July 11, 2011 | last updated June 1, 2012 10:24 am

Out of the red | Bristol Hospital stages turnaround but its future remains unclear

PHOTO/PABLO ROBLES
PHOTO/PABLO ROBLES
CEO Kurt Barwis has led the five-year fight to put Bristol Hospital in the black. But national trends are running against community hospitals and the hospitalís board is weighing its options.

When Kurt Barwis took over as CEO of Bristol Hospital in 2006, the 134-bed not-for-profit institution was bleeding red ink and in need of a new direction.

So Barwis, a long-time hospital and one-time technology executive with a deep finance and accounting background, helped institute plans to diversify the hospital's business lines, recruit more doctors and redo contracts with commercial payers to ensure the hospital gets more accurately compensated for the services it provides.

So far, things appear to be working out.

But as talks about hospital mergers and affiliations become increasingly more common across the country, particularly for small community hospitals that have little to no access to the bond markets, Barwis said Bristol Hospital is beginning to weigh its options. He said the institution's board of directors has been talking closely with the medical staff over the last month or so about the future of the hospital.

When asked whether he thought an affiliation was the best next step for Bristol Hospital Barwis said:

"It's not about what the CEO wants. It's up to the board. There is no foregone conclusion yet."

Bristol Hospital ended fiscal year 2010 with a $1.2 million operating surplus, the hospital's best financial performance in recent memory. The organization has recorded a positive operating margin for each of the past three years, maintaining a steady financial footing at a time when many hospitals are finding it difficult to break even.

At the same time, significant investments in infrastructure are being made.

The hospital, for example, purchased and installed a state of the art computer data center and recently completed a two-year $7.7-million technology investment that replaced and upgraded its entire IT system. The hospital also has just gone live with a fully integrated electronic medical record system.

But challenges still exist. As a small community health care provider, Bristol Hospital doesn't have access to the bond market for financing, forcing it to rely on donors and fundraising for capital investments.

And expected cuts to Medicare reimbursements will put further pressure on the hospital's bottom line at a time when the industry is being asked to reduce costs and increase the quality of care or face even further reductions from government payers.

"Hospitals must be safer, higher quality and more efficient while reducing costs," Barwis said.

Barwis has a long history within various aspects of the health care industry and also has used his finance background in roles at manufacturing and technology companies. Most recently, he was a senior executive at St. Mary's Hospital in Maryland, a 100-bed non-profit acute care hospital. Before that he was a CFO of an early-stage tech startup, Renaissance Technology, which developed a non-invasive cardiac diagnostic monitoring device.

When Barwis started in Bristol in August 2006, he inherited a hospital that was piling up losses. Reductions in patient volume and rising expenses were causing the hospital to run deep in the red.

In fiscal 2006, the hospital recorded a $9.4 million operating loss.

Barwis said the key to the financial turnaround started with the recognition that the hospital needed to add new business lines to pump up patient volume. Since 2007, the hospital has added a new cancer center, enlarged its emergency department, and added or bolstered other subspecialties.

More recently, the hospital established a new bariatric program, which it sees as a significant growth segment, particularly with the high rates of obesity and the increasing desire of people to lose weight through weight-loss surgery.

So far the hospital has performed close to 100 surgeries. And Dr. Makram Gedeon recently performed the first single-incision sleeve gastrectomy in Connecticut, a procedure that removes part of the stomach through a single incision in the belly button.

Recruiting new medical staff, like Gedeon who joined the hospital in 2009, also became a top priority, Barwis said. A shortage of primary care and subspecialists was hurting the hospital's ability to attract more patients, so in 2007 the hospital began to establish a wish list of doctors to recruit.

The hospital has added dozens of physicians in orthopedics, cardiology and oncology as well as primary care doctors and psychologists. And the hospital is looking to bolster its ranks further.

Barwis credits the entire medical staff as being key players in the financial turnaround.

"The easy thing to do is not spend money when the hospital is having financial problems," Barwis said. "But that's part of the problem. There was a deficiency in terms of supply and access to subspecialists."

Negotiating better contracts with commercial insurers also helped boost the hospital's bottom line, Barwis said.

Michael Nicastro, president and CEO of the Central Connecticut Chamber of Commerce, said Barwis' private sector and non-profit background has been key to helping reverse the hospital's financial losing streak.

"Kurt brings a very strategic mindset to the hospital," Nicastro said. "He's extremely knowledgeable of all the fine details in terms of the financial and insurance issues. He sleeps and drinks this stuff and that reflects the financial performance of the organization."

Nicastro said one of the keys to the hospital's success under Barwis' leadership is that he's continued to support investments in the organization, while also trying to hold down expenses.

For example, the hospital has invested over $7 million — much of it raised through fundraising — to move to a fully integrated information technology system that Barwis said will help cut costs by improving operating procedures and allowing the hospital to adopt best practice treatment protocols.

That investment included the adoption of electronic medical records for all departments within the hospital, which will help cut down on costly duplicative testing, Barwis said.

The hospitals is also working on implementing lean manufacturing techniques to try to eliminate manual, redundant, non-value added activities, Barwis said.

Future additions include a sleep center, breast health center, a new pulmonary rehab program, and a move to more single-bed rooms.

"He's taken them on this course of modernization, but on a path they can afford," Nicastro said.

As Barwis looks to the future, he sees an increasingly challenging environment. Health care reform is forcing all hospital's to re-think the way they do business and creates pressure to improve quality of care while reducing costs.

At the same time, Barwis said he anticipates a 6.82 percent reduction in Medicare reimbursements, which will have a significant impact on the bottom line.

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