MNA Report On North Adams Regional Hospital Finances

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This report was done by the Massachusetts Nurses Association; it is provided in full below.

 

Financial Analysis Shows a Full Service Hospital is Viable in Northern Berkshire County

Absent Poor Management and Bad Real Estate Investments

North Adams Regional Hospital Was a Going Concern

 

Northern Berkshire Healthcare (NBH) announced last month that it was forced to close North Adams Regional Hospital (NARH) with virtually no notice because the hospital had defaulted on its debt and could not be sustained on its purportedly poor reimbursements. But a review of NBH records reveals that the financial troubles facing the system were not connected to patient service revenue, and that North Adams Regional Hospital can be sustained as a full service hospital by the community that relies upon it for care.

Patient Services Revenue & Federal Reimbursement

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Despite claims from NBH executives, North Adams Regional Hospital has long been making money on its patient-care services.

NBH finances shows that NARH made millions of dollars on outpatient, inpatient, and Emergency Department services between 2000 and 2012.[1] In that time period, patient services revenues grew by 78%, while expenses only rose by 29%. The surplus derived from patient services made the system a $23 million profit in 2012, up from $4.3 million in 2000 – a 435% increase (see chart). And while profits from patient services fluctuated from year to year, they never fell below $4.3 million, and the average profit was over $9 million. In short, that means that the healthcare services NARH has offered to its community have made the hospital millions of dollars in each of the last twelve years.

Since closing the hospital, NBH has suggested that NARH’s fate was simply the result of its community hospital status and changes in federal reimbursement, but an analysis by the Center for Health Information and Analysis (CHIA) proves that this is not the case.  

Disproportionate Share Hospitals (DSH) are hospitals in communities with large poor populations that receive a minimum of 63 percent of their revenues from public payers like Medicaid and Medicare, which typically reimburse hospitals at lower rates than private health insurance companies. At NARH, public payers represent less than 65 percent of its payer mix, which is below the state average, and of the remaining eight Disproportionate Share Hospitals in Western Massachusetts, seven of them are considerably more dependent on public payers than NARH.[2] The remaining 35 percent of NARH revenue, unlike other community hospitals, comes directly from patients and their insurance companies. And CHIA compared what large private insurance companies paid to hospitals in 2012 and discovered that NARH received higher payments than the majority of its community hospital counterparts.[3] What the CHIA data tell us is that NARH is less reliant on lower-reimbursing federal payers than most community hospitals, has a higher proportion of insured patients,  and those health insurers are paying NARH more than they pay other hospitals.

Since it is clear that patient care services have been profitable every single year for more than a decade, and NARH has not suffered from some of the issues facing other community hospitals in the state, what has driven Northern Berkshire Healthcare’s financial problems? In short, it has been Northern Berkshire Healthcare’s decisions to acquire more and more debt. Between 1996 and 2004, Northern Berkshire Healthcare assumed nearly $65 million in debt through revenue bonds issued by MHEFA/MassDevelopment:

• In 1996, North Adams Regional Hospital took on $12.8 million in revenue bond debt, in part to refinance older debt.

• In 1999, NARH assumed approximately $25 million in debt to finance the purchase of Sweet Brook Transitional Care & Living Centers and Sweetwood Continuing Care Retirement Community – an alarmingly large assumption of debt which bore no connection to the provision of hospital services. This real estate investment scheme immediately began unraveling and the Sweets began costing NBH money. NBH then “took aggressive steps” – cutting staff and reducing operating costs in order to “lend money” to the Sweets.[4] Ultimately, NBH sold the Sweets in 2010 for $7 million under pressure from bondholders.

• In 2004, NBH took on another $27 million in revenue bonds, in part to pay off a portion of the 1996 debt. The 2004 revenue bonds immediately went into default, as the organization could not meet some of the financial covenants required by bondholders.

• Right up until the day NARH closed, the majority of NBH’s crippling debt service was not the result of expenditures related to the provision of patient care or even hospital capital improvements. Instead, the deep debt of purchasing the Sweets and the resulting significant annual operating losses incurred for the next ten years of operating the Sweets, were the primary factors contributing to NBH’s financial ruin.

