Faced with a projected $7 million loss this year, Deaconess Waltham Hospital may pull out of Boston's CareGroup network.
Deaconess Waltham President Dana Ramish said withdrawing from the six-hospital CareGroup was among the options the hospital's board was considering to fix its worsening financial situation. The 199-bed hospital in Waltham, Mass., a suburb west of Boston, had an operating loss of $5.5 million on revenue of $69 million in fiscal 2000.
Ramish said Deaconess Waltham would "entertain some strategic course outside our current organizational structure" and has CareGroup's blessing to look. Money to bail the hospital out of its situation is among the criteria that Deaconess Waltham would seek in a new partner, Ramish said.
Deaconess Waltham had a drop in inpatient volume this year and is projecting a loss on operations of $7 million for the fiscal year ending Sept. 30. The hospital has implemented programs to reduce costs and improve revenue collection, which it anticipates may reduce the loss by about $2 million. Ramish said he is not considering laying off any of the hospital's 1,200 employees.
CareGroup lost more than $200 million in the past two fiscal years. Last year the system's flagship, 589-bed Beth Israel Deaconess Medical Center in Boston, announced a drastic cost-reduction program that included putting more than one-fifth of its campus up for sale.
CareGroup Chief Executive Officer James Reinertsen, M.D., in a written statement, said he supports the hospital's evaluation of a wide range of opportunities including "partnering with other healthcare organizations."
Deaconess Waltham joined the Pathway Health Network in 1995; that became CareGroup in 1996. As a part of CareGroup, Deaconess Waltham pays the system for central administrative services, such as legal work and government advocacy, said a CareGroup spokeswoman. Neither Ramish nor CareGroup would disclose the amount that Deaconess Waltham pays to be part of the network.
Ramish said there was no time frame in place for Deaconess Waltham to leave CareGroup.
With 60% of its revenue coming from Medicaid and Medicare, Deaconess Waltham has struggled as a result of Medicare payment reductions and historically low Medicaid payments in Massachusetts.
"This is an extraordinarily difficult state in which to operate a hospital," Ramish said.