Salary cut is first surgery to save NRMC

Published 12:01 am Sunday, March 16, 2008

The first budget scalpel was unwrapped last week in what is almost certainly a radical expense-cutting surgical process at Natchez Regional Medical Center.

Interim hospital CEO Jim Richardson met with staff members Thursday to announce across-the-board, 5-percent pay cuts for NRMC employees.

Regional announced last month that despite believing it had made a profit last year, the hospital actually suffered significant losses and is struggling to pay its debts.

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Presumably, the cutting done last week and what’s likely to be more cuts ahead are the first moves in a reorganization plan aimed at keeping the hospital alive.

It’s going to need life support, at least for the short-term. And for Natchez Regional that will come in the form of Chapter 9 bankruptcy.

The hospital began working toward the big “B” word last week. It seems almost inevitable at this point.

Regional’s board of trustees must wrestle with three key hurdles ahead:

4How do you stop the bleeding of cash? If you’re in debt and your losing money by the day, radical thinking may be necessary. Obviously, any part of the hospital that isn’t profitable or that’s overstaffed needs quick attention.

4What will the board of supervisors do? The county is on the “hook” for the hospital’s debt, so the board of supervisors must be careful with any plans they might have. Simple “selling” the hospital may not be the answer, particularly if the selling price doesn’t cover the debt.

4What’s the survival plan, the long-term plan? Bankruptcy will only hold off the creditors for a bit. Ultimately, if the hospital is to continue to operate, a plan must be made to either fix systemic management problems and/or rig the place to operate at a minimum break-even point.

As hospital trustees work those possible scenarios, two men close to Natchez Regional agree that ultimately the Miss-Lou isn’t big enough to continue to support all of the hospitals still here.

“Most doctors agree that we need one hospital,” said Dr. Ed Daly, Regional’s Chief of Staff, adding that no one seems to know how to make that happen smoothly.

“What’s best is anybody’s guess,” he said. “Obviously, this county-run deal isn’t doing well. … Almost every day it becomes more and more dire.”

Former Natchez Regional CEO Jeff Wesselman, who left last week, but remains employed by Quorum Health Resources, the Brentwood, Tenn., company that provides management services to Natchez Regional, echoes Daly’s feelings.

“It’s a pretty sober environment right now. The board is in a tough spot,” he said. “It’s not their full-time job to manage hospitals. (But) I remain very optimistic about Natchez Regional.”

Despite the lingering debt and profitability issues, Wesselman says the hospital can still survive, even in a competitive environment.

“There’s still enough business here to support the medical facilities,” he said.

Wesselman said one of Regional’s biggest problems is just not having the right “mix” of doctors, particularly specialists.

“(Surviving) is still achievable,” he said. “We need more doctors in town. (And) recruiting doctors is difficult. Period.”

But the financial “errors,” Wesselman contends, were errors on paper, not fraud or wrongdoing on former CFO Mike Anderson’s part.

“It’s a lot of responsibility on a CFO — to close the books and have everything be accurate and right,” he said. “Although the errors were there, they’re really not a large number, compared to the whole picture.

“But you don’t have any margin, small errors can make a big difference.”

Regional can survive, Wesselman says, and it needs to for the community’s sake.

“It can still make it. Three months or six months does not define 48 years of history,” he said. “I don’t think (closing) is the right answer at all. It’s worth fighting for.

“I do think it’s a one hospital town, assuming that the county hospital winds up being the one hospital.”

Kevin Cooper is publisher of The Natchez Democrat. He can be reached at 601-445-3539 or