Number Two: Fletcher Allen regaining respect piece by piece

Vermont Business Magazine, Jan 01, 2005 by Kelley, Kevin

Fletcher Allen president and CEO Dr Melinda Estes is struggling to pair Vermont's largest hospital following a scandal that she likens to "the wheel falling off the bus."

Her main mission since taking over 16 months ago, Estes says, has been to "rebuild trust" in one of the state's most economically important institutions. It hasn't been a quick or easy undertaking.

Fletcher Allen Health Care is Vermont's third largest employer behind the state of Vermont and IBM, and is now the second largest business, albeit nonprofit, at $568 million in revenues.

Estes acknowledges that the hospital is still hurting as a result of management misdeeds related to a giant expansion plan dubbed the Renaissance Project. Revelations of malfeasance or incompetence on the part of top officials shattered Fletcher Allen's image in the communitices it serves and left its staff demoralized and angry.

"I was really struck by how wounded the workforce was," Estes recounts. "People were hearing from friends and neighbors, ""How can you work at Fletcher Allen?'"

Rebuilding trust both internally and externally will be a "piece-by-piece process," Estes says. The steps she is taking include town hall-style meetings with hospital staff in various departments and frequent talks to community groups throughout Vermont.

Some progress toward her goal is discernible, Estes finds.

In keeping with the hospital's new emphasis on transparency, Fletcher Allen workers tell her that at least the information they get through in-house communications is now the same as what they read or hear in the media. And not all the comments at public meetings are critical or skeptical, Estes adds. She says she regularly hears compliments about the quality of care provided by Fletcher Allen.

But the hospital" will probably continue to experience fallout from the Renaissance scandal for many months to come. Additional criminal proceedings are expected following the recent admissions of guilt by former chief operating officer Thad Krupka. He pleaded guilty to three misdemeanor counts of making false claims to health care regulators concerning the cost of the Renaissance Project. Krupka could face up to six months of jail time, but prosecutors indicated that he will be spared imprisonment if he continues to cooperate with state and federal investigators.

In a separate civil deal, Krupka agreed to forfeit a $170,000 portion of the pay he received from Fletcher Allen. The hospital itself has had to pay $1.3 million in state and federal fines.

William Boettcher, CEO at the time of the Renaissance-related deceptions, resigned his post more than two years ago. Fletcher Allen's 18-member board has also undergone a complete transformation in the time since the revelations of wrongdoing began to emerge.

Three new trustees were appointed in mid-December. They include Rita Markley, director of the Committee on Temporary Shelter; Alan Charron, former administrator of the Vermont Department of Health; and Daniel Chirco, president of Bogner of America, a sportswear company.

The current board is "very active" in ensuring that the hospital adheres to the highest ethical standards, Estes says. She concedes that the previous board "may not have been as active as you would like it to be."

Fletcher Allen's management structure is also undergoing a makeover. As many as 50 management positions are being cut and 20 created in accordance with a reorganization Estes has initiated. The moves are primarily meant to make the hospital more responsive to patients' needs, but the shake-up could also save up to $2 million in expenses.

As a 51-year-old neurologist with a master's degree in business administration, Estes is well acquainted with issues concerning patient care as well as with the intricacies of running a large medical facility. She came to Fletcher Allen from the Cleveland Clinic Florida, where she served as CEO and chair of the board of governors.

Along with the effort to restore trust, Estes says that quality of care will be the focus of her tenure at Fletcher Allen. She has a three-year contract that paid her $625,000, along with as much as $75,000 in retirement set-asides, in its first year.

The hospital's quality of care is high, Estes says, and has not been negatively affected by the Renaissance imbroglio. Fletcher Allen aims to be "a top performer on anything we are asked to measure or choose to measure," she declares.

Although Fletcher Allen is not a large institution in comparison with many of the other 125 academic medical centers in the country, it does have a dominant presence in Vermont. Fletcher Allen staff includes 700 physicians and 1200 nurses working at 40 patient care sites and 100 outreach clinics throughout Vermont and northern New York. The hospital says it serves a population of more than one million people.

Fletcher Allen also wields considerable economic power. Its finances appear healthy at present, with net income of $7.1 million reported for the first nine months of fiscal 2004. That was a marked improvement over the $5.3 million loss the hospital suffered in the previous year.