November 15, 1999 - 10:30am - Sandra Furukawa

In the year that would otherwise have been noted as its centennial anniversary, the bankrupt Boston Regional Medical Center of Stoneham, Massachusetts, formerly known as the New England Sanitarium and Hospital, not only closes its doors but possibly those of its academy and church as well. Sadly, what was arguably the most significant health care facility in regard to the Adventist church's medical missionary history is now itself history. Not only are thousands of people saddened by the collapse of this hospital known for "people caring for people," but many also question if the closure could have been avoided.

"I think this is really indicative of the health care environment. The hospital has been experiencing increasing debt, intense competition and decreasing reimbursement--especially from health maintenance organizations and Medicare," stated BMRC spokeswoman Christine Hawrylak in an Associated Press article. Hawrylak added that Boston Regional lost $7.8 million in the fiscal year ending September 1997.

It is true that the health care industry is rapidly changing and becoming increasingly more competitive, forcing many hospitals to close, merge, or struggle financially. However, while the factors stated by Hawrylak may have contributed to the center's collapse, an October 25th Boston Globe article by Dolores Kong instead asserts that misplaced faith, shoddy management, and poor judgment were actually the main reasons for the hospital's closure. The Globe article alleges that, among other things:

CEO Charles Ricks led the hospital deep into bankruptcy all the while denying to its trustees that there was cause for concern. Ricks "kept reassuring us, before the hospital closed 'that everything was going to be all right,'" said Dr. Robert G. Leone, a trustee and former president of the hospital's medical staff. Financial records show that as recently as 1992, the hospital had net assets of about $25 million and, a little over 10 years ago, its liabilities totaled just $5 million; now, however, the hospital's debt is estimated at $60 million-$15 million more than its net worth.

A long-promised rescue plan in the form of a too-good-to-be-true $52 million investment offer by Doctors Community Healthcare Corp. fell through in February, leaving Boston Regional millions of dollars in debt and without enough time to revive other previous offers. Under the terms of the deal, Boston Regional would have retained a 20 percent stake in the hospital, Ricks would have remained hospital president, and the church and academy located on the hospital campus would have been able to stay. Instead, the deal left the hospital in worse financial straits than before after it borrowed heavily from a Doctors Community-affiliated financing company in order to stay afloat until the deal closed and paid $50,000 a month in management fees to Doctors Community last year even before the agreement was finalized.

According to the Globe, the Doctors Community fiasco was just the final, futile business deal of what hospital officials describe as "a decade of hospital assets treated like an office slush fund and a bailout for poor investment deals--including questionable financial and property transactions such as $14 million of BRMC funds transferred over six years (despite the misgivings of trustees) to a money-losing physician practice, Boston Regional Medical Associates."

The Globe also reported that in 1990, property records show that a related hospital entity bought a Cape Cod home from a physician's wife for $175,000. Individuals familiar with the transaction report that, after extensive remodeling, the house was primarily used for personal and entertainment purposes by then hospital CEO Francisco J. Perez and former top-ranking church official Charles Case. In 1995, the house was sold at a loss of more than $40,000, not including renovation costs. Other sources claim that the representation of this situation by the Boston Globe reporting is inaccurate, but no other scenarios have been confirmed.

Also in 1990, property records reveal that the same hospital-related entity bought a Medford medical condominium from a physician for $125,000. The hospital converted the condo into a residential unit, which was sold in 1993 for $55,000 despite it being appraised at close to $100,000.

Records also show that Ricks? compensation in 1997 totaled $354,839, including bonus, country club fees, automobile allowance, and paid leave--a nine percent increase over the previous year. This is what he was getting paid at the same time the hospital defaulted on its bonds and slipped in its bond rating under his administration. Ricks? severance benefits also amounted to about three years? salary and, as part of his compensation package, he received an interest-free loan for a second mortgage on his house. Under the Doctors Community deal, he was to get a $280,000 base salary, plus an up-to-20 percent bonus, along with a termination amount equal to six months? salary.

Hospital officials also report that in the year or so before the center's closure, the administration eliminated the finance committee, stopped providing managers with monthly operations reports, and notified department heads that there was no need to come up with an annual budget. Meanwhile, the hospital spent millions of dollars on medical services and facilities such as a renovated maternity wing and surgical care unit plus a new breast care center, which included a mammography machine, paid for through community fund-raisers.

Efforts by the Globe to interview both Ricks and Perez resulted in a written response from Ricks and no response from Perez. However, Perez did issue a statement to Adventist Today when efforts were made to contact him (see sidebar following this story). Ricks, whose phone number is unlisted, responded to a letter sent to his post office box in Kennebunkport, Maine. A reporter for the Globe also reached the Tennessee home of Charles Case, who shared use of the Cape Cod home with Perez, but he refused to come to the phone.

According to the Globe, Ricks placed the responsibility for the hospital's closure on prior administrations leaving the heavy bond debt and lack of managed care contracts; on the intense competition among local hospitals; and on Doctors Community and its affiliated financing company, National Century Financial Enterprises, which allegedly abandoned the deal after a year of promising to complete it.

