MNA: hospital financial woes caused by bad investment

Posted at: 05/06/2014 11:35 PM
Updated at: 05/07/2014 10:02 AM
By: Dan Levy

NORTH ADAMS, Mass. - The Massachusetts Nurses Association is insisting very adamantly that North Adams Regional Hospital makes money on patient care -- and has been making money for many years.

IRS documents, they say, show the financial crisis that led to the hospital's abrupt closing on March 28, might be do to a real estate deal that went south more than a decade ago.

MNA officials who commissioned the audit also want to be clear, they're not alleging any nefarious activity, however they are still blaming the financial difficulties incurred by NARH on an "ill-advised real estate scheme."

For the hundreds of former hospital employees who've been out of work for more than a month, Tuesday night's news provided a glimmer of hope.

"It is encouraging," said Robin Simonetti, a laid off registered nurse, "because that means that our community is viable for a full-service hospital."

Viability means that North Adams Regional Hospital is self-sustaining. After the MNA examined IRS documents and bankruptcy briefs, they've concluded that patient services revenue at NARH grew by 78 percent over a 12-year period between 2000 and 2013, while expenses rose by only 29 percent.

That means the hospital has been making millions for Northern Berkshire Healthcare (NBH). So why were they $30 million in debt?

"NBH's own chapter 11 filings outlines the reasons for its critical financial status," said Mike Fadel, spokesman for the MNA. "Chief among them , what they highlight was the ongoing debt burden of Sweet Brook and Sweet Wood."

Sweet Brook is a transitional care living center for seniors and Sweet Wood is a retirement community, side by side in nearby Williamstown, property for which NBH invested $25 million back in 1999, and later sold for $7 million.

"It was clearly a bad decision and it was a decision to spend a lot of money in an area that's not related to the provision of hospital care," Fadel said.

While paying off the debt on the sour investments, NBH also trimmed the work force and cut operating expewnses at NARH.

"I think just the economics in the community have been very difficult," said NARH CEO Timothy Jones in an exclusive interview with NewsChannel 13 on March 25, three days before the hospital shut down.

Jones acknowledged there had been bad decisions in the past, but he also says community demographics and other things beyond his control created a $30 million deficit.

"The reduction in reimbursement rates and the increase in the (seriousness) of patients and their illnesses have caused the cost of care to go way up," Jones said.

Fadel says its important now for policy makers and decision makers to make themselves familiar with the hospital's financial data so that they understand the community can sustain a full-service hospital.

The community is still on target to reopen the emergency room on May 19.