How a merger saved Athol Hospital and made Heywood stronger
Brown said margins are steady but the system must be prudent about investing in services.
PHOTO/EDD Cote
Heywood Healthcare President and CEO Winfield Brown stands outside the Watkins Center for Emergency & Acute Care at the Heywood Hospital campus in Gardner with Tina Santos, chief nursing officer and vice president of operations for the system.
On April 26, hospital executives and business leaders from the North Quabbin region gathered on the grounds of Athol Hospital to celebrate the start of construction of a new emergency department and medical arts building.
The project will double capacity in the emergency room, called the Center for Emergency Care at Athol, add a new radiology department and office space for primary, specialty and behavioral health providers.
It's a long-awaited milestone for Athol Hospital, a 25-bed facility in dire need of renovation and greater capacity for years, and it probably wouldn't have happened had it not merged with Heywood Hospital in Gardner to create the Heywood Healthcare system just over four years ago.
At the time of the merger, Athol, then known as Athol Memorial Hospital, had four days of cash on hand and one inpatient bed filled, said Winfield Brown, president and CEO of Heywood Healthcare. Since then, Athol has swung to profitability, with an operating margin holding at about 3 percent and volume has increased every year, with an average daily census of 13.
This follows key steps to increase services on campus, such as adding cardiology services five days a week, and adding swing beds which allow Athol to provide rehabilitation services on site for patients ready to be discharged.
“Athol's just had a beautiful renaissance,” Brown said. “That has given our board the confidence to take the next step.”
Just as Athol is getting needed capital investment and is poised for growth, the larger Heywood Healthcare system has also gained an edge after the alliance was made official on Jan. 1, 2013.
Heywood has grown its behavioral healthcare business, opening the first phase of the Quabbin Retreat in Petersham, with phases two and three, including substance abuse detox and residential treatment programs, slated to open in the next few years.
Meanwhile, Heywood is planning the renovation of its operating rooms, creating the Heywood Surgical Pavilion, a project that's about two years out. In May, Heywood Hospital added 350 parking spaces covered by a solar array.
Fulfilling a promise
The capital projects are being paid for in part by the system's $10-million capital campaign, called “Fulfilling Our Promise.” Brown said the title is an ode to Heywood Hospital's good-faith promise to Athol Memorial, that if it joined forces with Heywood, the system would build a new emergency room in Athol within the first five years of the alliance.
Athol Hospital, formerly Athol Memorial Hospital, is still licensed separately from its larger sister, 138-bed Heywood Hospital, but the two organizations streamlined administrative functions after the merge.
Brown, formerly vice president of administration at Lowell General Hospital, stepped in as Heywood Hospital's chief executive in June 2011, with a few months left in the hospital's fiscal year. Heywood finished with a $3.5 million operating loss that year, which Brown said was significant for an organization of its size. But Heywood has been profitable every year since, finishing in the black when other area hospitals lost money.
Like Athol, Heywood Hospital's margins hover around 3 percent, “and that's a challenge to hang on to,” Brown said.
“Financially, we are solid, but there's limited resources like every other organization,” Brown said.
Staying independent
Athol Hospital and Heywood Hospital are disproportionate share hospitals, meaning a large percentage of their patients are covered by Medicaid and Medicare insurance plans. Those contracts provide lower reimbursements than typical commercial insurance plans: 73 percent of Athol patients are covered by government contracts, as are 64 percent of Heywood patients.
The population of the North Quabbin and North Central Massachusetts regions they serve also have a high need for behavioral health services. While the system is actively investing in mental health and addiction treatment programs, those don't generate the same dollars that medical-surgical services do.
Heywood has strong ties to Saint Vincent Hospital and UMass Memorial Medical Center in Worcester through clinical affiliations with their doctors, but Ken Pierce, a member of the Heywood Healthcare Board of Trustees and former chairman who was involved in the merger talks, said the goal is to stay independent for as long as possible.
“If we don't work for it in that direction, then it certainly will be swallowed up,” Pierce said of the system.
Sidestepping Saint Vincent
Athol Hospital could have ended up under the ownership of Tenet Healthcare, the Dallas-based parent of Saint Vincent Hospital. A for-profit company, Tenet bought Saint Vincent Hospital and MetroWest Medical Center in Framingham in a $4.3-billion acquisition of Nashville-based Vanguard Health Systems in 2013.
Brown said Heywood Hospital approached Athol about merging as Athol was in talks with Saint Vincent about being acquired, which would have put a major competitor with strong advantages in Heywood's backyard.
“We made overtures to them and, lo and behold, they entertained a conversation with us,” Brown said. He added former Saint Vincent CEO Erik Wexler recognized the potential for Heywood and Athol to partner and backed away.
About 15 years earlier, Heywood and Athol had discussed merging, but Brown said talks weren't successful, partially because there was some rivalry between the communities.
But that's changed. Pierce said the merger happened smoothly, after the two hospitals received speedy approval from the Department of Public Health. Pierce said the board of trustees works together seamlessly.
Driving development
Meanwhile, progress the system has made since in the merger is happening against a backdrop of economic renewal in the North Quabbin region. Brown said much of it has hinged on retail development at the North Quabbin Commons, a mixed-used development visible from Route 2 in Athol, and the tipping point was the arrival of a Market Basket in 2015.
The commons also has an eight-screen cinema and a Starbucks. The next new building to open is an urgent care addition at Heywood's Tully Family Medical Practice at the site.
Mark Wright, executive director at the North Quabbin Chamber of Commerce and an Athol native, said there were many sighs of relief in the community with Athol and Heywood merged, and he said the millions of dollars invested into Athol Hospital and services off campus have been impressive.
Wright noted Heywood Healthcare is the largest employer in the region, so investment and growth in the system will reverberate.
“It will help drive more economic development. It will also help drive an increase in property values and home construction,” Wright said.
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