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."
Rosenstein joined Cunningham as part of a core group of up to 30 doctors who met formally at the hospital and informally in restaurants to talk about how they could stem the exodus of doctors.
A turning point came during the blizzard in January 2010 when top doctors — clinical chairs and practice heads — slogged out in the snow for a meeting at the hospital, Cunningham said.
"There was like two feet of snow," Cunningham recalled. "But that room was packed."
Frustrated by Catholic Health's local leaders, who seemed more focused on scrutinizing the remaining staff than stopping the losses, the doctors decided to ask the owners to replace those executives.
Catholic Health named an interim leader but eventually decided to sell the hospital.
Catholic Health officials declined to address the employee concerns, re-issuing a statement from last year about the sale that said the sale positions St. Joseph "to thrive in the future and serve the health needs of the people of Maryland."
The sale was a relief to other staffers, such as Michele McKee, a nurse at the hospital for 32 years. She never considered leaving, saying she just tried to focus on her work. She still prefers to talk about the care provided on her oncology unit than about the scandal.
"Morale was impacted hospital-wide and it was difficult during those times," she said. "But we knew we were doing good things here, and the sun comes out after storms."
Many patients also remained loyal, McKee said.
Lisa Hurka Covington said she is one. She delivered her son at the hospital in 1979, and her husband had been treated there for years for heart problems. When she recently needed a procedure to treat a potentially deadly infection, she only felt comfortable with a St. Joseph's doctor.
She said she wasn't put off by the "negativity."
"I had never been put under before, and I was a wreck," said Covington, a 58-year-old Rodgers Forge resident who had her surgery in May. "I entered the hospital, and something changed. I left my life in their hands, and the doctors and nurses took excellent care of me. I'm alive. My husband is alive. I'll never go to any other hospital."
Others haven't felt the same way, however, particularly about cardiology.
Before the Midei scandal, St. Joseph performed more angioplasties, the procedure in which stents are placed in blood vessels to prevent a blockage, than any other hospital in the state. It has since fallen to fourth place.
The number of such procedures has fallen statewide, due partly to the Midei scandal and partly to unrelated research indicating that they may not be as necessary as once thought. The number performed in Maryland dropped to 8,971 in 2012 from 15,571 in 2006.
There's also more competition for the procedure. Since 2006, the state approved about a dozen more hospitals to offer angioplasty to get heart attack victims faster care. And some received approval to offer the procedure to pre-emptively clear blockages, creating even more competition for services.
Still, St. Joseph has started to see a comeback. Hospital officials report that cardiac catheterization procedures, which include angioplasties, are up by over a third in the past three months compared with the same period last year. And open-heart surgeries, which also fell after the scandal, are up about 40 percent in that time.
Even if the hospital could rebuild its cardiology business, that might not be the best path, said Stephen Parente, a professor in the University of Minnesota's finance department and the director of the university's Medical Industry Leadership Institute.
Cardiology is no longer the major revenue generator it was, he said. Procedures are down nationally, as are reimbursements. And unlike orthopedics, where younger patients come for broken hips, knees and spines and return for aged ones, cardiology is more exclusively the elderly's domain.
"It was a cash cow, but public and private insurers are doing what they can to make sure it's not a giant growth center," Parente said. "If new St. Joseph management thinks, 'We did great with cardiology and we only have to hunker down and wait,' that's a cautionary note. If they understand the limitations and how the market may be different, then they're all set."
Suntha, St. Joseph's CEO, said he does expect cardiology to again be a primary revenue generator, but he also plans to focus on other existing services such as orthopedics, oncology and baby deliveries.
He said that will help refill beds at St. Joseph, where fewer patients were admitted in each of the past several years. Admissions at St. Joseph dropped to 17,111 in fiscal year 2013, down from 25,895 in fiscal year 2008, according to state data.
While hospitals in general are working to reduce patient admissions to save money by pushing more preventive care and outpatient procedures, St. Joseph's steep drop far outpaced the 5 percent decline at Maryland hospitals overall.
So far, in the first few months of this fiscal year, admissions appear to have leveled off, hospital administrators said.
