Bon Secours Health System's newly arrived chief executive officer, Richard Statuto, is hoping leaner management and targeted investment will help the Marriottsville, Md.-based system regain footing lost in its rocky expansion of recent years.
Since arriving in February to replace Christopher Carney as president and CEO (Feb. 14, p. 6), Statuto has pared down management and said the system will be focused on its existing markets. This strategy prompted Moody's Investors Service last week to revise its outlook for the health system to stable from negative, affirming its rating of A3 on $1.1 billion of debt.
A restructuring in late April eliminated two geographic divisions and modified Bon Secours' chief operating officer role, prompting Chief Operating Officer Stephanie McCutcheon to step down as of June 3. She and Statuto mutually agreed on her decision to resign, he said. "She's very talented," Statuto said. "She's looking for the next challenge. I wouldn't be surprised to see her as a CEO," he added. Donald Strange, senior vice president of Bon Secours' former northern division, was named interim COO.
Statuto said last week the restructuring removes layers of management between his eight-person executive team and the Bon Secours regional executives who oversee operations. The result, he hopes, will be management that "mutually support each other," he said. There weren't layoffs related to the restructuring, only reshuffling of responsibilities, he said.
The not-for-profit system will focus its investments in its remaining markets in nine states across the East, South and Midwest after selling operations in Florida, New Jersey and Virginia, Statuto said. In February, Bon Secours sold hospitals in Norton, Va.; Venice, Fla.; and a hospital and long-term-care facility in Port Charlotte, Fla., to Health Management Associates for $279.1 million.
And earlier this year, its trustees agreed to explore the transfer of a Hoboken, N.J., hospital, to the University of Medicine and Dentistry of (Newark) New Jersey.
Bon Secours reported a net loss of $20.4 million on $2.25 billion in revenue in fiscal 2004. Moody's noted that recent divestitures cut Bon Secours' debt by $192 million and boosted unrestricted cash by $70 million. Operating margin rose to 3.6% in March from 1.8% in February, Moody's said.
Statuto cited signs of improved operations, including 133 days of cash on hand as of April and $9.2 million in operating income off $181 million in operating revenue for the month.