By the time NBH filed for bankruptcy in 2012, its debt burden still hovered around $44 million.[5] In its court filings, NBH attributed its financial problems almost entirely to becoming “highly leveraged” through the series of bond issuances listed above.  And NBH laid out the many ways it had sought to deal with its long-term debt burden, including cutting costs and laying off staff in order to pay off the debt. It appears that, while patient care services did not contribute to NBH’s financial distress and were, in fact, a consistent source of revenue year after year, Northern Berkshire Healthcare sought to remedy its indebtedness by making cuts to those very services. The final impetus for NBH’s Chapter 11 filing was bondholders’ refusal to make a voluntary deal to restructure the debt, again affirming the catastrophic impacts this debt took on North Adams Regional Hospital.

As Berkshire Medical Center assumes the operations of the hospital in North Adams, it will face the challenges any community hospital does: populations of sick and poor patients, less than ideal public payer reimbursements, and changes in the healthcare industry that are as yet unknown. But the history of North Adams Regional Hospital clearly indicates that the Northern Berkshires can sustain a hospital that offers the full spectrum of services which meets the needs of the community in a fiscally viable manner.

 

[1] IRS Form 990s (financial reports): 2001-2012

[2] Hospital Cohort Profile: Community, Disproportionate Share Hospitals. Center for Health Information and Analysis. March, 2014; Hospital Profile: North Adams Regional Hospital. Center for Health Information and Analysis. March, 2014

[3] Ibid. The average DSH commercial payer price level is in the 41st percentile; NARH’s price is in the 65th percentile.

[4] In re Northern Berkshire Healthcare, Inc., et al. (Chapter 11 Case No. 11 – 31114 (HJB)). United State Bankruptcy Court District of Massachusetts, Western Division. January 5, 2012

[5] Ibid.


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Hoosic River Revival to Host Hybrid Fundraiser and Community Events

NORTH ADAMS, Mass. — The Hoosic River Revival is scheduled to host a hybrid internet and event fundraiser from June 9 to June 21, 2025, which includes an online silent auction and an in-person walk and gathering at MASS MoCA.
 
The online "Confluence Of Two" Silent-Auction Fundraiser will run from June 9 to June 20 at 12 p.m. This auction provides an opportunity to bid on one-on-one time with various Berkshires-celebrated VIPs, with proceeds benefiting the non-profit Hoosic River Revival. The VIP experiences offer winning bidders the chance to walk up to one mile with a community leader as they lead registered walkers in the "Hoosic River Run" on the morning of June 21.
 
The "Hoosic River Run" is a mile walk and timed 5k race, hosted by Hoosic River Revival and the City of North Adams. The event begins and ends at MASS MoCA, following a route along a section of the Hoosic River that is lined with flood chutes. For those who do not win auction lots, in-person registration to walk or run will be available on June 21, starting at 7 a.m.
 
At 7 a.m. on June 21, the "Confluence Of Two" meetup and photo opportunity will take place at MASS MoCA Courtyard A. Winning bidders and their VIP walking partners will be introduced by Hoosic River Revival. Participants will receive Hoosic River Run T-shirts and swag bags, and each duo will be photographed for publication.
 
Also at 7 a.m., conceptual designs for a new architectural riverwalk will be premiered. These designs, recently commissioned by Hoosic River Revival, in collaboration with the City of North Adams and internationally-acclaimed architecture firm Group Work, aim to transform the river into a central asset for the city. The visualized concepts are intended to enhance flood safety, ecology, infrastructure for recreation, and riverside accessibility for residents and visitors. They include the option for a riverwalk loop that could connect diverse neighborhoods and potentially link to the Natural Bridge State Park, expanding on the vision of Hoosic River Revival Founder Judy Grinnell since 2008.
 
The one-mile walk will commence at 8 a.m., following the same route as the timed race. Participants will traverse the MASS MoCA campus, pass the Little Hoosac Tunnel, and circle back at Western Gateway Heritage State Park. At the park, students from the Berkshires' Academy for Advanced Musical Studies (BAAMS), accompanied by founding musician Richard Boulger, faculty, and alumni, will premiere an original song titled "The Wise Old Hoosic," dedicated to the Hoosic River.
 
Following the outdoor gatherings and race awards presentation at Courtyard A, MASS MoCA Community Day will run from 10 a.m. to 5 p.m., offering additional special events. Visitors can view the industrial-engineering perspective of the "Confluence Of Two" branches of the Hoosic River from The Prow balcony in Building 6, which was redesigned by Bruner/Cott Architects.
 
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