Kelly and Suntha said the "revitalization strategy" also includes rebuilding the physician network, wringing inefficiencies from a combined Maryland-St. Joseph system, finding new sources of revenue such as bariatric weight-loss surgery and expanding old ones. The plan, for example, calls for boosting baby deliveries from 2,000 a year to 2,500.
"Historically, they put a lot of eggs in the cardiac basket, and they were successful for a while," Suntha said. "Will we put all our eggs back in cardiac? We better not."
Suntha said he believes cultivating and rewarding the loyal staff will be key. Already, officials have set up a wall that publicly honors individuals for outstanding work. He has also been incorporating their ideas into hospital structure.
For example, those who run the emergency department thought having doctors, as well as nurses, participate in triage would meet patient needs more quickly and efficiently. On a normally busy Monday evening recently, the waiting room was nearly empty because all of the patients had been seen, said Larry Moore, the emergency department's director of nursing.
Implementing such changes before would have meant a slow slog through out-of-town administrators, said Moore, a nine-year veteran, and Dr. Neal Frankel, on staff since 2002 and now chief of emergency medicine.
Frankel said having physician leaders such as Suntha, who still practices one day a week, and Cunningham helps smooth the process because they understand doctor and patient needs.
Maryland "afforded us real-time decision-making we never had before," Frankel said. "We can now make a quick call. And we can visit each other's institutes and improve each other's practices."
Other ideas have been implemented, too. For example, popular daily prayers were kept at the historically Catholic hospital. Many patient rooms were upgraded. In a surgical waiting room, a new electronic board tells families where their loved ones are in the process. And so-called hospitalists now also oversee all of a patient's care, from surgery to rehabilitation to chronic-disease management.
Officials also expect surgeries to grow at St. Joseph as patients who live north of Baltimore migrate from the more expensive downtown Maryland campus to the more convenient Towson site under a plan Suntha calls "one program, two locations." Already, surgeries in October rose 4.4 percent over last October, hospital officials said.
The new energy infused by the Maryland system is a relief to longtime employees and attractive to newcomers. Dr. Ruth Brocato joined about two months ago from Greater Baltimore Medical Center.
The primary-care doctor had delivered her own children at St. Joseph but turned down positions for years because she was happy in her job. She also wasn't sure about morale, even though she respected all the clinicians she knew. But she couldn't resist the new owners and Suntha.
"It's part of a teaching hospital," said Brocato, now at St. Joseph's medical group in Hereford. "And I trust Mohan. … I could grow and I could have a chance to be part of the rebuilding."
Like other staff, she believes the controversy is behind St. Joseph.
Whether enough outside doctors and patients believe that remains to be seen, but the hospital's top cheerleaders say they won't give up.
"I've lived near here for 40 years," Kelly said. "I have 22 grandkids, and 10 were born here. I knew the strengths of the hospital and what happened was a glitch. I knew it was a hospital worth saving. … All the ingredients for success were right here."
St. Joseph timeline
January 2008: Dr. Mark Midei leaves MidAtlantic Cardiovascular Associates to become a full-time employee of St. Joseph Medical Center.
April 2009: A MidAtlantic cardiologist informs one of Midei's patients — a St. Joseph's employee — that his stent was unnecessary. The man reports the concern to hospital staff.
May 2009: St. Joseph relieves Midei from duty after performing an internal review of his work.
November 2009: St. Joseph begins sending letters to roughly 600 of Midei's patients telling them they might have had unneeded stents implanted in their coronary arteries and suggesting that they see a doctor. The warnings lead to dozens of lawsuits against the hospital and Midei.
November 2010: St. Joseph agrees to a $22 million federal fine to settle kickback claims and repay Medicare funds received for questionable stents placed by Midei.
July 2011: The Maryland Board of Physicians revokes Midei's medical license.
Dec. 1, 2012: Dec. 1, 2012: The University of Maryland Medical System buys St. Joseph from Denver-based Catholic Health Initiatives for $206 million, but Catholic Health retains all liabilities related to Midei.
November 2013: A mistrial is declared in a malpractice case against Midei and the former owners of St. Joseph after jurors can't agree on damages. Earlier they had found that Midei had breached standards of medical care.