Fred Hyde is e-mailing arrangements for a mid-Manhattan rendezvous. What sort of vehicle will he be driving, he is asked. He replies in the same clear, concise, staccato style in which he speaks.
"Small, red Mercedes, 13 years old but washed. See you at 10," he writes.
That is pretty much how Hyde prefers his hospitals-classically built but small; perhaps a little long in the tooth, but washed.
The leader of a two-person eponymous consulting firm that includes his wife, Jane Guillette, a former vice president at White Plains (N.Y.) Hospital Center, Hyde is to small, financially distressed hospitals what big, prominent turnaround firms are to large systems-with one significant exception.
"I don't do hatchets," Hyde says.
One bitterly cold day in January, Hyde agrees to allow this reporter to spend the day accompanying him on his rounds-not in the interest of self-promotion, he says, but in the interest of talking about the plight of small hospitals. In his all-encompassing, seemingly overambitious style, he schedules a series of three meetings with clients and associates that has him driving from his home in Ridgefield, Conn., down and up Manhattan before circling out to Long Island.
The day will begin with a visit to 326-bed Cabrini Medical Center, which is frantically searching for some short-term relief from a stabilized mound of debt after years of losses. Lunch will be at the Mailman School of Public Health at Columbia University where he has just been appointed a clinical professor in the Department of Health Policy and Management. Then, as Friday afternoon rush-hour traffic begins to snarl, he wants to shoot out the Long Island Expressway to pay a sick call to 213-bed Island Medical Center in Hempstead. One of New York's last for-profit hospitals, Island Medical is up to its ears in its second bankruptcy in less than 10 years.
Can the patient be saved?
Lose some, win some
With impeccable posture and a square jaw, Hyde, 56, is in some ways a study in tan-the interior of the red Mercedes, the overcoat with the upturned collar, the matching paisley scarf and even the Winsted Diner coffee mug sitting boldly and unencumbered by the transmission gearshift. The ceramic mug is a memento from a years-ago consulting job at Winsted (Conn.) Health Center Foundation, a bankrupt hospital that was reinvented with Hyde's help into a community-based ambulatory-care center in the hometown of consumer activist Ralph Nader.
Anyone on the public policy side who has been intimately involved in the permanent shuttering of a community hospital knows it's a tough job to kill a small hospital, and in the Northeast, Hyde single-handedly may be the major reason why. Fred Hyde and Associates' clients in the past several years include a laundry list of hospitals that once teetered on the brink of bankruptcy if they didn't fall off the cliff altogether. To name just a few, they include Flushing Hospital Medical Center, New York, which after coming perilously close to the Chapter 7 chopping block in 1999, reversed its losses in less than a year and has earned slightly better than break-even income on about $150 million in annual revenue for three years running; Memorial Medical Center at South Amboy, N.J., now defunct; and most recently, Aliquippa (Pa.) Community Hospital.
The latter spent five money-losing years as UPMC Beaver Valley before Pittsburgh-based UPMC Health System washed its hands of it. Hired by the community in 2001 to resuscitate the prodigal hospital, Hyde shepherded it to bankruptcy court last September. But it has had a revolving door of chief executive officers since Hyde resigned as president and CEO in October after losing the support of a small but key group of physicians (Sept. 16, 2002, p. 17).
"Bankruptcy is not the end of an organization," Hyde says. "It's part of business law and gives preference to an organization that can continue and wants to continue. It gives incentive for continuation. It's almost a moral imperative for people to correct things. It's a great opportunity."
Community groups might describe Hyde as the patron saint of financially distressed community hospitals; others with sharper pencils and attitudes might see him more like a hapless, heroic physician who spares no expense in keeping a hopelessly terminal patient alive: the un-Dr. Kevorkian.
