Labor shortages spark innovation: an interview with Gerald F. O'Neill - Executive Insights - Holy Family Hospital and Medical Center's senior vice president and CFO - Interview

Healthcare Financial Management, Jan, 2003

O'Neill: We offer a broad spectrum of services. As an acute care facility we have all the traditional acute care services--medical, surgical, obstetrics, psychiatry.

But we also have some unique aspects; we have a cancer management center that for 10 years had been the only service of its type available in the Merrimack Valley, and we also perform a fair number of neuro-surgical procedures for a community hospital. In fact, some prominent celebrities have had their neuro-surgery done here at Holy Family.

HFM: How is it that you're so highly sought after for neurosurgery?

O'Neill: Years ago, the hospital made an arrangement with a group of neurosurgeons in the area and made the necessary capital investments to ensure that we had the latest in technology and also trained operating staff to assist the surgeons. We were the first community hospital in the country to have a fixed PET scan on site. Those features gave us a prominent niche in the marketplace.

HFM: Are you developing new service areas or expanding in any other ways?

O'Neill: Holy Family is blessed with about 75 acres of land, so we have an opportunity to expand, and we are taking advantage of that opportunity right now. We broke ground this past July on a $22 million, 55,000 square-foot building addition, which will also include renovation of about 29,000 square feet in the existing plant. The project will be completed in the spring of 2004 and will provide space for new operating rooms, laboratory and diagnostic imaging services, and increased maternity capacity. This expansion has been necessary to continue to meet the demand for services.

HFM: How did you access capital for this expansion?

O'Neill: The Caritas Christi Health System, of which we are a part, undertook a $198 million bond issue in 1999, and Holy Family received $15 million of the debt proceeds. Holy Family also has raised $6.3 million to date from a capital fund-raising drive in the community so there will be a minimal equity contribution required from funded depreciation reserves. The fund-raising consultants had projected we would raise only about $3 million from the community, but because of the strong commitment of our medical staff, employees, volunteers, trustees, and businesses in the community we were able to raise more than twice that amount. To get that kind of support from the community is extraordinary.

HFM: How do you determine whether expending capital in a particular area is going to provide sufficient benefit to draw patients?

O'Neill: We rely on our department heads to keep abreast of what is current in their particular areas of specialty, and they become the champions for promoting acquisition of new equipment. Obviously we also perform financial feasibility studies on big-ticket items, but that's only one element. As a mission- and faith-based system, we're not just motivated by the bottom line, so it's always a rationing process--one area of the hospital benefits from a larger proportion of expenditures one year, and the next year, that area will take a back seat to another area. We have to use that approach because there's never enough money to meet all the demands.