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Springfield Hospital CEO eyes Chapter 11, possible D-H partnership for troubled facility

  • Michael J. Halstead, MBA Interim Chief Executive Officer Springfield Hospital



Valley News Staff Writer
Saturday, June 08, 2019

SPRINGFIELD, Vt. — In recent months, Springfield Hospital officials have worked to trim costs to better match revenues and are now preparing to enter Chapter 11 bankruptcy to settle the hospital’s debts and pave the way for a sustainable future.

Once the hospital’s finances are stabilized, Springfield officials hope to have more serious discussions with Dartmouth-Hitchcock Health about a formal partnership.

“I think we need a partner for the long term because the uncertainty in health care lends itself to not allowing hospitals that have a small base of revenue to weather any storms that come up,” Mike Halstead, interim CEO of Springfield Hospital, said Thursday.

Halstead, who arrived in Springfield in January, is employed by Tennessee-based Quorum Health Resources, which the Springfield Hospital board of trustees retained through a management contract. He said his focus is on maintaining quality services for patients, even as he continues to look for cost containment measures.

The hospital, which closed its birthing center in early May, has no plans to cut more services. Instead, Halstead said he aims to find lower-cost methods of delivering some services, such as using nurse anesthetists instead of anesthesiologists for surgical services and working with a contractor to provide urgent care at the small health system’s outlying clinics. Springfield Medical Care Systems includes Springfield Hospital and also operates outpatient clinics in Charlestown and the Vermont communities of Chester, Ludlow, Bellows Falls, Londonderry and Springfield.

Springfield Hospital, though the first hospital Halstead will lead through bankruptcy, is not alone in the challenges it faces. They include navigating efforts toward health care reform, such as budget and rate reviews by Vermont’s Green Mountain Care Board, as well as participation in the accountable care organization OneCare, which has developed contracts with insurers to pay health care providers based on success in preventing disease rather than on fees for medical services provided.

Other challenges facing the state’s hospitals include a tight labor market, difficulty finding and retaining workers, and preparing for emergencies, Jeff Tieman, CEO of the Vermont Association of Hospitals and Health Systems, said on Wednesday.

“Springfield just speaks to (how)... it can be hard to manage all of those challenges at one time,” Tieman said.

The turmoil in Springfield has caused some staff to leave, Halstead said. Of the hospital’s 700 employees, about 100 have left in recent months, he said. But, more recently, about 25% of those who left have returned, some on a per-diem basis rather than full time.

The staffing issues led the 25-bed hospital to limit its inpatient census to 10 on some days in March and April, he said.

More recently, however, Halstead said the staffing crunch is starting to subside.

“Last week (we) didn’t have anybody leave us,” Halstead said. “... That was a good, positive thing.”

The news for the community isn’t all good. Should the hospital’s board opt to move the organization into Chapter 11 to restructure its approximately $6 million debt to vendors and about $12 million in bank debt, some vendors may not see all they are owed.

But, Halstead said, the hospital aims to be “as fair to all of them as we possibly can be.”

Since he arrived in January, Halstead said Springfield has paid down its debt, bringing it down from a high of $9 million.

“We’re pleased that we’ve been able to make that kind of progress,” he said.

The $800,000 loan Springfield received from the state of Vermont in January will be repaid, Halstead said. The hospital will begin repaying that debt in October through a reduction in its Medicaid reimbursements, he said. He expects the state will be repaid by June of next year.

Bankruptcy will be on the agenda for the board’s June 18 meeting, Halstead said. It is unclear yet whether and when the board will decide to enter Chapter 11. That depends on a couple of things, including finding the right time from a cash flow standpoint and developing a clear plan for the court that outlines how the hospital will be sustainable moving forward.

Developing that, Halstead said, is a “science with some art thrown in.”

Once begun, Halstead said he expects Chapter 11 will take six months to a year to accomplish. Halstead himself may not be around that long. He said he expects the organization will be able to begin its search in the fall for a permanent replacement for former CEO Tim Ford, who departed in December, once it becomes clearer what the outcome of the Chapter 11 process will be and what a hoped-for partnership with D-H might look like.

D-H officials remain uncommitted to formally welcoming Springfield into the health system’s fold, which currently includes Alice Peck Day Memorial Hospital in Lebanon, Cheshire Medical Center in Keene, N.H., Mt. Ascutney Hospital and Health Center in Windsor, New London Hospital and White River Junction-based Visiting Nurse and Hospice for Vermont and New Hampshire.

“We continue discussions with Springfield Medical Care Systems,” D-H spokesman Rick Adams said in an email last week. “As we’ve been doing for some time, we continue to work to help provide the best care for Springfield’s patients through on-site services and the work of hospitals in and around the Dartmouth-Hitchcock Health system, but no final decisions have been made regarding any formal role D-HH may play in the future of the Springfield Medical Care Systems.”

Halstead said he also has had preliminary discussions with the Burlington-based University of Vermont Health Network, but because Springfield is much closer to Lebanon, D-H is a more logical partner.

“I’ve always thought the only logical partner would be Dartmouth,” said Vermont Secretary of Human Services Al Gobeille, who announced last week that he would step down from his position later this month. “Whatever’s going to happen has to happen with Dartmouth.”

Currently, D-H performs some of Springfield’s lab work and employs one of two urologists that work in Springfield, Halstead said.

“At this point (D-H officials have) been responsive to us when we’ve asked for time on their calendars,” Halstead said. They’re “not indicating they’re not interested.”

On the ground in Springfield, Halstead said the urologists have made themselves and their patients comfortable in the former birthing center space in the hospital. The nearby clinic formerly occupied by the urologists is now used by providers from Brattleboro Memorial Hospital, who are offering pre- and post-natal care for expectant and new mothers.

Also going smoothly, Halstead said, is the transition to the new emergency services provider, BlueWater Emergency Partners, based in Brunswick, Maine. The hospital is saving more than $900,000 annually with the change that began in April and patients seem to like the new providers, he said.

“That’s going very well,” he said.

Springfield Hospital officials held a series of community meetings in recent weeks to provide updates on the hospital’s status.

Halstead said the broad message he heard was clear: “They definitely hope and pray that the future is that we can remain here, providing care to the community. That’s what I’ve said our goal is all along.”

Nora Doyle-Burr can be reached at ndoyleburr@vnews.com or 603-727-3213.