Printer-friendly format

Kenneth Venuto

In these desperate times, a Brentwood healthcare consulting and management company has launched a subsidiary to help hospitals with potentially desperate measures. Called Intensive Resource Group, the new company offers short-term, rigorous services to hospitals facing severe economic challenges.

"Many hospitals are starting to have a downturn in their operations that is happening, in many cases I believe, much more rapidly than anyone would have predicted," IRG President Kenneth Venuto said. He boasts 30 years of financial and operations experience in both public and private healthcare settings. The last 20 years have been with Quorum Health Resources, IRG's parent company.

Quorum has been around for three decades, providing consulting, management, construction and education support for hospitals and their executives. Typically, when Quorum has a management contract with a hospital, one of their consultants serves as the chief executive officer and chief financial officer. IRG might do the same for its clients.

Quorum boasts about 150 hospital clients, most in the not-for-profit sector and from all across the country. Since IRG began operations late last year, more than 10 hospitals have signed on, including facilities in California, Pennsylvania and Washington, D.C. "The synergies between Quorum and IRG work so well," Venuto said.

The name Intensive Resource Group isn't a new one. Quorum actually started IRG in 1989 because of market demand. As the company matured, it was rebranded as Cambio Health Solutions and spun off. Quorum, however, retained the rights to the IRG name. "Yet we still continued to get the phone calls and the inquiries from various clients in the industry about the Intensive Resource-type services," Venuto recalled. As the economy worsened, the number of calls increased. "So we decided to re-energize the name, set it up as a separate sub and make it another Quorum Health Resources service offering.

"At IRG, we target hospitals that are having some financial problems, or hospitals that are predicting some problems and want to avert that up front," Venuto continued, adding that, generally, IRG should wrap up services to a client in 10 months to two years.

IRG recently was hired by a hospital just a few weeks away from bankruptcy. "The reason we were retained was, in large part, to move them through that process," Venuto said. "As an organization moves through that process, it's very stressful and obviously very emotional, but that's the time for some cool-headed thinking, and it's the time to identify issues and problems and address them quickly and decisively." Another recent client was at risk of defaulting on its bond covenants before IRG stepped in.

IRG consultants help distressed hospitals with communication – with its board, the community and medical staff. "From our point of view, it's very important obviously to be focused internally, but it's also important to be focused externally. Quite frankly, as we begin to work with a new client, individuals who are in the organization perhaps are too close to it. They don't recognize the need; or they recognize it too late; or there's denial," Venuto said.

Sometimes, temporary interim management can "give the organization a chance to essentially catch up to itself," he said. "We have experts in numerous disciplines, and a second or even a third set of eyes is usually very, very productive for the hospital."

In addition to financial expertise, IRG consultants bring to the table management, personnel and operations knowledge. That's why IRG is working with one client as the facility tackles the job of reacquiring its accreditation.

"Although we look very intently at distress situations, keep in mind that's not the entire book of business. If you think it through, some hospitals may need assistance with sales or acquisitions of other facilities or mergers with other facilities," Venuto said. "Frequently, we find hospitals are in need of evaluating sustainable process improvement, and that's typically a combination of financial, operational and strategic concepts."

That said, IRG's prime directive is to turn around ailing hospitals, and in this dismal economy, that can be a tall order. "I have to tell you candidly, I've seen a lot of difficult times, but I don't remember ever seeing situations like this where the access to capital was so tight that hospitals are just postponing capital projects on a regular basis and, in some cases, are actually stopping projects until things get better," Venuto said, adding his observation applies to hospitals of all sizes... in all markets...8 including hospitals with good credit ratings.

In preparation of launching IRG, Venuto and two other colleagues spent significant time in New York last fall, talking to investment bankers, financial advisers, professionals at rating agencies and bond insurers. "For the most part, they told us that we had already been in what they call a recession for about a year, but their thinking is it will be another two-to-three years before this really gets straightened out. Who knows how that will really go?"

Venuto acknowledges that stepping into a troubled hospital, where nerves are already frayed, can be a tough situation. "We're human beings like everyone else, and we have the same emotions as everyone else. In our business, we have to be very objective, though, and we have to be very discerning; and we have to be very analytical. That's our role," he said. Saving a hospital may require laying off employees, downsizing or eliminating departments or renegotiating contracts. "That's never easy, and it's never fun," he said, "but those are the types of things that happen when, all of a sudden, the fiscal operation is going in the wrong the direction."

Quorum and IRG are owned by Community Health Systems, which owns or operates 120 hospitals in 29 states.


www.qhr.com

Tags:

Community Health Systems, financially troubled hospitals, hospital managaement, hospital turnaround, Intensive Resource Group, Kenneth Venuto, Quorum Health Resources

Login and voice your opinion!