Optima Healthcare is shedding a bit of its corporate skin, refocusing on the operations of its three hospitals and preparing for whatever an uncertain future may throw its way.
By year-end the destiny of the Manchester, N.H.-based system is expected to be decided by special boards of trustees for 238-bed Elliot Hospital, Optima's flagship, and 242-bed Catholic Medical Center. The boards are re-examining the hospitals' participation in Optima.
Optima controls the only two private acute-care hospitals in Manchester and also owns 150-bed St. Joseph Hospital in Nashua, N.H. But Optima's plans to shift almost all acute-care services, excluding emergency room and psychiatric services, to Elliot from CMC sparked a groundswell of community opposition in Manchester.
While the public drama over consolidation plays out, Optima is trying to return to the business of healthcare.
"We've eliminated most of the corporatization, and we've refocused on the hospitals and their people," said Douglas Dean, who became president and chief executive officer of Optima in July.
Last month Optima chose Alyson Pitman Giles, 45, to run CMC as executive vice president and chief operations officer starting Nov. 30. She is president and CEO of 93-bed New London (N.H.) Hospital.
"Notwithstanding the external issues, the structure contemplates a system that supports three distinct hospitals," Dean said.
The extent of services at the Manchester hospitals will be determined by the special boards, he said. But in any case, he added, "the identities of these hospitals need to be preserved."
In 1997 Manchester voters blasted the consolidation plan in a watershed referendum calling for Optima to keep both hospitals operating as full-service acute-care facilities.
Shortly afterward, New Hampshire Attorney General Philip McLaughlin reviewed the results of the 1994 Optima merger and issued a damning report in March that faulted Optima for running roughshod over the hospitals' historic charitable missions, thereby violating state law.
In response, two special boards of trustees were convened in June to recreate the pre-merger governance of Elliot and CMC hospitals and to rethink their participation in Optima.
As winter's chill slips into New Hampshire, the boards are poised to start face-to-face negotiations, with final decisions expected by year-end.
As the endgame begins, the outcome is uncertain.
Bishop John McCormack, newly installed as the head of the Manchester Catholic diocese in September, has asserted that CMC's identity must be preserved, though he has stopped short of demanding independence.
The CMC board reportedly has developed an affiliation model for linking Elliot and CMC hospitals rather than supporting a full-blown operational merger.
Ovide Lamontagne, a lawyer and spokesman for the CMC board, could not be reached for comment at deadline.
Meanwhile, the Elliot board continues to support the merger and some form of clinical consolidation.
"We're anxious to complete the work-not just to get it done, but to do a good job as soon as possible," said Rev. William Donoghue of Brookside Congregational Church and chairman of the Elliot special board. "The hospital is in crisis."
The Elliot board has made two important decisions that set the ground rules for negotiations with CMC.
First, the Elliot board voted against using endowment funds to offset operating deficits. That seriously limits the possibility of running two acute-care hospitals in Manchester under the Optima umbrella. An Ernst & Young report commissioned by the attorney general estimated that operating the hospitals as they were before the merger would result in operating losses of about $25 million annually in 2002 and 2003.
In principle, Optima could afford to fund deficit operations with its strong balance sheet: Cash and investments stood at $187 million at the end of fiscal 1998. But that would not work if Elliot's board says no, because its endowment accounts for the lion's share of the system's investment assets.
Donoghue said the CMC special board has verbally agreed to reject deficit financing.
Secondly, the Elliot board affirmed the hospital's 1958 mission statement to provide comprehensive care to patients, regardless of their economic circumstances, echoing CMC's longstanding charity stand. The affirmation by Elliot could provide cover for a continuing affiliation with CMC.
Amid the uncertainty hanging over CMC and Elliot, important changes at the hospitals have ground to a halt.
Several construction projects remain on hold at Elliot, stopped by a board- imposed moratorium.
And Optima is waiting to buy a fixed-site magnetic resonance imaging unit despite winning a long-running effort to secure a certificate of need from the state in July. Until the consolidation questions are answered, the location for the machine can't be decided, said Optima CEO Dean.
Optima currently shuttles a mobile MRI between CMC and Elliot.