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Special master: no “present intention” to cut salaries, benefits at Westerly

December 20, 2011

As you can imagine, Attorney Mark Russo has been pretty busy since he was appointed to serve as Westerly Hospital’s special master. It took several days to get him on the phone, but I finally had a quick conversation with him about his plans for the hospital. Here’s what we talked about.

The Pulse: What have you been doing since you were appointed?

Mark Russo: We’ve been introducing ourselves to all the employees, the medical staff, the medical executive staff and working with the hospital’s vendors to make them comfortable with the process so they continue to do business with the hospital. We’re continuing to do some community outreach, just trying to explain the process to people in the community.

The Pulse: It’s my understanding that a lot of people don’t really know what receivership is and there’s the fear that they’ll stop going to the hospital. Are you seeing that in your community outreach?

Mark Russo: I’m getting a lot of good questions, and luckily we’re able to answer them. So I think people are starting to feel comfortable with the process, is the sense I’ve gotten. I think they know we’re there to try to protect and stabilize the hospital.

The Pulse: What would you say is the most common misunderstanding or question that people ask you?

Mark Russo: Let’s see… I think the most common question is whether we’re going to come in and start making cuts and eliminating jobs and basically doing things to try to shut the hospital down, is one of the main concerns.

The Pulse: What do you say to that?

Mark Russo: That’s not what we were appointed to do. Our job is to stabilize the hospital. I mean, we might look at operational efficiencies as we go forward, there’s no question about that, but we don’t have any immediate plans to do those sorts of things.

The Pulse: It’s my understanding you’ve met with Lawrence and Memorial Hospital in Connecticut. Do you see them as the top potential partner for Westerly?

Mark Russo: I asked Lawrence and Memorial to meet with me so I could explain the process to them as I’ve done with others, and I see them as a potential strategic partner, but not the only one. We’re going to go through a marketing process and try to attract as much interest as we can in the hospital.

The Pulse: Have you had anyone else contact you who is interested in buying or partnering with Westerly?

Mark Russo: No, not as of yet.

The Pulse: can you give me a sense of your time-line? Landmark Medical Center is still in receivership after more than 3 years; do you think it will take that long for Westerly?

Mark Russo: Well, I hope not. I give credit to the people who are working on Landmark. It’s been in that long, but they’ve kept it operating and continuing to provide medical care to the community. That’s not easy. But I would hope that if we’re successful, we’re looking at a year to 18 months is what I’ve been telling people is my time line that I’d like to hit and be successful.

The Pulse: And you’re thinking you’ll be able to find a buyer or a partner in that amount of time?

Mark Russo: I hope so. Yes.

The Pulse: Tell me what you plan to do in the coming months. What are the next steps?

Mark Russo: We’ve got to try to restructure some things to free up cash so we can effectively operate.  That’s probably number one priority. Secondly, is we’ll be assembling the necessary due diligence that buyers or strategic partners will want to see and probably engage some professionals to help us put together a market campaign where we’ll request proposals from the marketplace.

The Pulse: Marketing to get people to come to the hospital or to buy the hospital?

Mark Russo: People who are interested in acquiring the hospital.

The Pulse: You represented Transition Healthcare when it was interested in buying Landmark. Do you see them offering a bid for Westerly?

Mark Russo: I don’t know yet.  I would certainly get them the materials and see if they are interested. I have not had a discussion with them yet as to whether they would be interested. But, I guess it’s not beyond the realm of possibility. Maybe.

The Pulse: I’m hearing from employees who are wondering if you have plans to change their salaries and benefits. What would you say to them? Is that a possibility?

Mark Russo: I don’t have any present intention to do that, but what I would say is if I’m faced with those issues in the future, I wouldn’t do that without a lot of analysis and a process where I go through it with their representatives, whether it be the union representatives or otherwise. So, there’s nothing immediate, but if we ever got to that stage or were considering that, there would be a lot of analysis that would go into it.

The Pulse: There are some people in Rhode Island who say we have too many hospitals. And Westerly has only about 40 available beds. Why does Westerly need to stay open?

Mark Russo: It serves a very important purpose in that community and it’s been there for 90 years.  Community hospitals may look different tomorrow than they are today, but we think the marketplace is going to figure that out and we don’t have any intention of closing it.

The Pulse: Would you go to Westerly if you were sick?

Mark Russo: Sure.

The Pulse: Anything else you’d like to say about this issue?

Mark Russo: Nope. I think we covered it.

Anything I missed? Let me know…


3 Comments leave one →
  1. Concerned in Westerly permalink
    December 21, 2011 3:23 am

    12-18 months to find a buyer is absurd. There’s already a buyer ready to go. The only thing that will happen in 12-18 months is the receiver gets paid LOTS of money. And he gets paid first. If Mr. Russo is really concerned about the viability of the hospital, here’s what he should do: Step 1) Issue an RFP to all interested parties (that should take about a week); Step 2) Allow interested parties 30 days to inspect the hospital’s books…kick the tires; Step 3) Review responses to the RFP and enter into an agreement with the best bid (could be done 90 days from the issuance of the RFP). Step 4) Initiate the Hospital Conversions Act process.

    The idea that Mr. Russo is hoping to FIND a buyer in 12-18 months is so offensive. Don’t people realize this is just a chance for a connected lawyer (handed the receivership by recommendation of the hospital’s lawyer) to make lots and lots of money via billable hours? You should ask the receiver if he has a deal in place to keep on board the hospital’s high priced law firm. And also ask if they cut a deal in exchange for the recommendaiton to the Judge. The lesson of Landmark is that the process has no incentive for the receiver to move fast. The only incentive is for the receiver to keep the gravy train going until the judge gets ticked off.

    Mark my words…this thing will take years and Russo will enrich himself handsomely. And his law firm pals will no doubt bleed the place dry too. WHERE IS THE OVERSIGHT????

    • Steven permalink
      December 26, 2011 9:17 pm

      Wow!! Great interview Megan…and some very valid points “Concerned in Westerly” that I and most people have not thought of….In my opinion, the whole receivership process seems scripted and will wind up hurting the Hospital employees and the Westerly community rather than procuring a positive outcome…I just have a strange feeling the special master and hospital administrators will exit the mastership process unscathed and for the better while everyone else, specifically the community and employees, will be left with a completely different Westerly Hospital or worse no hospital at all…

  2. December 30, 2011 4:02 pm

    Thanks for your comments guys! I’ll continue to watch as this receivership unfolds. Of course, keep letting me know if there’s something I’m missing.

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