Hyde arrives in a community armed with a stellar resume; he's a 1967 Phi Beta Kappa graduate of Yale University, with a degree in biology, an M.D. from Yale School of Medicine in 1972, and a J.D. from Yale School of Law in 1975. In 1992, he obtained a master's in business administration from Columbia University. Though he passed the medical boards, he never bothered to apply for a license to practice medicine, choosing instead to head directly into law school after discovering that he was more interested in politics and public policy than practicing medicine, he says. A Nader Raider while at Yale, he's also been a newspaper reporter; press secretary to former U.S. Rep. Robert Giaimo (D-Conn.), who served in the House from 1959 through 1981; a speechwriter; general counsel for the Connecticut Hospital Association; vice president of planning at Yale-New Haven (Conn.) Hospital; and an investment banker. That just takes him up to 1981, when he set up shop as a hospital consultant in Beverly Hills, Calif. He moved back to Connecticut, which he still calls home, in 1985.
Though Hyde tends to downplay his degrees, his rapid-fire assessments of hospital financial crises suggest a steel-trap mind with an encyclopedic knowledge of the business and policies of healthcare. But he always delivers his prescriptions with the aid of crystal-clear metaphors-frequently automotive in nature-that even the most healthcare-naive community member can understand. In describing his consulting work at Flushing Hospital several years ago when, hired by powerful Local 1199 of the Service Employees International Union, Hyde was able to coax the hospital out of bankruptcy, he says: "The wheels hadn't fallen off, but the nuts were loose." Baseball metaphors are helpful, too. He describes much of his role at perhaps his seminal consulting job-Winsted-as serving as "the utility infielder. I figured out how to get things done within the means they had," he says.
Most of the hospitals where Hyde has consulted the past several years have come his way through his ties with Local 1199 of the SEIU. The union, which has a vested interest in protecting jobs, first tapped Hyde to help Flushing Hospital, which was poised to close. Flushing was eventually acquired by New York-based MediSys Health Network in 1999; 1,200 jobs ultimately were saved and 200 more added later, according to Hyde, who readily points out that "one out of three benefited jobs in New York are healthcare jobs." The union subsequently hired him for other jobs, including Cabrini and Island Medical.
"In every case he's been a beacon of light," says Steven Kramer, executive vice president of 1199. Even hospital executives welcome Hyde's advice, Kramer says.
"He is brilliant in his analysis and his ability to present information in a credible form," Kramer says. "He can present the driest economic and medical terms and turn them into something, which is like an exciting TV talk show."
In short, after just a few minutes with Hyde, most people are willing to don his team sweatshirt and drink any flavor Kool-Aid he asks them to imbibe. Kramer laughs heartily when he is asked why the union doesn't turn to a more prominent turnaround firm instead.
"Let me see how I should put this," Kramer says. "We feel he has much greater expertise and that he is much more understanding about the role that the workforce plays in the continuing of care and continuing whatever positive approach that existed in the institution before. He doesn't believe you have to gut a place to rebuild it."
Just as union officials boast about Hyde, Hyde is a big booster of hospital workers, community groups and medical staffs. "When something goes south, they are all people of standing, but they haven't been on the inside," Hyde says. "I try to help them."
That morning, striding into Cabrini, a building that blends in perfectly with the tree-shaded brownstones of Manhattan's Lower East Side, Hyde nods his head at the security guard. "I'm going up to see the boss to see if we can plot to get you some money," Hyde says.
After 10 years of big deficits, Cabrini, under the stewardship of President and CEO Robert Chaloner, has finally "cleaned up their income" but still has a significant mound of short-term debt, Hyde says.
Chaloner, who has been on board for a little more than a year, says the facility is committed to remaining a community-minded hospital in the midst of Manhattan despite a number of stronger competitors. It's a much-needed hospital that treats a large immigrant population, has the only inpatient dementia unit in the area, and also has played a major role in treating patients with HIV, Hyde says.
There's been a $23 million improvement in the bottom line since the board engaged a turnaround firm three years ago, Chaloner says.
Sept. 11, 2001, certainly didn't help, but Cabrini has finally reached "the slightly positive break-even point" on operations. In 2002, it posted a net loss of $500,000 on $160 million in revenue, he says.
"Our biggest nightmare is that year after year of losses have run up large bills," Chaloner says. "Today we are trying to pay today's expenses plus last year's."
