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More than a hope and a prayer for Illinois hospital


By Claire Bushey, Crain's Chicago Business
Posted: December 10, 2012 - 5:00 pm ET
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In an industry gripped by consolidation, Palos Community Hospital in Palos Heights, Ill., guards its independence with a strong balance sheet and firm leadership from the last of a generation of nuns who once led many of Chicago's hospitals.

A Catholic hospital with a secular name, Palos has steadily grown to become the fourth-largest independent hospital in the Chicago area. Revenue climbed nearly 6 percent, to $359 million, between 2007 and 2011. Founded in 1972, the Palos Heights hospital has survived stiff competition, with five hospitals within 15 miles.

Palos has prospered by following a formula that is difficult to duplicate by hospitals in less-affluent areas. With a large number of patients on private insurance, Palos has stockpiled more than $680 million in cash and investments, making it the envy of larger rivals.

Another key is Sister Margaret Wright, 77, who started in the hospital's physical therapy department and became CEO more than 30 years ago. A quiet taskmaster, she also is known for her careful interest in the personal lives of her employees, people who know her say. The former theology student can be tough whether negotiating with insurance carriers or reining in difficult-to-manage doctors, they say.

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“She holds people accountable, staff as well as physicians,” says David Seaman, CEO of Blue Island-based physicians group Pronger Smith Medical Care LLP. “She's very protective of the institution.”

Ms. Wright declines to be interviewed, and a hospital spokesman declines to answer questions.

She will be the sole nun serving as chief executive of a Chicago-area hospital, following the announcement last week that Sister Sheila Lyne, 76, is stepping down as CEO of Mercy Hospital & Medical Center on the Near South Side. Sister Elizabeth Van Straten, 68, who like Ms. Wright is a member of the Religious Hospitallers of St. Joseph, is retiring in January as CEO of St. Bernard Hospital on the South Side.

“They've been just great women in a culture and a time in history when women were not supported in taking on leadership positions,” says the Rev. Michael O'Connell, former pastor of a parish in Orland Park, where Ms. Wright attends Mass. “But they did.”

Ms. Wright grew up on Chicago's South Side. Her father was a police officer. Her mother was an Irish immigrant and former North Sider who passed her lifelong love of the Cubs to her daughter.

In the 1950s, Ms. Wright attended the nursing school at St. Bernard's, says Sister Sheila Boase, a member of the Religious Hospitallers who lived with her in the early 1970s.

Seeing the nuns in action prompted Ms. Wright to join the Montreal-based order, Ms. Boase says. Ms. Wright took her vows in 1960 and later earned a master's degree in sacramental theology from Marquette University.

Shortly after Palos opened in 1972, the order closed St. George Hospital on the South Side, which had been open for more than 50 years. Although the parent nonprofit retains the old name, the new facility was renamed to make clear that it was open to all members of the community, Ms. Boase says.

Palos, which opened when the south suburban population was booming, faces the challenge of caring for more senior citizens at a time when Medicare reimbursement rates are tightening.

The health care program for the elderly and the disabled accounted for 44 percent of net patient revenue in 2011, up from 37.5 percent in 2008. In an era of hospital consolidation, even some of Ms. Wright's admirers say Palos eventually will have to join a larger health care network.

“It's just a matter of how long can they hold out,” says Dan Marino, CEO of Oakbrook Terrace consultancy Health Directions LLC.

As CEO, Ms. Wright plays a critical role in strategic decisions, such as starting new programs like cardiac care, while paying a close eye to every detail of the operation, says Carole Ruzich, a hospital board member.

“She runs a very tight ship,” Ms. Ruzich says.

To attract new patients, Palos is gearing up for the opening in March of a new, seven-story patient pavilion, part of a plan to convert to all private rooms, while increasing capacity by 13 percent, to 428 beds. But the project has more than doubled the hospital's debt, to about $275 million, since 2009.

It is expected to cost $380 million, about 6 percent less than estimated, according to a Fitch Ratings report.

Richard Pepper, chairman emeritus of Chicago-based Pepper Construction Group Inc., the hospital's longtime general contractor, says Ms. Wright sets high expectations.

“Let's say our operation is an A,” he says. “Working for Sister Margaret, you got to be an A+.”


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