By Felice J Freyer; Paul Grimaldi; Jonathan N Savage
Jonathan N. Savage, the court-appointed special master, says he’ll “be looking at a number of possible scenarios by which the hospital will move forward.”
The lawyer appointed by Superior Court to take control of the financially ailing Landmark Medical Center says he plans no immediate changes in the functioning of a hospital that he calls “a pretty well-run institution.”
To stabilize the Woonsocket hospital’s finances, Jonathan N. Savage, the court-appointed “special master,” stopped paying vendors for services provided before June 26, the date he was appointed. For services provided since his appointment, however, all vendors will be paid on time.
Although at least some of those pre-June 26 debts will eventually be paid, the moratorium on payments gives the hospital enough cash to operate for more than a year, Savage said in an interview Thursday.
As special master, Savage, who has little experience in health care, functions as the hospital’s president, chief executive officer and chairman of the board, approving all expenditures, hiring and other decisions — at least until July 17, when Superior Court Judge Michael A. Silverstein will decide whether Savage will continue in that role, work with a consultant or be replaced. Meanwhile, Savage has been conferring regularly with the judge, and the hospital’s upper management remains in place.
Savage was appointed as special master because the hospital petitioned the court for help with its financial crisis. A special master has added powers that hospital management did not have before the court’s intervention. With the court’s approval, Savage can modify or abrogate certain contracts and agreements that the hospital has made; the nature and extent of those changes vary depending on the contract.
Savage’s Pawtucket law firm, Shechtman Halperin Savage, has a team of several lawyers and legal assistants working on Landmark, and at least one representative is at the hospital every day, he said.
Dr. David R. Gifford, director of the state Department of Health, said that his staff has been meeting with Savage to provide information and keep tabs on what’s happening, but has not been on site at the hospital. “We don’t have any issues or concerns about quality of care,” Gifford said. “So far I think things are moving in the right direction. … . I feel more confident today with this process than I did before the special master was appointed.”
Gifford said that, in the end, Landmark will have to partner with another hospital and also curtail services, eliminating some specialty programs to focus on the “core services” that the community needs. “To be financially viable up there, a hospital cannot continue to provide the same breadth of services,” Gifford said. Landmark recently shut down its cardiac-surgery program because it could not attract enough patients.
Landmark is due to make a $1.3-million payment Oct. 1 on a bond issue that dates to 1993. Secured through the Rhode Island Health and Educational Building Corporation, that bond was refinanced in 2005. There is $12.5 million outstanding on that bond, according to the corporation’s executive director. There is also $758,000 in payments to Bank of America remaining on a lease apparently tied to the hospital’s cardiac-care program, according to the corporation and Woonsocket municipal records.
Savage said the hospital would be able to meet these obligations.
Landmark, founded in 1873 as the Woonsocket Hospital “for the relief, cure and general care of the sick,” today has 1,055 employees and operates the third-busiest emergency room in the state. A midsized community hospital, Landmark has been losing money for many years and, since 2005, has had more debts than assets. At the end of the last fiscal year, Landmark was $7.2 million in the hole.
Although most community hospitals in Rhode Island are struggling, a Health Department study of hospital finances last year said Landmark had the greatest risk of failing because it is the only hospital whose debts exceed its assets. Other hospitals have endowments producing income that can fill deficits. Landmark has no such cushion.
In his first week as special master, Savage said he has been working to set up procedures to ensure that all expenditures, and other decisions, are approved by his office. He is also meeting with employees, doctors, community leaders and others to describe his role and assure them that the hospital continues to function as always. He said he’s seen no signs that patients are turning else- where. “The community views this court intervention as a very positive step,” Savage said.
Savage estimated that court supervision will last for 12 to 15 months, with the goal of maintaining a strong hospital to serve the Woonsocket area.
How that will be accomplished remains unclear. Savage said he’s so far done only a “very cursory review” of the finances, and has found no evidence of malfeasance or even mismanagement. “The recurring theme,” he said, is that Landmark has provided quality care in a cost-effective manner.
Savage blamed Landmark’s financial problems on low reimbursements and a high burden of uncompensated care, factors a special master cannot change.
The hospital serves many elderly and poor people covered by government programs that pay low rates. Some 64 percent of Landmark’s inpatient revenues come from the federal Medicare program, for example. (A Health Department analysis earlier this year found that Landmark’s uncompensated-care burden was greater than the state average but lower than that of five other hospitals.)
Many of those patients are sent to Landmark from Thundermist Health Center, in Woonsocket, which refers 15,000 a year, more than any other medical group. About 80 percent of Thundermist’s patents live at or below the poverty level, according to Maria Montanaro, Thundermist’s president and chief executive.
Montanaro said that Thundermist should have some input into Landmark’s future and health-care delivery in northern Rhode Island. “Thundermist needs to be an elemental partner for whatever is planned for Landmark,” she said.
“Landmark is a critically important hospital for the people of northern Rhode Island,” said Rick Brooks, director of United Nurses and Allied Professionals, a union that represents 500 workers at Landmark. Union leaders are scheduled to meet with Savage this week.
The hospital, Brooks said, “serves a disproportionately poor and elderly population — which is nobody’s fault, and neither the hospital nor the community should be effectively punished for that by the threat of closure. That leads us to conclude that there needs to be some reallocation of the dollars that are financing our hospital system in the state.”
Landmark has tried many times over the years to merge with another hospital in Rhode Island or Massachusetts, with no success. Recently, Landmark officials said they were in negotiations with Memorial Hospital of Rhode Island, located 15 miles to the south, in Pawtucket. Last month, in the final days of the General Assembly session, Woonsocket lawmakers filed legislation that would have enabled Landmark and Memorial to bypass a law requiring intense and time-consuming scrutiny of any hospital merger. The bill faced opposition and never came to a vote, however.
Savage now also has control over any negotiations with Memorial. Asked about those talks, he said, “We will be looking at a number of possible scenarios by which the hospital will move forward. I suspect [Memorial] may be part of that. Everything is possible and everything is on the table.”
Savage said he will also review Landmark’s plans to sell its rehabilitation hospital, in North Smithfield, to a for-profit company from St. Louis.
“We will be looking at a number of possible scenarios by which the hospital will move forward. … Everything is possible and everything is on the table.”
Originally published by Felice J Freyer; Paul Grimaldi, Journal Staff Writers.
(c) 2008 Providence Journal. Provided by ProQuest Information and Learning. All rights Reserved.
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