from several sources — including accolades from Seattle Magazine, the Puget Sound Business Journal, and Washington CEO magazine.

Under her tenure, KPS expanded its reach beyond its traditional Kitsap Peninsula market area to cover individuals and businesses statewide. Then, in 2005, the OIC sucker punched the steadily recovering KPS by announcing it would sell the company to Group Health. Gilje was disheartened by the move, but took it in stride, using her usual optimism to keep the company’s employees motivated and preserve the positive momentum they had built together.

Gilje oversaw what was a smooth transition in ownership, and Group Health saw the wisdom of keeping her at the helm. “They’ve been a pretty good parent for us,” Gilje said. “They don’t interfere in our day to day operation, and their involvement is actually pretty minimal.”

While some people were certain Group Health would begin moving KPS administrative functions to Seattle, Gilje was on a mission to convince the firm to move more of its own administrative work to Kitsap County. “The cost of labor is much cheaper on this side of the water. It just makes good business sense,” she said.

When asked what her immediate plans are, Gilje, who is an avid cross country skier and outdoors enthusiast, answered, “We’re going to sell our house in Port Orchard and move to our place at Alpental.” She also said that she and her family would vacation in Norway and visit her husband’s relatives there.

She allowed that running KPS was a highly intense, 24/7 job that left little time for her family. Gilje lamented she’s missed watching her eight-year-old daughter grow up, and the sadness was evident in her voice when she said it was the nanny who saw her daughter’s first steps — not her.

“It is time that I move on, my work is complete here. KPS has completed its turnaround and is healthy and viable,” stated Gilje.

“While we understand why she feels it is time to move on, it will be hard to see her leave,” stated Rick Woods, chairman of the KPS board of directors and Group Health executive vice president and general counsel. “Under her leadership, KPS regained its strength and has become a viable player in the health plan marketplace once again.”

“My thanks go out to Kitsap County for embracing me for the past eight years and to Group Health who will be a fine parent company for the future of KPS,” stated Gilje.

The KPS board of directors has retained Richard Marks as the interim president. A comprehensive search for her replacement by the KPS board of directors has already begun.