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Northern Berkshire Healthcare On Road To Recovery

By Tammy DanielsiBerkshires Staff
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North Adams Regional Hospital has achieved significant quality gains during the last year's financial uncertainty, said Trustees Chairman Dr. Arthur Turton, left, and President William Frado.
NORTH ADAMS, Mass. — The financial prognosis for Northern Berkshire Healthcare is looking up as the health care system prepares to emerge from bankruptcy.

Hospital officials said on Wednesday that NBH has reached agreements with its bondholders and major creditors and could come out of bankruptcy in April.

"We're back," said interim President William "Bill" Frado Jr. on Wednesday afternoon. "We can actually see the end of the tunnel and the light's getting brighter every day."

The health care system still reported an operating loss of $3.25 million on revenues of $67.7 million for the fiscal year that ended Sept. 30, 2011. But that's a significant brake on a financial slide that saw losses of nearly $7 million the year before.

In fact, North Adams Regional Hospital, the health-care system's principal holding, has made a profit of $1 million since the beginning of the fiscal year on Oct. 1.

Dr. Arthur Turton, chairman of the board of trustees, said the health care system's five-year outlook is good. Based on "quite conservative" figures, including likely cuts in Medicare payments and leveling off of patient volume, Turton said NBH trustees have approved a plan that should not only maintain its fiscal stability but be able to put away some cash reserves.

"We're going from an $80 million debt to less than $20 million debt and you can imagine what that means to our interest payments every year," he said.

"I think the outcome is very positive for the organization and for health care in our community," he said. "The close to home aspect to our care is very important to this community and it's one of the things that motivates the trustees to go through what we've gone through and try and be sure this place is functioning and available for our community."

Turton and Frado were preparing to inform the corporators — the hospital's "ambassadors" to the community — on the progress over the past year.

NBH was saddled with debt from pensions and bonds for renovations and expansions, including the misstep in purchasing the so-called "Sweets" nursing home and retirement community in Williamstown. The Sweets were sold off at a loss and the pensions taken over by the federal Pension Benefit Guaranty Corp. The bankruptcy was filed last June after bondholders refused to restructure the debt.

While some creditors are still negotiating, NBH expects to have its reorganization plan confirmed at hearing on April 2 and issue new bonds within weeks, fully emerging from bankruptcy. The health system will take a $5.2 million nonrecurring hit for legal and accounting fees for the bankruptcy and pension plan costs.

Turton and Frado said they weren't too worried about some of their major creditors "getting a haircut" but acknowledged "when it comes to our local vendors, we do mind them taking a loss."

Turton said local creditors have been very cooperative in working with the health-care system with the knowledge that business will continue on the other side of the bankruptcy.

With its financial health assured, NBH will be able to focus on future needs, including a search for a new chief executive that has been on hold the last nine months. A search committee has been established and a search firm hired; interviews are expected in April and new CEO by June or July.

The health care system will begin looking anew for a partnership, a move also delayed because of questions over solvency.

"Many of the payment schemes that we're hearing about involve very large organizations that cover millions of lives not just 30,000 in Northern Bekrshire, but hundreds of thousands to be financially viable," said Turton. "Undoubtedly, we'll have to be a part of such an organization."

The hospital is seeing good news in the leveling of patient volume and a slight uptick in outpatients. The Wound Healing Center and joint replacement and endoscopy services are all seen as growing patient volume.

NBH is also tackling the problem on recruiting and retaining primary-care physicians, a breed of doctor that's becoming harder to find. An anonymous donor has provided a significant nest egg to build an endowment toward luring doctors, for instance by helping pay off student loans or providing stipends for sabbaticals and with point-person who's sole role is recruiting.

Bill Frado said morale has improved.
Despite the financial woes, the health system has scored high on patient satisfaction and quality measures, including accreditations and awards. Frado credited employees who "repeatedly stepped up to the plate" during a critical time.

"What has happened during this bankruptcy period is pretty remarkable," said Frado, who felt the filing actually helped ease anxiety amongst employees. "It gave people the sense that we had a direction, that we were doing something ... that we weren't just being buffeted by the winds."

Turton said the management skills of Frado, who came out of retirement to lead NBH, in boosting morale and reducing the conflict between union and management. It was a matter of being as transparent as possible, preaching team work, supporting each other and commending good work.

"The object of a lot of what I did was to push decisions down as close to the front lines as they could possibly go," said Frado. "They were responsible for the patient's care so they should be doing it. That released a lot of energy that was bottled up in people."

Frado recalled a conversation as he was going through the cafeteria line just days after the filing that reflected employees' determination.

"The lady down there [at the register] said to me, 'we're tough, we're going to make it,'" he said. "That was the best thing she could have said to me at that point."

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