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UMass Memorial Health Care has brought finances back from the brink

UMass Memorial, with its Worcester teaching hospital (above), is the dominant health care provider in Central Massachusetts. Its CEO, Dr. Eric W. Dickson, is helping turn its finances around.PAT GREENHOUSE/GLOBE STAFF

WORCESTER — In all the years Dr. Eric W. Dickson worked in UMass Memorial Health Care’s big emergency room here, moving from one patient to the next, he never dreamed that one day he might run the whole health system.

But in 2013, Dickson got the job. And it turned out that all those days and nights in emergency medicine were good training.

When Dickson took over as chief executive of UMass Memorial, the dominant health care provider in Central Massachusetts, the privately run nonprofit was losing millions of dollars a month. It was dangerously close to defaulting on its bonds. Patients were choosing other hospitals. Executives were jumping ship, and employees were unhappy.


Dickson needed to think like an ER doctor again: Identify the most serious problem, deal with it, and move on to the next. He made a series of drastic cuts and changes — some of them unpopular — to turn around the system.

Two and a half years later, the network of four hospitals, with a combined 12,906 employees and 1,099 beds, has returned to financial stability, and is aggressively vying for patients in the competitive and changing world of health care.

“We came back from the brink,” Dickson likes to say.

“We came back from the brink,” says UMass Memorial Health Care chief executive Dr. Eric W. Dickson.Pat Greenhouse/Globe Staff/Globe Staff

Dickson, 49, was president of UMass Memorial’s group of more than 1,000 physicians when, he said, the company’s board asked him to apply for the chief executive job, to replace John G. O’Brien, who planned to retire. The board had already spent more than a year searching nationwide for a new leader, interviewing more than a dozen candidates. It ultimately settled on Dickson because he was a physician who grew up in the system.

Only after taking the job did he realize the dysfunction he was inheriting. UMass Memorial lost $8 million in February 2013, the month Dickson took over. It lost $10 million the next month. At its flagship teaching hospital in Worcester, UMass Memorial Medical Center, disgruntled nurses were threatening to strike. The medical center, which, like other big teaching hospitals, has high costs associated with medical research and training new doctors, was losing business to cheaper competitors, including Saint Vincent Hospital in Worcester. And UMass Memorial almost failed to make payments on its $350 million in bonds, which would have put the board and leadership at risk of losing control of the organization.


“I’m an emergency physician: Chaos has been my life for a long time, making order out of the chaos,” said Dickson, a former reserve Army medic. “You just don’t have a lot of time, and you have to make quick decisions in the emergency department. That training is serving me extremely well.”

UMass Memorial’s board chairman, David Bennett, blames the financial problems on a changing health care environment that was squeezing all big hospital systems that had relied on filling hospital beds to make money. Increasingly, health care payments are changing to reward providers that give care at lower costs and work to keep patients healthy and out of hospitals.

“I’m not sure that could be avoided,” Bennett said. “Lots of institutions faced the same challenges we did.”

But UMass Memorial’s situation was more dire, Dickson acknowledged, partly because the system was slow to transition to a new leader and had fallen behind on making changes to adapt to new state and federal health care laws. As a result, he took measures that were more extreme.


Dickson quickly moved to cut 600 employees from the workforce, including clinical and administrative staff. He sold eight buildings. He closed operating rooms and hospital units. He negotiated a deal with the nurses union just hours before a planned strike in Worcester. He transferred Wing Memorial Hospital in Palmer to Baystate Health of Springfield, so UMass Memorial executives could focus on their operations in and around Worcester.

The layoffs especially hit hard. “A lot of people were really upset,” said Dr. Neal Tyrrell, a pediatrician who has worked at UMass Memorial Medical Center for 10 years. “Morale was at an all-time low.”

“Morale was at an all-time low” after layoffs, said Dr. Neal Tyrrell, a UMass Memorial Medical Center pediatrician.The Boston Globe/Globe Staff

Meanwhile, Dickson and his team looked for ways to make the business more efficient. They centralized scheduling at one website and one call center, so patients could more easily book appointments. They started buying supplies — surgical gloves, medications, and the like — for the entire hospital network together, in an effort to negotiate better rates.

