A Noble Mission Challenges Linger in Wake of Failed Hospital Merger

George Koller has heard some interesting rumors since announcing that Noble Hospital will not affiliate with Baystate Medical Center — including whispers that Noble might not remain a hospital much longer.

That’s nonsense, said Koller, Noble’s president and CEO. But the whispers are based on a kernel of truth — specifically, that Noble has struggled in recent years to stay financially afloat, and it will now have to find a way to improve its lot independently.

And that’s exactly what Koller intends to happen.

“We see a huge need for Noble Hospital in this community,” he said, citing 30,000 emergency room visits, 4,000 inpatient stays, and 3,000 surgeries annually — high numbers for a hospital with only 100 beds. “Couple that with the tests and procedures we do in radiology, cardiology, oncology, and other areas, and the need is obvious.”

Still, in the days since negotiations concerning an affiliation between Noble and Baystate fell apart, Koller has heard questions about whether Noble will change its mission — specifically, whether it will move away from acute care into another practice model. But he quickly dismissed such speculation.

“Our objective is to continue to be an acute-care hospital, and that was voted on by our board of directors and medical staff with resolve.” Of course, that’s easier said than done — especially at a time when fully 50{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of Massachusetts hospitals continue to lose money. “And we fall into that bucket,” Koller said.
Escaping that bucket is Noble’s goal — only now, it will be attempting to climb out on its own.

Deafening Silence

Officials at Noble and Baystate have been tight-lipped regarding the specific reasons why the planned partnership, announced last spring, failed to materialize. Jane Albert, Baystate’s director of Public Affairs, said both parties signed a memorandum of understanding at the start of the discussion process, effectively agreeing to keep details of the negotiations confidential.

However, Albert asserted that Baystate had no goals entering the discussions beyond hearing Noble’s ideas.

“Noble contacted us because of their desire to affiliate with an academic medical center,” she said. “And we’re always exploring options to partner with area hospitals and physicians to better meet our mission, which is to improve the health of people in our communities.”

These options sometimes involve affiliations with hospitals, such as Mary Lane Hospital in Ware and Franklin Medical Center in Greenfield. But Albert noted that they also extend to health science academies created in Springfield schools and monetary donations to public health initiatives in Greater Springfield.

“In this particular case,” Albert continued, “when Noble approached Baystate interested in an affiliation, we said, OK, we’ll follow up and pursue whatever opportunities there might be.”

Both hospitals intend to maintain some current partnerships in OB/GYN and emergency services, Albert explained.

“We have a relationship with their women’s center,” she said, explaining that women can receive OB/GYN services at Noble but deliver their babies at Baystate, which boasts a neonatal intensive care unit. The two hospitals also share a relationship through Noble’s Emergency Department, which provides training for Baystate employees.

“We recognize the importance of maintaining a health care presence in Westfield, and Baystate will continue to explore clinical opportunities to partner with Noble as we have in the past,” said Mark Tolosky, president and CEO of Baystate Health.

Picking Up the Pieces

Baystate had planned to spend at least $12 million on capital improvements to Noble Hospital if a partnership could be forged. Koller said he was disappointed by the way the negotiations with Baystate ended, but said both institutions made a good-faith effort to explore all possibilities.

“We had a very close, very productive relationship with Baystate in hopes of making a merger occur,” Koller said. “We learned a lot about ourselves, and Baystate learned a lot about the market we’re operating in. But we decided not to merge, and that we’d both achieve our individual goals by staying independent of each other.”

For starters, he said, Noble is considering several options that had been shelved during the merger discussions with Baystate, including a salary freeze for the coming budget year and a series of workforce reductions.

“It is a layoff, but we’re calling it a rightsizing,” Koller said. The reason, he explained, is that the hospital has been overstaffed in recent years because, although patient volume has increased, it has not done so at the anticipated rate. “The influx has not been as large as the staff amassed to take care of it, so we feel we need to rightsize to adjust to the volume of patients.”

Another cost-savings measure lies in the switch from a defined benefit pension plan, which required no contribution from employees, to an employee-contribution plan.

Under the new system, the hospital will put an initial 2{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of a worker’s salary into the pension, then match any employee contribution 50 cents on the dollar, up to an additional 4{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of total salary. The shift will save Noble $1 million in pension contributions per year, and will give employees control over how their money is invested, something they could not do before.

Still, bringing Noble into the black will be no quick fix. The hospital was recently awarded a $1 million grant from the state’s Essential Community Provider Trust Fund, but Noble has traditionally lagged behind other struggling hospitals, partly because its community requires less free care.

Part of the problem for community hospitals is a nationwide one, Koller said — that is, the trend toward patients seeking routine care at teaching hospitals when they should be accessing their local community hospitals.

“There’s a perception that you have to go to a teaching hospital to get care, and in Massachusetts, that’s occurring at a rate twice what we’re finding in other states,” he said.

“People are going to teaching hospitals for diagnoses that should be handled at their community hospitals, such as pneumonia, an appendectomy, or having their gall bladder out. And that’s driving the cost of health care up — $4 billion a year in Massachusetts alone. That’s what’s causing the economic difficulties in this state.”

Making a Pitch

To counter that trend, Noble is embarking on a marketing effort to spotlight some of its services to the community.

“We think it’s very important to make sure the public knows the real story, so we’re launching a fairly aggressive ad campaign highlighting what services and programs Noble offers,” Koller said. “We want to assure the public that we’re here, and that we’ll continue to be here.”

He noted that when people do visit the hospital for the first time, they are surprised at the range of services available in Westfield — partly because the hospital is snugly situated amid residential neighborhoods and doesn’t have the large-campus look of other institutions.

“We need to be more proactive and progressive in our outreach, and more visible in the media,” Koller said. “We have a superb ER, great radiology, anesthesiology, psychiatry, pathology, the Bronson rehab unit — these are wonderful core services, and coupled with our great specialists and subspecialists, they make the hospital what it is. But they can get overlooked because we’re not a big teaching hospital.”

In the meantime, Noble is reconstituting its strategic planning committee to discuss its options. “It will meet within a month to begin exploring strategies,” Koller said. “We will begin to look at the strategic picture going forward in the next three to five years.”

As for an expanded relationship with Baystate, Koller isn’t abandoning the possibility of a merger somewhere down the road just because it didn’t work out in the current environment.

“Timing is everything,” he said, “and the timing just wasn’t right.”

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