By April, Chaloner says the hospital must find a way to pay off as much as $80 million in short-term debt, primarily to vendors. Even if the hospital succeeds in refinancing its short-term debt into long-term debt, it must find $6 million by April, Chaloner says. Hyde is advising him on taking the case to elected officials, and Chaloner and his board are convinced that going it alone-remaining a community hospital that traditionally serves large elderly populations-is the right thing for Cabrini.
"The union feels it's an ideal case," Hyde says. "They've done the hard part (in stabilizing the cash flow), but they need help in working capital." Noting that bankrupt National Century Financial Enterprises was one of the few firms willing to extend working capital to small hospitals, Hyde adds, "This is a real bottom-feeder market ... (Cabrini) has a good story to tell in terms of viability. Volume is growing given the New York market, and Cabrini has a place."
One hospital, two bankruptcies
Later in the afternoon, John Breen, CEO of Island Medical, looking spent, unwraps the aluminum foil around a grilled cheese sandwich cooked in his hospital's neon-signed coffee shop. He is drinking a Snapple out of the bottle. It's been another rough day in an endless stream of rough days.
"We're reducing staff and starting layoff letters," Breen says. "Today we're notifying the nonunion staff and finalizing the list of other employees with (Local) 1199." When it all shakes out, the staff of 450-333 full-time positions-will have been reduced by more than 10%.
Seemingly frozen in the 1950s, Island Medical challenges even Hyde's irrepressible optimism. The hospital ekes out its existence in a shabby brick building with blue cursive signage out front proclaiming it "The People's Hospital" in a neglected part of Long Island. Inside, the CEO's office is just as shabby-pressed-board furniture, a dark, tiny window and commercial-grade carpeting.
Hyde is working closely with Breen, who also originally was hired as a consultant, to ever so gingerly help Island Medical get back on its feet. Gallows humor prevails at the hospital, which in the past decade has been in bankruptcy longer than it's been out, first entering Chapter 11 protection in late 1992 and re-emerging in 1997 or 1998, Breen says. The hospital most recently filed for bankruptcy in October 2000 with $22 million in assets and $31 million in liabilities.
Asked about the operating margin on net revenue of $22 million in 2002, Breen shrugs with a smile and says, "It's negative, but it doesn't matter how much." Pressed for a number, he says it was probably a $12 million loss-a negative 55% operating margin. "You'll never find an institution that's still functioning" with a margin like that, he says somewhat proudly.
When asked why the hospital bothers taking such heroic measures to survive, Breen says, "First, no one wants to close a hospital, least of all a bankruptcy judge. There is strong support in the community, but having said that, the community doesn't realize just how fragile the circumstances are." Breen adds that there are "compelling reasons" such as job preservation to keep an institution such as Island Medical open.
"Yes, patients could go somewhere else in New York-this is not Boise, Idaho-there are other hospitals close by that could preserve our work. It just would be further away," Breen says.
Ever the booster, Hyde points out that Breen has hired an anesthesia group-at the cost of $45,000 per month-to replace the one anesthesiologist who resigned. Officials hope that will bolster the surgical volume in the operating room, which disappeared without round-the-clock anesthesia coverage. "If you build it, they'll come back," Hyde says.
On the drive back to Manhattan, Hyde is asked the tough question: Why not just let some hospitals die?
"It's a tough one," Hyde says. "I've always been leery of people who decide that others are terminal. The truth is we're all terminal."
Birthplace: New York
Family: Wife, Jane Guillette; two sons, ages 12 and 17
Education: Phi Beta Kappa graduate of Yale University, New Haven, Conn., with a bachelor's degree in biology, 1967; M.D., Yale School of Medicine, 1972; J.D., Yale School of Law, 1975; MBA, Columbia University, New York, 1992.
Previous jobs: Newspaper reporter; congressman's press secretary; speechwriter; vice president and general counsel for the Connecticut Hospital Association; hospital executive; investment banker.
Quote: "A lot of my clients don't have any money. I have to figure out how they get paid so I get paid."