When the owners of troubled St. Joseph Medical Center put the Towson hospital up for sale a year ago, the University of Maryland Medical System didn't hesitate to put in a bid.
Medical violations by its star cardiologist had left St. Joseph in financial disarray and struggling to hang on to patients, doctors and its reputation. It faced millions of dollars in lawsuits and the prospect of a further decline.
But the UMMS board and its top executives saw opportunity in the 148-year-old Catholic medical institution started by the Sisters of St. Francis.
The rapidly expanding UMMS could finally move into the Baltimore County suburbs and serve a clientele of affluent residents, most of whom carry insurance. St. Joseph had a strong history and a core group of loyal followers even as it lost patients. The facilities were modern and technologically advanced and the hospital had strong medical programs, including cancer and orthopedics.
Even the cardiovascular program that nearly brought the hospital down was a valuable asset. St. Joseph still was one of the few hospitals in the state with a highly coveted certificate that allows it to perform heart surgeries.
UMMS beat out LifeBridge Health and St. Agnes Hospital in the bidding for St. Joseph and, after months of hammering out a deal, officially takes over control of the hospital from Denver-based Catholic Health Initiatives on Saturday.
Three UMMS executives spoke Friday about their plans for the hospital and the challenges they will face in staging a turnaround — a task they acknowledge will take time and won't be easy, but that they say can be accomplished.
"We think we can bring this hospital back to where it has been historically, but also to the next level," said Robert A. Chrencik, president and CEO of UMMS. "There were big-time strategic reasons for us to be interested in St. Joe's."
Doctors at the hospital said they hope the new ownership means that St. Joseph can move past the turmoil that began three years ago when the hospital disclosed to hundreds of patients that cardiologist Mark Midei placed stents in their arteries when they might not have needed them.
Midei was forced to resign and the Maryland Board of Physicians revoked his state license. He has maintained he did nothing differently than doctors across the country and that Catholic Health Initiatives used him as a scapegoat.
"There is definitely an element of relief because the hospital has gone through dark days," said David Dalury, chief of orthopedics at St. Joseph. "Overall there is excitement. I think this will be a great win for everybody."
UMMS would not release financial details of its acquisition, but Chrencik said the hospital is not taking on any of St. Joseph's debts or liabilities, allowing it to focus on increasing revenue. The system also won't be responsible for any lawsuits stemming from the Midei case.
St. Joseph has lost about 25 percent of its annual revenue during the Midei ordeal. The hospital once brought in about $400 million a year, compared to about $300 million annually now. Operating losses were $24 million in fiscal year 2012, which ended June 30.
Revenue growth will depend on increasing patient volume, said Dr. Mohan Suntha, the radiation oncologist who was tapped to take over as president and CEO of St. Joseph. In the first 12 to 18 months, he will lead a campaign that includes reminding people of the strong medical programs that exist at the hospital, while using UMMS resources to build up other programs, such as primary care.
A large part of the hospital's task will be rebuilding credibility and trust with potential patients by leveraging the UMMS brand and medical reputation. Suntha said the cardiac stent issue "besmirched" the hospital and some providers stopped sending patients there.
"As confidence gets rebuilt, providers that may have turned away from St. Joseph over the last few years will turn back," Suntha said.
As part of its takeover, UMMS also signed an agreement with the Catholic Church to follow its religious principles and beliefs.
UMMS said it expects to begin staff and medical program enhancements immediately, but overall changes will take time. Conservatively, Chrencik said, he expects it to take three to four years for revenue to return to prior levels.
Former state Sen. Francis X. Kelly, a UMMS board member who will chair the board of St. Joseph, said stable leadership also will help the hospital.
Other doctors there described the merger as positive.
Dr. Michael Schultz, who heads St. Joseph's breast cancer center and is interim director of its cancer institute, said the hospital will benefit from the prestige and research abilities of the Greenebaum Cancer Center at UMMS.
"Not only is it a destination cancer center, but more importantly, we will have access to many significant and numerous clinical trials for all of our sub-specialty cancers," Schultz said. "Clinical trials are essential to providing superior cancer trials, and UMMS is a leader nationally in those endeavors."
Kevin Stierer, chief of cardiac thoracic anesthesia and president of the medical staff at St. Joseph, said: "It has been challenging for everyone for the last three years, but we expect positive changes."
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