By DALE P. FAULKNER
Sun Staff Writer
WESTERLY — The new owners of The Westerly Hospital say the long struggling facility is stable and headed in a new, positive financial direction. They point to a 2 percent operating margin for the first four-months under their ownership as proof.
Bruce Cummings, L+M president and CEO, said that the gain from operations of about $680,000 for the June 1-Sept. 30 period is cause for optimism if not outright celebration.
“We’ve actually exceeded our expectations. Quite frankly, I thought it would take up to a year and a half, maybe up to two years before the hospital would be at break even or better,” Cummings said.
L+M, of New London, was the only formal bidder for The Westerly Hospital, which went into voluntary receivership in late 2011. It bought the facility for $69 million, including $22 million in debt. The receivership filing followed years of financial bleeding for The Westerly Hospital, which posted a loss of more than $5 million for fiscal 2011.
The hospital’s performance during the four months under L+M ownership “strongly suggests that Westerly is well on its way to achieving financial stability,” Cummings said. For fiscal 2014, L+M is forecasting a 1 percent gain from operations at The Westerly Hospital.
“It’s pretty skinny, but today, especially in Rhode Island, anything that’s not in the red is really doing pretty well,” Cummings said.
L+M administrators are pointing to the overhaul of Westerly’s revenue cycle method, the process used by hospitals to code and bill for services, as playing a critical role in the initial turnaround. Other contributing factors, Cummings said, are leveraging the purchasing power of the two facilities for materials; improvements to a flex staffing approach that better matches staffing levels to the patient census; and a sharp reduction in administrative costs.
Lou Inzana, vice president and chief financial and support services officer, said efforts are underway to get The Westerly Hospital to a 3 percent operating margin within three years of L+M taking ownership. Those steps include strategies to regain market share that the Westerly institution lost during the uncertainty of the receivership period.
“Hospitals in Connecticut, Rhode Island, and throughout the country are seeing patient volumes soften, but coming through receivership, Westerly lost volumes at a faster rate then other area hospitals, so in other words they lost some market share,” Inzana said.
Patients who sought care at other hospitals will return, Cummings said, as they become convinced that The Westerly Hospital is stable and has a future.
Physician recruitment is also seen as a means to improve market share. Under L+M, four new physicians have been hired at Westerly: Shereen Brown, an ob-gyn; Michael Betler, a general surgeon; Meghan Grant, a family medicine physician; and Vincent MacAndrews, an orthopedic surgeon. Talks are underway with a second new ob-gyn practitioner.
Physician recruitment will become easier, Cummings said, as Westerly’s financial picture continues to brighten. “Doctors are asking about the state of the hospital, knowing it had been a distressed hospital, but the fact that we’ve turned the corner is certainly going to help in terms of getting physicians to come to Westerly,” he said.
As part of L+M’s court-approved agreement, the New London-based hospital committed to investing $30 million in The Westerly Hospital over five years. A $6 million proposed capital budget will be presented to the Westerly Hospital board of directors on Nov. 25. The budget represents the first of L+M’s five-year plan to satisfy the $30 million requirement. “We’re planning our investment in the facility to meet the needs of the community and to fund future growth,” Inzana said.
A number of equipment and physical plant improvements have already been instituted at the Wells Street facility. The medical air system was replaced; the emergency oxygen supply hookup, which had been identified by state health officials as being in need of replacement, was corrected; and temperature and humidity control problems in the operating room have been addressed, Cummings said.
Paving is being done in the parking lots of the hospital and related property to improve access and limit slips and falls. An inadequate storm drain that caused flooding in the Henry Nardone Conference Center and kitchen is being replaced. The storm drain work had been identified in previous capital spending requests but had been cut because of a lack of funding, Cummings said.
Two new ultrasound machines were installed to replace older equipment and changes to the hospital’s lab have resulted in savings of $300,000 annually.
New patient care initiatives under L+M’s ownership include hiring a full-time wound care nurse, increasing emergency department nurse staffing levels by 20 percent in the summer, and hiring an emergency department nurse manager.
Stephen Greene, chairman of The Westerly Hospital board of directors, said the board is pleased with L+M’s management of the hospital and the early results. He praised Cummings and his team as being easy to work with and good communicators.
“There was a period of years that the greater Westerly community was uncertain about where our hospital was going. The turnaround has been quick, certain and comfortable...the future is tough but our expectations are high,” Greene said.
A seven-page memorandum from Cummings, outlining changes at the hospital since June, was recently sent to the medical staff, employees, the board of directors and town officials in Westerly, Stonington, North Stonington, Charlestown, Richmond, and Hopkinton. The memo concludes with the following message from Cummings: “Pass the word: Westerly is back!”