St. Joseph trying to turn the corner

After a surgical scandal involving a cardiologist brought St. Joseph Medical Center to its knees, the medical staff left behind struggled to move forward.

Patients and doctors fled in droves after the scandal broke in 2009. Negative headlines beat at their morale. And many remaining employees believed the distant owner of the once-well-regarded community hospital in Towson was unresponsive, leaving them feeling abandoned.

"It was difficult to face the reality that someone I trusted very much had failed us," said Dr. Gail Cunningham, a 23-year veteran who headed the emergency department and is now vice president of medical affairs.

"Then to know that the event tainted the entire organization when we thought it was a very isolated incident was also difficult," she said. "To have patients ask if it's is safe to come here when I know my colleagues are incredibly good clinicians, to have people truly doubt our capabilities, was difficult. Add the issues with our corporate owners, and it was just adding insult to injury."

It has been one year since the University of Maryland Medical System bought the hospital on Dec. 1, 2012, from Denver-based Catholic Health Initiatives for $206 million — to cheers from the staff. Cunningham acknowledged that some anger remains, but the desperation of the "fiercely loyal" doctors and nurses has turned to hope that the hospital's tattered finances and reputation can be mended.

Financial losses have been tempered. So far this year, its losses have averaged $3 million a month, while the hospital spilled an average of nearly $5 million a month of red ink during the fiscal year that ended in June, almost half of that under the prior owner.

About 100 doctors returned to the network immediately after the sale, and 15 more are restoring their privileges each month, administrators say. Patient numbers have stabilized, and the morale of the staff, led by new CEO Mohan Suntha, a radiation oncologist, is going the only way it could: up.

Still, restoring the once-premier heart hospital that relied on cardiac fees for a third of its annual billing won't be easy or fast, analysts say. St. Joseph lost almost a third of its admissions and nearly half of the primary-care doctor network that referred patients to cardiologists and other specialists in the years since Dr. Mark Midei was accused of performing hundreds of unneeded heart procedures.

The scandal continues to unfold in the news as patients of Midei, who lost his medical license in 2011, seek compensation in the courts for stents that hospital officials acknowledged they might never have needed.

In the latest case in early November, a jury for the first time found that Midei had breached medical standards but couldn't decide on damages, leading a Baltimore County judge to declare a mistrial. Nearly 250 patients who had accused Midei of performing unnecessary stent procedures settled their cases in May. Catholic Health owned the hospital at the time and agreed to assume all liabilities related to Midei, who unsuccessfully sued St. Joseph and Catholic Health for defamation.

While the St. Joseph name continues to be linked to the scandal, officials decided not to let it erase 150 years of history and tradition, and officially re-christened the hospital the University of Maryland St. Joseph Medical Center.

It's that link to the University of Maryland Medical System — a $3.5 billion network of 11 hospitals that controls about a quarter of the state's market — that financial analysts expect will help the hospital turn around. St. Joseph ought to be able to leverage the university system's prestige, top-flight managers and state support to re-tap the deep well of paying customers in the area north of Baltimore.

Still, analysts at Fitch Ratings and Moody's Investors Service, who rate the hospital system's debt, don't expect St. Joseph to be profitable for at least five years.

"Five years for a turnaround is about four years too long," said Joshua Nemzoff, president of Nemzoff & Co, a New Hope, Pa.-based hospital acquisitions consulting firm that was not involved in the sale.

"The problem there was very isolated in terms of the people involved," he said. "The hospital can be put back together. I wouldn't expect that to take five years. You don't buy a hospital with the intention of turning it around in five years. The board wouldn't let them."

It will be more like three years, said former state Sen. Francis X. Kelly, a university system board member tapped to be chairman of St. Joseph's board after lobbying his colleagues to make the acquisition.

He'd been a loyal patient for years, and he knew there were many in the community and at the hospital who wanted to see the hospital recover.

One of them was Dr. Andrew Rosenstein, a gastroenterologist who has worked at the hospital for 15 years.

Even though the practice he belonged to lost about a quarter of its business from the scandal, he and his partners resisted leaving, in part because they respected their hospital colleagues' ability and care.

"We had several large institutions trying to recruit us away, but we thought somehow we could see our way through this," Rosenstein said. "Everyone who stayed was committed."