WESTERLY — While The Westerly Hospital is performing well under its new ownership, the facility’s board members continue to stress the reality that all businesses face — without customers, or in the case of health care facilities, patients, there is no future.
Stephen Greene, chairman of the hospital’s new board, told the Town Council Monday that if the hospital continues to rebound as it has under the first 13 months of ownership by L+M Healthcare, it will continue “as we know it ad infinitum.”
But, responding to a question from the council, Greene acknowledged that L+M Healthcare is free to eliminate services the hospital offers after the first two years of ownership.
“If all the numbers show that there’s no reason to continue various lines of services because there’s no usage from a business perspective, any business would discontinue a particular service line,” Greene said.
L+M Healthcare, which also owns L+M Hospital in New London, purchased The Westerly Hospital on June 1, 2013, marking the informal end to the facility’s time in receivership, a state court form of bankruptcy.
Under terms of a court-approved asset purchase agreement, all clinical services, subject to patient safety considerations, must remain in place at The Westerly Hospital for at least the first two years of L+M Healthcare’s ownership, and the hospital must continue as an acute care hospital for at least the first five years.
Greene was joined Monday by fellow board members, and by Dr. Dan Rissi, L+M Healthcare vice president and chief medical and clinical operations officer; William Stanley, L+M Healthcare development and community relations vice president; Jackie Desmond, head of the hospital’s nurse’s union; and Judi Lawrence, head of the union that represents the hospital’s secretaries, food and nutrition staff, housekeeping staff, certified nursing assistants, groundskeepers, and mechanics.
The purchase agreement also requires L+M Healthcare to spend $30 million on capital improvements at Westerly in the first five years of its ownership and to inject $6.5 million in working capital for a turnaround plan in the first two years. Board member Thomas Liguori said L+M’s investments such as new medical scanning equipment are geared “toward continuity, not ending of services.”
“The only thing that stands in the way of a high quality, sustained, long-term term existence is our area’s utilization of the second chance,” Liguori said.
While some were disappointed that The Westerly Hospital was not able to emerge from receivership as an independent hospital, Liguori said L+M is Westerly’s “best match.” He also said that local residents need not sacrifice by seeking treatment at Westerly, noting that the L+M Healthcare system includes The Lawrence + Memorial Cancer Center, in affiliation with Dana-Farber Community Cancer Care, in Waterford, and two L+M affiliates with Joslin Diabetes Center in Mystic and New London.
The Westerly Hospital has posted a monthly profit each month since the sale, Greene said. This year, Green said, revenues lag about $1 million below budgeted projections but becauser of strong expense management, he said, the facility is projected to post a $2 million overall gain.
At the time of the sale, Greene said, Westerly Hospital was $35 million in debt, including $7 million owed on bonds, $5 million in bank loans, $3 million in lease payments, $11 million in trade payables, and $5 million in accrual obligations. L+M paid all of the debt in the first year of its ownership as well as $8 million for malpractice insurance to cover physicians during the transition to new ownership, closing costs, and working capital advances prior to the closing.
The Westerly Hospital currently has $12 million in payables and $8 million in other liabilities, and no bank debt. The hospital has $60 million in assets and a fund balance of $40 million. “That’s very strong for a nonprofit,” Greene said.
To date about $5.6 million has been spent by L+M on items such as new CT scan equipment, information technology, and building and grounds renovations, Greene said.
Physician recruitment, Greene said, is a daily priority. A plastic surgery program has been reintroduced at Westerly and a comprehensive medical staff plan implemented. The hospital has added one family practice physician, two ob/gyn specialists, one general surgeon, an orthopedist surgeon, a dermatologist, two physicians assistants, and two advanced practice registered nurses.
L+M Healthcare System employs about 2,500 full-time equivalents, including about 500 full-time equivalent employees at Westerly, Greene said. “This is a world class health care system with world class physicians,” Greene said.
L+M Health Care System is currently developing a three-year strategic plan, which Greene said should be completed by Aug . 1. Combined with the results of a recently released community health assessment for Rhode Island, Greene said the strategic planning process will likely “lead ultimately to some form of broad-based community campaign, likely at least a year away.”
Local donors have also returned to support The Westerly Hospital as evidenced by more than 1,000 donations in the 2013 annual campaign, Greene said.
Greene attributed much of the turnaround to the cooperation and sacrifices made by the hospital’s employees, particularly its unionized workers. Liguori repeated the message, praising the “leadership capability that these two women demonstrated in order to pull this off,” referring to Desmond and Lawrence.
Liguori also praised the Town Council for supporting the hospital during the receivership period and endorsing the Westerly Area Residents Committee, which was sanctioned by the court to help monitor the receivership and make recommendations on the hospital’s final disposition.
The town came together to support the hospital during its crisis period, said Diana Serra, council president.
“What is a community like Westerly going to do without a hospital? It’s unheard of. Westerly without a hospital? It’s not going to happen, so we came together and showed the medical community that we need this hospital,” Serra said.
Councilor Christopher Duhamel asked what the council can do to help keep The Westerly Hospital in business. Promote, the facility to others, Greene said.
“We really want the community to know that the hospital continues to be available to the community. The point there is if we don’t use it, if everyone jumps in the car and runs to Boston and New York, and I don’t mean that disrespectfully, how can we continue to assume that 25 Wells Street will always be there?” Greene said. “Utilization of the facility is critical.”
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