Hospital’s chief is someone to rely on

Published 12:00 am Sunday, May 4, 2008

After a couple of months of wondering if Natchez Regional Medical Center would be open much longer, its future appears more solid than ever now.

So what’s the difference?

The hospital’s board of trustees has hired a national firm that seems to know its business — extremely well.

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Scott Phillips, founder of Healthcare Management Partners, LLC, stepped in a couple of weeks ago as the new CEO of Natchez Regional.

To listen as Phillips discusses Natchez Regional’s current state of affairs is a little like listening to a trusted physician assure you that everything is going to be A-OK.

“Almost all of my management experience has been in turnaround situations,” Phillips says calmly, adding that he has more than 30 years of healthcare industry management experience. “I like what I do because healthcare is important work.”

As soon as his firm was hired, Phillips said, he and his coworkers began digging up information about Natchez Regional, the market and the competitors in the area.

They’ve met with most of the stakeholders — supervisors, board of trustee members, hospital staffers and members of the medical community.

“We’ve been very busy, working 16 to 17 hours a day trying to figure out this puzzle,” Phillips said.

In late February the county- owned hospital admitted that its previously announced “profitable” year in 2007 was, in fact, a year of great financial losses.

The immediate need for cash was so dire that board of trustees members lobbied the Legislature for permission to file bankruptcy under Chapter 9, a special code allowing government entities to file for bankruptcy.

If Natchez Regional eventually files for bankruptcy under Chapter 9, it will become the first hospital in the state — and one of only a handful in the country — to do so.

Interestingly, Phillips said that under normal circumstances the bankruptcy wouldn’t be necessary.

“This hospital is not bankrupt. It has a cash flow problem,” he said. “Its assets are significantly greater than its liabilities. But because of its legal structure, it’s not able to borrow money like other hospitals.”

Since county taxpayers technically own the building, the hospital isn’t allowed to put up the facility as collateral, as a homeowner might to obtain a mortgage.

“If it didn’t have its legal structure, you’d refinance the debt, regain some liquidity and move out,” Phillips said.

Another misconception many people have, Phillips said, is that providing indigent and uncompensated care caused the hospital’s current financial situation. Despite large “billed” amounts of unpaid care, the hospital actually incurred only a small amount of direct expenses as a result.

Lastly, Phillips said a final myth is that Natchez Regional’s financial dilemma is because it’s a “victim of unscrupulous competitors.”

Not true, he said. Other hospitals survive in other parts of the country despite fierce competition.

“Healthcare has become, by national design, a very competitive industry,” he said.

Although Phillips may not say it directly, the reality is that the hospital’s unprofitability is probably a combination of being overstaffed in some areas and just overall mismanagement in other areas. That’s my opinion, not Phillips’.

He’s too busy working on the fix to speculate further, or to alarm hospital workers by talking about possible staff cuts. But it sounds to me like he’s moving toward righting the listing hospital.

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