Phillips’ hospital work not over yet

Published 12:00 am Sunday, August 17, 2008

Scott Phillips just put on a new hat and he’s about to start courting.

All he needs is a shoeshine before he goes out and shows the world his best features.

The hired gun/savior of financially beleaguered Natchez Regional Medical Center rode into town on virtual white horse a few months back.

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Phillips’ firm, hired by Natchez Regional’s Board of Trustees, made quick work of digging into the numbers behind the hospital’s finances.

Perhaps the most amazing feat he’s managed is carefully debunking the myths that many people — even those close to the hospital — believed were at the heart of the financials woes.

The hospital wasn’t struggling to pay its bills because of the well-managed competition and it wasn’t because of serving poor people who were not paying their bills.

In short, the biggest issue Phillips pointed out is that Natchez Regional was massively overstaffed and had been mismanaged badly, too.

Through obviously painful job layoffs and restructuring the hospital’s management, Phillips reported recently that the hospital is no longer bleeding cash and that it’s paying its current bills.

That’s a massive change in a short amount of time, but Philips isn’t finished.

His team — including a number of longtime Natchez Regional management members — deserves a big “thanks” for the hard work done to date.

But all that’s been done so far simply stabilizes the hospital. Long term a better solution for the management of the hospital is needed.

The hospital board and the county board of supervisors have agreed to move toward selling the hospital.

Enter Phillips and his new hat. He’s getting ready to be salesman.

But an interesting thing is that selling the hospital isn’t as simple as selling a house.

First, selling a publicly owned facility requires jumping through lots of hoops — some of which are intended on protecting the public’s interests.

Second, figuring out the value of Natchez Regional can be a complicated process. Essentially, our community is attempting to sell an under-performing business.

The first step has been done: fixing the immediate cash flow problem. That “dirty work” is something new buyers would not want to have to do, plus it increases the value.

Another step is showing how much business a new owner of Natchez Regional could either capture or funnel to its existing facilities.

Phillips estimates that potential is a huge benefit for a potential buyer.

Approximately $20 million in Medicare business leaves our area each year for treatment in larger cities, Phillips estimates. And, he said, Medicare only represents 12 percent of the population.

“Almost half of the Medicare revenue is leaving town and Medicare patients are the least mobile,” Phillips says. “If you know 45 to 50 percent of Medicare is leaving, you can be sure your (non-Medicare) patients are leaving, too.”

Approximately $50 million in healthcare services leaves our area each year, he said.

While that patient flight may seem like a huge negative, if you’re a potential buyer who already has larger healthcare facilities nearby, that’s a plus, Phillips says.

A large buyer can capitalize on this by funneling those patients to their own facilities in Jackson or Baton Rouge — for example. Even better, a new buyer could funnel more specialist physicians to our community to handle the need here instead of shipping dollars and patients out of the county.

In the meantime, let’s hope Phillips and his new hat can make Natchez Regional attractive to buyers.

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