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Could NRMC have avoided nosedive?

Natchez Regional Medical Center’s once-archenemy now appears to be its only savior.

For decades, Natchez Regional leaders quietly considered cross-town rival Natchez Community Hospital as public enemy No. 1.

In a not-so-surprising announcement late last week, NRMC confirmed the identity of the hospital’s likely buyer would be Natchez Community’s owner, Community Health Systems.

Barring two seemingly unlikely outcomes, the announcement will mean Natchez will soon become a one-hospital town, ending the decades’ long medical feud.

One scenario that could stymie the sales process would be if 1,500 voters sign a petition that would put the sales process to a countywide vote, rather than leaving the matter up to the county supervisors to decide.

The other scenario would be if another bidder opts to overbid CHS and go into competition with them. The latter option seems at least plausible since the $18 million price tag for the hospital might seem like a bargain to a group with highly skilled hospital management skills.

As it turns out, Natchez Regional’s biggest enemy was its own inept management.

In addition to the release that Natchez Regional’s lone bidder is CHS, the public hospital also released its 2013 audit. The audit was far more revealing of the hospital’s true underlying problems than had previously been disclosed.

The audit sheds a little more light on what was clearly a bad decision made by Natchez Regional and former CEO Bill Heburn to heavily invest in the Natchez Medical Foundation. The foundation was created in the fall of 2011 as a fundraising arm of the hospital, Heburn said in late August 2011, just prior to the start of the 2012 fiscal year.

But rather than raise substantial funds, it appears the foundation quickly became a way for the hospital to effectively “buy” physicians and their practices. At one point, one dozen physicians were associated with the foundation.

On the surface it appeared NRMC and the foundation were doing an excellent job in recruiting physicians. However, the result was an ever-mounting debt for the combined entity. By the end of the 2013 fiscal year, the audit shows the foundation owed NRMC more than $9 million. Clearly the foundation wasn’t fiscally sound from the beginning.

Of the total $7.6 million loss Natchez Regional incurred in fiscal year 2013, half came under the auspices of the foundation — $3.8 million.

Two other audit findings — which collectively required negative adjustments of more than $3 million — indicate just how “fixable” the hospital’s dire situation may actually have been in more capable hands.

Auditors noted the hospital was not accurately keeping track of its payables and its receivables. In business, not knowing what’s coming and going is deadly. Most entry-level accounting and business school students learn how important this is early in their careers, yet hospital leaders with decades of experience didn’t bother to keep track.

The result was an adjustment of more than $1 million for the fiscal year, according to auditors.

Auditors also noted another bad financial decision that resulted in a $2 million adjustment. The hospital haphazardly raised its rates for services in August 2013, but didn’t bother to realize it was already under contract with many healthcare insurers to accept a lower amount for the same services.

One has to wonder if more capable and agile management could have avoided the hospital’s amazingly rapid cash burn and operational nosedive.

Kevin Cooper is publisher of The Natchez Democrat. He can be reached at 601-445-3539 or kevin.cooper@natchezdemocrat.com.