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Boston Globe: Boston Medical Center’s CEO may have the toughest health care job in Massachusetts

Boston Medical Center’s CEO may have the toughest health care job in Massachusetts

By Robert Weisman

Globe Staff 

Kate Walsh has worked for the region’s dominant health care system and for a leading global drug maker. But her education on urban health issues – and the challenge of leading the state’s largest safety net hospital in a sluggish economy – began just 18 months ago when she took over as chief executive of Boston Medical Center.

The vast majority of the hospital’s patients come from low-income families. Many are elderly, disabled, or recent immigrants struggling with their English. Most get health insurance from the state or federal governments. Some have difficulty getting to the South End hospital from homes and jobs in far-flung neighborhoods.

“If you’re a working poor person and you have to take a day off to go to the doctor, you don’t get paid,’’ Walsh said, citing one of the many lessons she has learned since arriving at BMC.

Running the Boston University teaching hospital may be the toughest health care job in Massachusetts. BMC, formed through the 1996 merger of Boston City Hospital and neighboring University Hospital, lost $25.6 million last year, more than any other hospital in the state. It has been forced to close an emergency room and eliminate 245 jobs in the past year.

And with fresh cuts expected in Medicaid and Medicare – the government insurance programs for low-income and older patients that account for 75 percent of the hospital’s revenue – Walsh’s job is about to get even more difficult.

‘Boston Medical Center has to be more competitive. We have to be better, quicker, smarter.’

“We’re still challenged,’’ she said. “Boston Medical Center has to be more competitive. We have to be better, quicker, smarter.’’

Walsh, 55, the daughter of a Brookline police detective, held executive posts at Brigham and Women’s Hospital in Boston and Novartis Institutes for Biomedical Research in Cambridge before joining BMC. She has worked to strengthen the hospital’s operations and financial position, while raising its profile in the crowded Boston health care marketplace.

She negotiated higher reimbursements from private insurers to help offset the cuts from state and federal government payers. She presided over the opening of a new ambulatory center with funds donated by the Shapiro family’s philanthropic arm. She also launched or expanded a series of initiatives designed to make medical care better and more efficient while improving BMC’s relationship with more than a dozen community health centers in the city.

As part of that outreach, BMC buses patients between community centers and the hospital campus. It also operates a food pantry that serves more than 7,500 patients a month. And along with safety net hospitals in New York, Florida, and Colorado, it has applied for federal funds to create a model for an “accountable care organization’’ serving low-income patients.

BMC already runs a Medicaid managed care health insurance arm, BMC Health Net Plan, that operates statewide and would be a linchpin of the new health care model.

But most important to the future of the hospital are negotiations in Washington, D.C., between state and federal officials on a round of supplemental federal funding needed to support BMC for the next three years. The parties have set a Sept. 30 deadline to agree on so-called waiver payments that will flow to BMC and other hospitals with high percentages of low-income patients, such as Brockton Hospital and Lawrence General Hospital.

Under the waiver, additional money is awarded to hospitals that serve a disproportionate share of low-income patients in states that experiment with innovations to provide improved, more efficient care. Massachusetts officials are seeking at least $115 million annually from 2012 to 2014, including about $90 million for BMC. How the budget-cutting and debt-reduction now being played out in Washington will affect waiver money remains to be seen.

“These funds are critical to BMC,’’ said Thomas P. Traylor, the hospital’s vice president for federal, state, and local programs.

To understand the scope of the challenges facing BMC, you only have to visit the primary care doctors suite at BMC’s new Shapiro Ambulatory Care Center across the street from Walsh’s office.

Just before noon one recent drizzly day, Dr. Thomas Barber had already seen nearly a dozen patients. Among them: a homeless Dominican man with mental health issues, a woman in chronic pain reluctant to go out on disability from her clerical job, a transgender woman feeling phantom spasms after her leg was amputated, a Nigerian immigrant suffering from diabetes and hypertension, and an ex-convict being treated for neck cancer.

“Every day is like this,’’ Barber said. “You can see it’s never dull.’’

While BMC doctors prefer to concentrate on treating patients, the financial shadow hanging over the institution always lurks. Last year, credit rating agency Standard & Poor’s lowered its rating on BMC from A- to BBB+, citing its financial losses and reduced government payments. The hospital has since managed to narrow its operating deficit, but Standard & Poor’s reaffirmed the lower rating in a report earlier this year.

It gave a favorable review of Walsh, management, and the hospital’s board. But the rating agency also warned that “future supplemental revenue and Medicaid cuts related to (state) fiscal pressures remain uncertain and therefore, the outlook remains negative.’’

BMC completes its fiscal year Sept. 30 and is expected to report improved finances from a year ago, largely because of its rigorous expense control.

Dianne J. Anderson, chief executive of Lawrence General Hospital, another safety net hospital awaiting waiver funding, said she understands Walsh’s challenge. Like the BMC chief, Anderson previously worked at a Harvard-affiliated teaching hospital – in her case, Beth Israel Deaconess Medical Center – that was less dependent on government payers and received heftier reimbursements from private insurers.

Anderson said hospitals such as BMC and Lawrence General are further along in creating lean organizations and new health care delivery models – because they had to. “We can be an important part of the solution in addressing health care costs,’’ she said. “But we have to be adequately reimbursed to make the investments we need to make.’’

Walsh has worked to reduce costs while preserving BMC’s health care services, said Michael J. Widmer, president of the Massachusetts Taxpayers Association, a nonprofit policy research firm. “Those things can only go so far,’’ Widmer said. “That’s the dilemma that Kate and her team face. There’s a whole variety of factors that are putting fiscal stress on the health care system in the state and the stress has been more intense for Boston Medical Center.’’

Meantime, the hospital’s doctors have adopted an approach that has become common in many industries because of the economy: They are trying to do more with less.

“Every day feels harder and harder because the resources are declining,’’ said Dr. Ravin Davidoff, the chief medical officer.

“That’s the reality. But we’re also working smarter. It feels like the pressure we’re under is pushing us to do things in a more innovative way.’’

Robert Weisman can be reached at