By Paul Skowron, CEO Surgical Hospital of Munster Five years after turning around Calumet Surgery Center in northwest Indiana, we converted it to a four-OR, nine-bed surgical hospital. Surgical Hospital of Munster (SHM). The conversion was sufficiently complete by Labor Day 2008, so my Operational Tour of Duty at SHM was coming to a close. Licenses were in place, and provider numbers and contracts were sufficient, allowing the hospital to return to 80 percent of its prior volume and growing. Cash flow was returning to normal, and clean bills were going out the door. I could return to the Regent office and focus on company-wide priorities. No sooner had I put my bags down when Denise Cheek, Chief Operating Officer of SHM called me. On Saturday, September 13, Northern Indiana experienced the worst rainstorm since 1954, and the newly renovated hospital was flooding. A tributary of the Little Calumet River, less than a football field away, was spilling over its banks. Within 24 hours, one square-mile of businesses and residential areas in Munster was under water. Denise immediately contacted employees and enlisted their help to move $1 million of surgical equipment from the first floor to the second before losing power and use of the elevators. On Day Two of the flood, I stood in the waiting area of Munster with Denise, both of us in our waders with water up to our thighs. The entire first floor, including all four operating rooms, was in the same condition. After recently presiding over the grand opening of the newly renovated surgical hospital, Denise looked like Little Orphan Annie who had just lost her dog. We couldn’t stand around feeling sorry for ourselves though, and a sense of urgency quickly developed. Physician board members had their own problems with the adjoining Hammond Clinic also flooded, and relied entirely on Regent management to formulate a Plan of Correction. Michael Karnes, Regent co-founder and Chief Financial Officer, developed a financial projection that dictated the timeline to remediate this disaster and rebuild based on available insurance coverage and potential debt restructuring. He determined that we must re-open by December 15. Not that we thought it was possible at the time, but it set the tone and the challenge – a 90 day turnaround time. In record time, a nationally recognized flood remediation firm was located, negotiated with and pushed through legal. Mike managed the coordination of insurance coverage with Mesirow Financial to secure the maximum property, contents and business interruption coverage under flood conditions. We were moving in the right direction. Now, onto the clean up and rebuilding process. Fortunately, the same local general contractor who had just renovated the facility was available to coordinate a seamless transition from flood remediation to reconstruction. The general contractor expedited occupancy permits with the City, local utilities and FEMA. Regent team members continued to pull their weight in the wake of the flood working toward an expedited re-opening date. Mike Karnes developed a debt-restructuring plan. The plan had to be negotiated with the bank and then approved by the Board. The multi-tiered plan was designed with maximum coverage for the facility and minimum exposure for shareholders, taking into consideration that the physicians had their own facilities to reconstruct. Joyce Deno, Chief Operations Officer, Eastern Region and Carla Daley, Director of Clinical Operations, Eastern Region managed all aspects of the project related to infection control, re-licensing of the facility and clinical advising regarding what to salvage, and what to replace. In addition to interim Chief Financial Officer, I worked with Denise to coordinate subcontractors each day to keep the plan on course. The Regent team, Denise and her staff demonstrated an extremely high level of determination and dedication that ultimately resulted in success. The Surgical Hospital of Munster received State Inspection approval on December 12, three days ahead of schedule. While Regent was significantly invested during these three months, the management fee charged was substantially less than usual since there were no cases being conducted and no incoming cash flow. True, Regent had a vested interest in opening as soon as possible, but that is the beauty of the partnership model, a motivated minority investor and manager with the best interest in mind for all players.
Pictures From the Flood