CEO out, Hutcheson Medical Center looks to future

CEO out, Hutcheson Medical Center looks to future

February 16th, 2011 by Emily Bregel in News

Charles Stewart

Relief seemed to be the overriding reaction to the resignation of Hutcheson Medical Center's embattled president and CEO, Charles Stewart, among hospital staff and leaders.

"People are encouraged in that they feel like something is happening," said Dr. Todd Rudolph, hospitalist at Hutcheson.

With the departure, hospital leaders anticipate that negotiations about forming a strategic partnership with Erlanger Health System will finally move forward -- and quickly, perhaps within days.

Hints had emerged over the past few weeks that Stewart's time at Hutcheson might be nearing an end.

Board members had expressed frustration with the administration's secrecy about financial information. County leaders were angered by reports of a $69,000 CEO bonus awarded during a fiscal year when the hospital lost millions. Local doctors pointed to Stewart's leadership as part of the problem in driving away specialists and patient referrals.

The situation culminated this week.

At a called meeting of the Hutcheson Medical Center Inc. board Monday night, board members accepted Stewart's resignation, effective immediately.

Gerald Faircloth, vice president of operations and interim chief financial officer, also resigned. Both resignations came in the wake of years of multimillion-dollar losses and dwindling patient volumes at the 300-bed Fort Oglethorpe hospital.

Chief Nursing Officer Debbie Reeves will step in as interim CEO, likely for three to six months, as a CEO search gets under way, said Martha Attaway, Hutcheson Medical Center board chairwoman.

Attaway said Stewart received the severance pay included in his contract, but she said she did not know the amount.

Hutcheson officials would not provide Stewart's contract without an official Freedom of Information Act request, which the Times Free Press filed Tuesday. The hospital has three business days to respond.

STEWART'S RESPONSE

Stewart said in a Tuesday phone interview he agreed with the board members that it is time to bring in new blood. He declined to comment on his severance pay.

"I have no ill feelings toward Erlanger or the board or anyone else. I was hired to do a job and I've tried to do my job to the best of my ability. I've been there almost 51/2 years and quite frankly, I'm proud of the progress we've made in the time I've been there," he said.

Patient satisfaction ratings and hospital quality measures have greatly improved in that time, he said. The hospital also has added new service lines.

"It's unfortunate the financials didn't follow the success we've had in other areas," he said.

He said he hopes the Erlanger agreement secures a solid future for the hospital's "dedicated and hard-working" employees.

"My greatest hope is that this change is going to secure their jobs and this resource for the community and Hutcheson can really come into its own," he said.

FUTURE WITH ERLANGER

Hutcheson leaders have placed their hopes on Erlanger, who they hope will help bring badly needed specialty coverage and patient referrals to the community hospital.

"It's urgent that we finalize a deal and get Erlanger on site," said Darrell Weldon, chairman of the board of the Hospital Authority of Walker, Dade and Catoosa Counties. "Once we have this affiliation, I think the public needs to test the waters, and see if the new product is a good one."

Weldon said he expects an agreement with Erlanger could come within a week, and likely Erlanger will help usher in new management as soon as possible.

Hutcheson's CEO could come from Erlanger's own ranks, he said.

In October leaders of both hospitals said a detailed partnership plan would be released likely in mid-January, following a 60-day "due diligence period."

The plan has yet to emerge.

"The level of concern among the employees has been palpable," Rudolph said. "There's just uncertainty, not enough information."

Even members of the hospital's boards haven't seen a draft proposal from Erlanger hospital, which as of last week was under review by Stewart and his attorney.

"That (secrecy) was a point of contention, particularly with the hospital authority board and I think also with the HMC board," Weldon said.

Now, a newly created 12-person transition team, comprised of three members from four of Hutcheson's boards, will take the lead on the Erlanger negotiations, Attaway said.

POOR DECISIONS

Hutcheson's administration made a number of poor management decisions that ultimately alienated doctors and staff, Weldon said. That includes a $1.7 million investment in an interventional cardiology lab in 2009. The new advanced capabilities have yet to be used, because the hospital didn't have an interventional cardiologist to staff the lab until a couple months ago, he said.

That effort was "overreaching for the capabilities of the hospital, particularly the staffing at the time," he said. "They didn't have a firm commitment from interventional cardiologists."

Trustees of the Hospital Authority of Walker, Dade and Catoosa counties, which oversees the hospital's 40-year lease to private nonprofit company Hutcheson Medical Center Inc., have voiced frustration about the lack of transparency on the part of Stewart and the HMC board.

In December the hospital authority board's financial adviser Ed Wall filed a complaint with the Georgia Attorney General's office after the hospital administration resisted his efforts to access public financial information through Freedom of Information Act requests.

Hutcheson has lost more than $7 million in each of the past two fiscal years, and lost $3.3 million in the first quarter of fiscal year 2011, which began Oct. 1, 2010, according to unaudited financial statements.

SPECIALISTS LEAVING

Hutcheson's bottom line sank deep into the red after many specialists started practicing at other hospitals. Many primary care physicians in North Georgia also became affiliated with Chattanooga-based hospitals, drawing patient referrals away from the community hospital.

In recent months the hospital has averaged 30 or 40 patients a day in its 195 acute care beds, officials have said.

Stewart attributed the loss of specialists to the draw of the major hospitals in Chattanooga, which could offer more support from other doctors in sharing on-call obligations.

But doctors themselves pointed to strained relationships with Stewart as the problem.

Dr. Vince Viscomi, a former chairman of the Hutcheson Medical Center board, said an exodus of surgeons came after 2007, when the hospital broke with Anesthesiologists Associated in Chattanooga to partner instead with "locum tenens" anesthesiologists, who are temporary employees, in an effort to save money.

Surgeons began leaving Hutcheson as they felt less confident about the anesthesiologists they would be working with, he said.

"That was the beginning," Viscomi said.

Under new leadership, more doctors may be willing to return to practicing at Hutcheson, Viscomi said.

"I think the relationships with the physicians in the community had passed the point of any sort of reasonable resolution," he said. "A lot of doctors had said they'd be willing to come back, but only with a different administrative team. The (hospital) authority realized that was really a requisite to start the rebuilding process for Hutcheson."

OPTIMISTIC OUTLOOK

Reeves spent most of Tuesday meeting with hospital staff, answering questions and discussing the current transition period, said Haley Johnson, hospital spokeswoman. Reeves was not available Tuesday for an interview, she said.

County commissioners welcome greater transparency and more collaboration between the hospital's boards.

Too much of the hospital's business has been conducted in meetings closed to the public, said Walker County Sole Commissioner Bebe Heiskell.

"It's a public hospital, and nobody knows anything that happens there. Maybe if they hadn't been so very private we wouldn't have taken this long" to address the hospital's problems, she said.

Despite deep financial issues and low patient volumes, quality standards remain high at Hutcheson, Rudolph said.

"People's perception outside of Hutcheson does not match the reality of what's going on at Hutcheson," he said.

Contact staff writer Emily Bregel at ebregel@timesfree press.com or 423-757-6467.