"We were able to turn around a lot of things but could not survive being left at the altar. I have spent several hours with the creditors? attorneys who have indicated to me that our board and management made the only, decisions we could, based on the offers and choices we had," Ricks wrote.

Even though they were not in office when some of the earlier decisions were made, current church leaders also defend the hospital and the church's role.

"It's always easy to second-guess the past, especially when something goes bad, and wonder if we shouldn't have done something different and better," said Halvard Thomsen, president of the church's Southern New England Conference, who acknowledged that he had joined the hospital board only after it had decided to go with Doctors Community. He added that he has been a member of two Adventist hospital boards and "in neither case has the ecclesiastical representation overshadowed the businessmen and the business minds at all."

Still, others say there are still too many questions and not enough answers. "It just doesn't seem right. How does a hospital close in three weeks after being here 100 years?" asked Diana Gould, who ran the development office and was one of BRMC's chief community fund-raisers. "Unbelievable devastation was done."

At the time of its closure, the hospital had to lay off 600 full-time and 300 part-time employees. "It's a wonderful hospital and everybody's crying," said a dejected X-ray technician to a Boston Herald.com reporter. The technician, who declined to give her name, added, "I?m not looking for another job yet. It's like family."

According to many employees and patients, Adventist or not, the 100-year-old Boston Regional was a very special, caring place of priceless historic value and great potential. In its early days, when it was known as the New England Sanitarium and Hospital, Ellen White visited and wrote favorably of it, stating that its location provided patients with "the most favorable conditions for recovery of health" (Special Testimonies, Series B, No. 13, p.3). Later, when the hospital was known as New England Memorial, the wildly popular alternative-medicine practitioner and author, Dr. Deepak Chopra, taught in the family practice residency program. Church members lament the fact that such a historically significant Adventist institution--more significant than even the well-known Loma Linda University Medical Center--has been lost and, with it, a beautiful estate, a school, and possibly a church.

Being that the buildings for both the Hospital Church and the Greater Boston Academy are also located on Boston Regional's scenic 41-acre parcel overlooking Spot Pond, a jury trial was conducted to decide whether or not the land on which the buildings are built should be regarded as part of the bankrupt hospital estate.

At the same time that the jury trial was going on at the US bankruptcy court, a hearing on the sale of the hospital property was also underway across the hall. The hearing was an effort by creditors representing the bondholders and other major creditors to clear the grounds so the property could be sold. According to the Boston Globe, the unusual back-to-back timing of the two trials was so that the jury's verdict could be reached in time to decide the sale of the hospital property. The October 29th split verdict of the jury found the church independent, but the school as part of the estate. The Boston Globe reported on October 30th that the verdict had jeopardized the sale of the property since the only bid on the hospital (for $20 million) was contingent on both the church and the school vacating the property.

Both sides seemed surprised by the jury's ruling, which was reached after nearly five hours of deliberation. It has not been determined what the potential buyer, Gutierrez Co., a Burlington-based commercial real estate firm, or the creditors committee will do. (Phone calls to both parties were not returned as of when this article was written.) Possible scenarios include Gutierrez rescinding or modifying its offer, or the creditors committee appealing the verdict on the church.

One of the lawyers for the church and school, Charles Glerum of the Boston law firm Choate Hall & Stewart, commented, "I imagine now that everyone knows what the jury's decision was--the parties will sit down and try to sort out a solution that works for everyone." He refused to say whether his team would appeal the verdict on the school but said, "My clients were of course dismayed by the decision with respect to the school, and gratified by the decision with respect to the church.

If the academy shuts down, its 94 students will immediately begin classes at the nearby Edgewood Elementary School. Since the 96-student elementary school is already at full enrollment, according to an unhappy EES parent, it will most likely have to convert its gymnasium into additional class space for the remainder of the year.

Whatever the reasons for its closure, it's clear to see that the loss of the Boston Regional Medical Center has resulted in a hurting community that will need a lot of time to heal.

"This [hospital estate] was our birthright, it couldn't be sold. Here it was cast away," said Dr. Will Horsley, who was chief of ophthalmology as well as one of the many Adventists who worked there. "They lost a church and an academy, and they got less than zero."
  Statement of Frank Perez

What has happened to the Boston Regional Medical Center is a tragedy for the community it served, for the dedicated physicians and employees who gave their lives to it and for the corporate church. Each administrator who served that institution from the 1970's to the present would have his own perspective on what happened and why, and some might choose to point fingers at predecessors or successors. Further, comments already made to the press are incomplete, out-of-context and create more rumor and gossip than fact. Already, this process played out in the press has hurt people unnecessarily and, in my opinion, unfairly. I do not wish to worsen an already difficult situation. Lastly, it has been nearly six years since I left the institution. I only know what I found when I arrived and what I did about those challenges during my tenure.
 

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