UMass Memorial lost $57 million on operations in the fiscal year that ended in September 2013. Last year, that reversed to a $54 million surplus, and the system expects to report another profit for fiscal 2015.

Dickson might have stopped the bleeding, but challenges loom for UMass Memorial and other big hospital systems. It faces new pressures to control costs and adapt to changes in the way health care is paid for. And it must find a way to keep and grow its patient base when the competition is intense.


One of Dickson’s biggest initiatives is pushing what are known as lean management principles, a style traditionally used to root out waste in the manufacturing industry. This includes posting key goals and ideas for improvement on workplace walls, from executive meeting rooms to patient floors. Employees throughout the system are required to generate ideas for how to improve operations. These can be as small as moving where gloves are kept in a patient room so they’re easier to access, to putting a computer on wheels to help physicians complete their rounds more quickly.

Employees’ ideas — the ones just proposed as well as the ones already implemented — are posted on bulletin boards in each hospital department. So far, UMass Memorial has implemented 20,000 ideas that came from staff, from food service workers to nurses and doctors, Dickson said.

Some employees have embraced the new system. “People feel like they have a voice,” said Tyrrell, the pediatrician. “When people feel heard and see results, things change.”

Not all of Dickson’s changes have been welcome. Part of his strategy has been to streamline operations by acquiring privately owned doctors groups that work in UMass Memorial hospitals. But one group, which runs the unit for premature and sick newborn babies in Worcester, has refused to give up its independence.

“The issue with us is strictly control. They want control of the unit,” said Dr. Joel Weiner, a newborn medicine specialist who has worked at UMass Memorial as part of the private doctors group for 30 years.


Weiner and his colleagues believe patient care will suffer if they have to report to executives who they say are too focused on the bottom line and will force them to cut short patient time. “The hospital will say you’re not generating enough money, you’re sitting around,” Weiner said.

Dickson said the doctors in the newborn unit should not be allowed to charge “whatever they want” at a time UMass Memorial is trying to contain costs and adapt to new payment systems. “It’s a model that just doesn’t work in the new health care paradigm,” Dickson said.

The two sides have essentially stopped negotiating. With the doctors failing to agree to join UMass Memorial, the health system is now moving to hire new physicians for the newborn unit.

UMass Memorial is the product of a 1998 merger that combined privately run Memorial Health Care with the teaching hospital of the University of Massachusetts Medical School. The health system today is a private nonprofit but remains closely affiliated with the public medical school; UMass Memorial’s biggest hospital shares a campus with the school, on the eastern edge of Worcester, the second-largest city in New England.

The health system’s return to stability is a relief for the community, where it is the largest employer, said Timothy P. Murray, chief executive of the Worcester Regional Chamber of Commerce and a former lieutenant governor.

“It’s never pleasant when people lose their jobs,” Murray said, “but I think [Dickson] knew he had to make those decisions to get it back in a position that it could stabilize and grow.”

With finances now under control, UMass Memorial executives are spending more time trying to hold on to patients and attract new ones. They have stepped up advertising, launched new urgent care facilities, and are piloting a program that allows doctors and patients to discuss minor medical problems over the Internet.

This year, the system launched into new Medicare payment models that reward doctors for keeping patients out of hospital beds. It is building an outpatient surgical center in Shrewsbury to compete for day surgery business that Dickson said is going to lower-cost providers. And it has begun a massive $700 million overhaul of its patient record and information technology systems.

“The biggest challenge is we’ve got this big health care system that has to transition from sick care to health care, where we’re proactively trying to keep the patients home and healthy,” Dickson said. “Trying to turn a ship this size — it keeps me up at night.”

Employees’ ideas are posted on bulletin boards in each hospital department, such as this one in pediatrics.Pat Greenhouse/Globe Staff

UMass Memorial Health Care

1,099 hospital beds

12,906 employees

49,930 in patient admissions (in FY 2015)

839,398 outpatient visits (in FY 2015)

(Fiscal years run from Oct. 1-Sept. 30)

SOURCE: UMass Memorial Health Care

Priyanka Dayal McCluskey can be reached at Follow her on Twitter @priyanka_dayal.