The Baltimore & Ohio Railroad Museum could be on the verge of a westward expansion, according to its executive director, who says the West Pratt Street museum is "seriously" thinking of buying the adjacent campus of Baltimore Behavioral Health Inc.
Officials from the museum and the nonprofit mental health clinic signed a letter of intent Friday, giving the museum 90 days to scrutinize the two long brick buildings that house BBH's main clinic operation, said Courtney B. Wilson, the museum's head.
Wilson said BBH has expressed interest in leasing back one of the two buildings, meaning that a sale of the 3.7-acre campus could allow the outpatient clinic to shed its mortgage debt and downsize at a time when questions have arisen about its finances.
William "Kris" Hathaway, BBH's chief executive officer, has notified the city of the talks, according to city officials. He declined to comment Friday. Wilson said Hathaway approached the museum to gauge its interest in buying the property.
While Wilson said he does not know if a price has been discussed, the museum's board of directors has set up a committee to negotiate with Hathaway. BBH, founded 13 years ago, paid $3.29 million in 2004 for the two buildings and a parking lot, according to property records. State records show a $3.31 million assessment as of July. (BBH also rents a building on Poppleton Street and several area rowhouses.)
The two buildings, at 1001 and 1101 W. Pratt, were once part of the B&O's vast Mount Clare Shops complex that sprawled across Southwest Baltimore. The landmark 1884 roundhouse — the museum's visible focal point — rises due east of BBH's campus.
"Acquiring original B&O buildings is one of the reasons we're seriously looking at it," Wilson said of the BBH site.
Built around 1916, two-story 1001 W. Pratt housed the carpentry shop, he said. The other building, constructed a decade or so later, held the railroad's research and development lab and offices on its three levels. Most B&O structures in the area were razed years ago.
Wilson said it's too early to say whether a purchase would make sense for the museum, let alone how the parcel might be used. But he said the museum, which rebuilt the 22-sided roundhouse after a major snowfall collapsed the roof in 2003, can afford to buy the property.
"The B&O Museum is probably in the best financial shape of any nonprofit I know," he said. "We have been consistently running, on an annual basis, break-even or minor surpluses. We currently don't have any debt."
Wilson says Hathaway approached him a little over a month ago. "He gave me a call and said, 'Look, BBH is looking at maybe retrenching in smaller space or thinking about selling the property,'" Wilson recalled. Wilson understands that a group of doctors might also be interested in the site.
During the past six months, BBH has laid off staff and met with city officials to discuss concerns about its finances. More recently, two former BBH employees provided The Baltimore Sun documentation showing that nine months' worth of retirement savings deducted from their paychecks by BBH since last year had not been deposited in their accounts.
Last week, the state fined BBH $90,000 for inappropriately employing a psychiatrist who had pleaded guilty to Medicaid fraud several years earlier. The fine equaled the salary and benefits BBH paid Dr. Roman Ostrovsky over 14 months. Ostrovsky, who has declined to comment, served for a time as BBH's medical services administrator.
Hathaway said Thursday he could not comment on the fine because he had not seen the decision. Last month he said BBH had taken steps to comply with Medicaid employment rules and enacted measures to make sure it would stay in compliance. BBH has 30 days to appeal the fine.
Hathaway has also said issues with the company's retirement plan would be resolved by the middle of this month. He acknowledged meeting with city officials to discuss BBH's finances but emphasized that his clinic has never asked the city for financial aid.
BBH was the subject of a recent Sun investigation that revealed high Medicaid billings at the clinic, which specializes in treating people who have drug addiction and mental illness diagnoses. As its Medicaid billings rose in recent years, so did the salaries of top BBH executives, totaling $1.4 million last year for Hathaway and five of his family members.
According to the investigation, some former BBH patients and employees and outside doctors say the clinic has been diagnosing mental illness in some patients whose main affliction is drug addiction.
As of July, BBH said it was treating about 800 patients. But the state's efforts to rein in high-cost Medicaid billings have cut into BBH's revenue: It received $11 million in public funds in fiscal 2010, down from $17 million the year before.
State health regulators started investigating BBH earlier this year, after The Sun began its examination. The state's probe is continuing.