Published 10:14 pm Saturday, June 6, 2009
After a little more than a year, Troy Regional Medical Center owners are still looking to find their way.
But, the Troy Doctors Hospital LLC, which took ownership in January of 2008, has made key strides in turning a sinking facility around.
From hiring new physicians to restructuring the hospital’s emergency room to organizing a new board of directors and, most recently, making changes in management, steps have been taken toward successfully running Troy’s hospital.
The group still struggles to find financial footing 16 months later, but that will not put a stop to owners’ plans to make TRMC a profitable business, they said.
Troy Doctors Hospital LLC, more commonly called the doctors group, started out with 14 local physicians and an investment company, Gilliard Health Services, which joined forces to save the hospital when its doors nearly closed indefinitely.
The group, with the backing of the city of Troy, took ownership from Attentus Health Care after the company had lost millions of dollars.
“The doctors had gotten together before I ever came into the discussion,” said Gil McKenzie, investor with GHS and now hospital CEO. “Now, it’s locally owned, locally governed and locally managed.”
The doctors are Chuck Wood, Ben Smith, Timothy Eakes, Dr. Wilton McCrae, Adolfo Robledo, Richard Schloemer, Sanjeev Singh, Peter DiChiara, John Crosby, Phylecya Cheatham, Wilburn Smith Jr., Radiology Group P.A. and Troy Pediatrics.
Dr. Mark Griffin, former chair of the doctors group, has sold his share to McKenzie’s company.
Each of the physicians have a 5 percent share in ownership, with the exception of Cheatham, who has 4 percent; Wilburn Smith Jr., who has 1 percent; and McKenzie, who has 40 percent.
Owning a hospital was not exactly something this group wanted to do, but it was something doctors felt was needed, DiChiara said.
“We felt like there were really no good options,” DiChiara said. “We felt like the (investment) group that wanted to buy it would get rid of a bunch of stuff and be another company trying to make money off of it. It wasn’t our first choice, but we were kind of afraid not to.”
Where they’ve come
And it has not been easy for them either. Taking over a company deeply in debt did not give the doctors group a solid beginning.
They started with a year-long agreement with the city of Troy backing them in their endeavor, where the city agreed to take over if the doctors could not afford to make loan payments.
They have accumulated debt of $10.5 million for the purchase of the real estate, $1.5 million in a loan used for daily operations and another $452,000 loan that will repair the air conditioning system. When the agreement was set to end on Jan. 31, doctors asked the city to once again extend the agreement until March and then asked again to further take that agreement until May.
The city agreed, but it did have to deny some requests along the way. Informal requests came from doctors for the city to up its purchase price agreement to $18.5 million, but Troy Mayor Jimmy Lunsford said the city would not spend any more of its money than the $10.5 million already promised.
Of course, that money would only have to be spent if doctors could not afford to pay the debts.
In the 16 months since the local investors assumed control, McKenzie said doctors have been working to secure a long-term loan to continue ownership. So far, that journey has been unsuccessful.
Doctors will continue to seek the best way to finance their loans and secure their ownership, McKenzie said.
After the city of Troy offered April 30 to issue bonds through its Health Care Authority, doctors voted to accept that offer.
The Health Care Authority, a three-member board of Chairman Sherrill Crowe, Vice Chairman Driscol Colquett and Secretary-Treasurer Brenda Debose, met last month to begin the process of issuing bonds, but it did not take long before it also hit a roadblock.
The problem has been finding a favorable interest rate, something that Lunsford said, in a previous interview, is key since the city would be liable to take over loan payments if doctors defaulted.
But, Lunsford also said he is not sure exactly what rate the groups are seeking.
“We’re just waiting to see what the market does,” Lunsford said. “We have no idea what the interest rates may come to.”
McKenzie said financing through the city would be the best direction for doctor owners to take.
“Going with the city is the best way to go,” McKenzie said. “The only reason we put the brakes on is because (the rate is) higher than expected.”
Both the city and doctors are exploring financing choices, and the city has extended its agreement to back the hospital at least until Dec. 31.
There is a chance the doctors will be approved for a loan independently and could break away from city backing, but residents may have to wait until the end of the year before ownership of TRMC is secured.
But, finances are not the only big changes they’ve seen since the group took over.
Since last January, the hospital has brought in a new emergency room group, Pegasus, which McKenzie said has brought ER wait time from around seven hours to a little more than one hour.
McKenzie said other medical improvements include adding a new pharmacy service and expanding the physical therapy lab.
The hospital has even, for the first time in years, started to make profits.
“We started making money in February. In March we broke even, and in April we made a profit,” McKenzie said. “May isn’t closed yet, but it’s looking good. We’ve got our head above water, and we are in the black for 2009.”
Also in the last year, doctors have reorganized their management structure, electing officers and establishing a Board of Directors among the owners in March.
The board is run by Chairman Chuck Wood, Vice Chairman KT Cole, an investment partner of Ben Smith, and Secretary-Treasurer Yanni Tempelis, owner of Troy Pediatrics.
Also on the board are John Crosby, Will Smith, Cheryl DiChiara and McKenzie.
The most recent management change, though, came last week when former CEO Rusty Eldridge and McKenzie “mutually agreed” to not renew Eldridge’s contract.
“He was not asked to leave,” McKenzie said. “It was more of a discussion of his skills. His talents are probably weighted more on turn around.”
But it was not a decision all owners were on board with.
“I’m upset about Rusty leaving,” Peter DiChiara said. “I thought he’d done a good job.”
The decision didn’t come with a vote of the board, but was negotiated between McKenzie and Eldridge last Monday.
“It was brought up at the board meeting but sounds like it was negotiated,” DiChiara said. “We weren’t involved in that.”
The next steps
The owners have plenty of things they want to accomplish, with the first among them being to continue health care improvements, McKenzie said.
Bringing in new specialty physicians, such as an orthopedic surgeon, a cardiologist and a radiologist, as well as expanding primary care physicians are part of the plan.
McKenzie said doctors also plan to continue upgrading equipment in the coming year.
McKenzie said the doctors also will seek to put a new CEO in place for the long term, and it will be a process open to the community.
“We are taking applications for the CEO slot,” McKenzie said. “It will be a very open process, and whoever is chosen to be CEO (the decision) won’t be made behind closed doors. Whoever we get we want to have full confidence in for the long term.”