By Daniel Connolly
The board of the Regional Medical Center at Memphis voted Wednesday to give consulting firm FTI Cambio broad powers to turn around the financially struggling public hospital.
The firm’s new policies will likely have major impact on the employees and patients of The Med, which operates the only burn and trauma centers in the region and serves as a safety net hospital for the poor and uninsured.
FTI Cambio’s policies will also likely have a big impact on the numerous clinics, insurers and suppliers that work with The Med.
The consulting group is already supplying executives to run the day-to-day operations of the hospital, but intends to make big changes quickly once an 18-month contract for as much as $10.4 million starts Sept. 1.
In one of its first moves, the consulting firm plans to bring in its own employees to replace The Med’s chief medical officer, Dr. Stuart Polly, and chief nursing officer, Rhonda Nelson. Polly and Nelson weren’t available for comment Wednesday.
Replacing them will be Dr. Jack McCue, who is already acting as an adviser to the hospital, and nurse executive Rhue Hope Lamont.
“We feel that those two positions are absolutely critical to the success going forward and they need to be filled by people who are experienced in transformation (and) turnarounds,” said Jim Braley, senior managing director with FTI Cambio, based in Brentwood, Tenn. “It’s nothing against the incumbents at all.”
The company is also replacing Sylvester Reeder, the chief executive whom the company has been supplying under a short-term contract. The new interim CEO will be Claude Watts Jr., currently running a hospital group in Gary, Ind.
Reeder would not comment Wednesday.
The firm plans to keep two other interim executives, chief operating officer Christine Pappas and chief financial officer Peggy Allen.
It also plans to bring in other advisers.
Patients may see changes. FTI Cambio has floated the idea of closing The Med’s doors to residents of Arkansas and Mississippi, unless those states increase their contributions to the hospital, and it may eliminate some services.
And the consulting group called on The Med to renegotiate its agreements with several medical groups, including UT Medical Group Inc., Semmes-Murphey Clinic and Campbell Clinic.
FTI Cambio will also play a role in the hospital’s negotiations with health insurers BlueCross BlueShield and United Healthcare, which start administering the TennCare health insurance program for the poor and disabled in West Tennessee later this year.
Braley of FTI said none of these suggestions is final. He said the consulting group plans to conduct a thorough evaluation over its first 60 to 75 days. As it completes assessments of some part of the hospital, it will immediately start making changes.
The decision to hire FTI Cambio is the latest episode in a difficult period for The Med.
The hospital has been losing money for years, finishing the 2007- 08 fiscal year with a $3.6 million operating deficit. It also needs hundreds of millions of dollars for capital improvements and has had several interim executives since Dr. Bruce Steinhauer retired in late 2006.
Last year, it began a search for a financially powerful partner but couldn’t find one, and in June began to look for a turnaround firm.
Of nine candidates, it selected two: New York-based Alvarez & Marsal, which had helped during the search for a partner, and FTI Cambio.
Some board members said familiarity with FTI Cambio was a factor.
“They’re already here,” said board member Darrell Thomas. “They understand our operations.”
FTI Cambio also answered concerns about costs. It had earlier proposed a contract valued at $18.9 million over two years, but agreed to cut its time period and price.
That brought it more in line with Alvarez & Marsal’s proposal, which would have cost between $6.6 million and $9.6 million over 18 months.
The board voted 5-1 to select FTI Cambio. The only board member to vote for Alvarez & Marsal was Jeane Chapman, who said its proposal appeared to do a better job of involving current employees. But once the votes were counted, she agreed to switch so the board would be unanimous.
The hospital plans to finalize details before signing an agreement with FTI Cambio, board chairman Gene Holcomb said.
Contact Daniel Connolly at 529-5296. To read more stories by this reporter, click on “Contact Us” at commercialappeal.com, then click on the reporter’s name.
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Potential Med initiatives
FTI Cambio included dozens of possible initiatives for The Med in its winning proposal, though none is final. Among them:
Limiting The Med’s bariatric and catheter lab services
Reducing the size of the hospital’s medical education programs
Evaluating the “value” of the burn unit
Moving the primary care Health Loop clinics out from the auspices of The Med
Evaluating employee benefits and renegotiating as necessary
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Originally published by Daniel Connolly [email protected] .
(c) 2008 Commercial Appeal, The. Provided by ProQuest Information and Learning. All rights Reserved.
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