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Baptist Health System ‘looking up,’ CFO says
Unanticipated decline in patient volumne, new construction debt put bond rating at risk

Only a few days after the one-year anniversary celebration of the opening of Baptist West and Baptist Women’s Hospitals, Baptist Health System announced the resignation of Baptist West administrator John Hellmann.

The health system is looking toward hospital operations veteran Martha Chill to step up in the interim. She will add those responsibilities onto her current duties. A Baptist Health System senior vice president, she also has served as Baptist Women’s Hospital administrator since the doors opened last year.

Baptist West facilities were not the only Baptist properties recently affected by management upheaval. Administrator Richard Hammett, who had the top job at Baptist Hospital of East Tennessee, located downtown, also resigned. Both Hammett and Hellmann were thanked and touted in the company’s statement that read: “…these executives have contributed greatly to Baptist Health System and will be missed.” The memo goes on to recognize the current climate within the system citing it as a “challenging, yet exciting time” for Baptist.

Though looking at nearly $200 million in debt, $80 million of which stemmed from the development of the West Knox facilities, Karen Hawthorne, Baptist Health System chief financial officer said, “We are looking up.”

Hawthorne notes that while the system will probably not meet the anticipated bond rating for the year, which is called a ‘technical default,’ the group is not in actual default. “We’ve never missed a payment, nor are we in danger of missing a payment,” she said. Hawthorne concedes, “We haven’t reacted fast enough to declining volumes at the main hospital.”

While Baptist Health System was projecting losses for 2004, Hawthorne said it lost “a little more than projected.” The group also did not anticipate volume at the downtown campus dropping. “Our volume declined, so we needed to staff to that level,” she said.

Hawthorne added Baptist is in the process of rightsizing the whole organization. Some adjustment came in April when 48 jobs were cut.

“Volume declined and we needed to staff to that level,” she said. As for more job cuts in the future, Hawthorne said, “If it goes down, we’ll have to adjust. If it goes up we’ll have to adjust. It’s just business.”

Last fall, Baptist hired consulting firm Cambio Health Solutions, naming one of its employees, Richard Salerno, interim chief operating officer. Salerno will assume the responsibilities of administrator at Baptist downtown until a replacement is found. Cambio boasts an impressive résumé, having turned around struggling hospitals nationwide. The group is assisting Baptist with productivity and expense management. Its current contract runs through December.

Hawthorne said Baptist continually works toward being included on more insurance plans and is trying to hire new physicians, replacing doctors who have left the market and taken their patients with them. “It’s hard to recruit physicians, especially surgeons,” she said.

Hawthorne notes that the group has recently recruited several new physicians, are experiencing higher July volume than anticipated and had a record-breaking number of births at the Women’s Hospital in June. “Our volumes are continuing to rise,” Hawthorne said. But she added, “There’s no reason why we can’t be successful with the volumes we’ve had.”


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