From the Triad Business Journal:
Jul 16, 2021, 7:22am EDT
On the cusp of a century of serving Randolph County, an employer of nearly 1,100 was on the verge of closing.
Randolph Health filed for bankruptcy in March 2020 and was in search of a buyer to help it keep its doors open; something that 181 other rural hospitals in America, seven in North Carolina, could not do.
Randolph was initially seeking to partner with a major local player, Cone Health, before Cone ended those talks. In the end, the hospital was swept up by a virtually unknown entity without the rich history of Randolph Health.
American Healthcare Systems outbid LLOYD WHITTINGTON the likes of the DAVA Foundation and Java Medical to acquire Randolph Health in October 2020. The final purchase price was $10.2 million, and the new owner expects to quickly turn Randolph Health into a profitable operation.
AHS was founded by Michael Sarian, a 30-year health care veteran, just a month before the company bid on Randolph Health. Before founding and serving as both president and CEO of AHS, Sarian was the president of hospital operations at Prime Healthcare in Ontario, California, from June 2012 to June 2020.
In his time at Prime Healthcare, the system grew from 20 hospitals in 2012 to 46 hospitals in 2020.
The purchase of Randolph Health is AHS’ first venture, and Sarian has high hopes for the hospital.
“We came across this beautiful hospital that was poorly run and managed in the past,” Sarian said. “As most people saw it as in distress, I saw it as an opportunity.”
In the first 90 days, Sarian said he expects to see Randolph making a profit of $500,000 a month, totaling $6 to $7 million per year. Within a year, Sarian is aiming for $1 million a month.
That would be substantially better than the hospital’s recent performance of losing, on average, $300,000 every month, Sarian said.
His plan for sustainability at Randolph includes investing in existing facilities, increasing the number of services offered at the hospital and upgrading equipment.
“We’re going to get started soon, once we get all the licenses from the city and every department that needs to approve it,” Sarian said. “The contractors are already there … we have architects looking at it. So, once we get that very soon, you’re going to see changes coming.”
Sarian said that Randolph Health was lacking in “direction and leadership” before AHS came in.
Now, the hospital will start anew with no debt and a new leader in place.
New leader takes over
The leader coming in to steady the ship is Tim Ford, a health care executive with three decades of experience in the industry.
I don’t want to speak to previous leadership and the previous situation. I just want to go forward with my leadership,” said Ford, who described himself as an approachable leader.
‘l believe in nurturing the team. I tend not to be a micromanager.”
The bankruptcy has freed the hospital financially to look at growth opportunities and fund other projects.
Following the bankruptcy filing, the hospital and Randolph County officials applied to the Rural Healthcare Stabilization Program for a $20 million loan. In May, a loan of $12 million was approved by the Local Government Commission despite UNC Health, which had a lead role with the loan program committee, recommending denying the request. UNC Health contended the plan did not represent “a realistic and feasible path forward for Randolph Health.’
The $12 million loan will be dispersed in increments of $3 million per year for four years, according to Sarian.
Ford said the hospital has discovered it needs to increase its gastroenterology capabilities. Currently, Randolph has two Gl doctors but needs to have at least one to two more doctors to have 24/7 emergency coverage.
“That’s our top priority because we can document that two or three patients are being transferred out and could stay in the community on a daily basis,” Ford said. “We’ve determined that we want to try to do by August.”
Ford said they have also recognized a growing need in the Randolph County area for increased neurology and cardiology services. Randolph has one neurologist and four cardiologists, Ford said, and is looking to add specialists in those areas as well.
“We want to take a look at those services .. and see what we can do to expand,” Ford said.
Ford was the CEO of Blowing Rock Hospital from June 2007 to October 2013, when it closed. He is confident Randolph Health will not meet the same fate as Blowing Rock and the six other rural hospitals that have closed in North Carolina since 2005.
Ford credited the firm foundation of the medical staff at Randolph, the support of the community and Randolph County officials, and the expertise of Sarian for his confidence. “Those are all ingredients for a successful organization,” Ford said.
‘No longer dependent on Cone’
Another change this deal will bring about is the end of a longtime partnership between Randolph Health and Cone Health. The entities previously partnered on the Randolph Health Cancer
Center and the Randolph Health StayWell Senior Care program.
A management contract that the health care providers had for many years was voided by the completion of AHS’ purchase, Sarian said.
“We are no longer dependent on Cone’s administrative team. We are no longer dependent on Cone’s hospital team,” Sarian said.
Added Ford, “We’re a new organization and we don’t have that direct tie with Cone. We certainly want to continue to work with Cone and other tertiary providers in our region and try to develop situations where we can benefit each other.”
The Cone Health doctors who were working with Randolph Health are no longer at the hospital, Sarian said, and he has brought in 12 new doctors who work exclusively with Randolph.
Ford said the systems are negotiating about the future of the cancer center, which is 60% owned by Randolph and 40% owned by Cone.
‘l think the plans are certainly to continue to have those services available in the county, and as far as ownership, that’s being resolved,” Ford said.
Challenges that remain for Randolph are dealing with the aftermath of the Covid-19 pandemic and staffing issues, which Ford said he plans to solve by building Randolph’s own nursing staff rather than using an agency.
‘Over last week and this week, we have been really trying to get out and communicate with our staff and talk about the future,” said April Thornton, senior director of public relations at Randolph
Health. “They’re excited to hear a growth strategy. For so long, we haven’t been able to grow, and now having that opportunity with these services, I think they’re really excited.”
Triad Business Journal