Milford Regional CEO eager to affiliate with UMass Memorial

Photo | Courtesy of Milford Regional Medical Center Edward Kelly, president & CEO of Milford Regional Medical Center

PHOTO | Courtesy of Milford Regional Medical Center Nearly 400 Milford area business and community leaders, sponsors, and supporters attended the Mélange Gala and Live Auction. Pictured (from left) are UMass Memorial Health President and CEO Dr. Eric Dickson, and Milford Regional Medical Center President and CEO Edward Kelly.

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By Emily Micucci

A plan for UMass Memorial Health in Worcester to bring longtime independent community hospital Milford Regional Medical Center into the fold is on track, with longtime Milford Regional President and CEO Edward Kelly saying in a January interview he hopes it will happen quickly.

Kelly’s eagerness to join the largest healthcare system in Central Massachusetts illustrates the dire situation many community hospitals find themselves in in the post-COVID-19 pandemic era. Milford Regional, which includes a physicians group of 300 doctors, has been fiercely independent throughout its 103-year history, even in the past when the board of trustees eschewed suggestions that joining UMass Memorial or another large system made sense, as regulatory and IT cost pressures threatened to overwhelm community hospitals.

Now, the board has changed its tune. Milford Regional suffered a $15-million operating loss in fiscal 2023, said Kelly. Following multiple years of losses, the 148-bed acute care hospital had no feasible way to overcome financial straits and grow patient care in needed areas.

“We didn’t want to get to the point where we were changing who Milford Regional was, just to stay independent,” said Kelly, who has led the hospital as CEO since 2016 after serving on the executive team since 1993.

Milford Regional officials had conversations with its other affiliated healthcare systems before determining that UMass Memorial would be the best fit, he said. Affiliates include Massachusetts General Brigham in Boston and Boston Children’s Hospital.

“I’m very encouraged and excited with the decisions we’ve made, and we want to see it happen as quickly as possible,” Kelly said.

A formal agreement to affiliate under the UMass Memorial umbrella would be subject to Massachusetts Department of Public Health regulatory approval.

Photo | Matt Wright

Dr. Eric Dickson, president & CEO of UMass Memorial Health, in Worcester

For its part, UMass Memorial was playing defense as it eyed a corporate affiliation with Milford Regional, one of the largest teaching sites for the Worcester academic medical center and a close clinical partner, said Dr. Eric Dickson, president and CEO of UMass Memorial Health.

“The thought they could go bankrupt or become part of another system and we’d lose that educational site – it was critical for us to preserve that,” Dickson said in a Jan. 11 interview.

Dickson has been frank about the situation facing hospital systems across Massachusetts. Milford Regional’s year-over-year losses are commonplace, and those with smaller reserves are receiving state bailouts, he said.

“It’s a very, very disturbing trend,” Dickson said, pointing to Dallas-based Steward Health Care, and Heywood Healthcare serving Northern Worcester County as two examples of hospital systems reaching a breaking point.

Heywood, which UMass Memorial has considered merging with, is restructuring through Chapter 11 bankruptcy, while Steward, owner of several Eastern Massachusetts hospitals as well as Nashoba Valley Medical Center in Ayer, allegedly stopped paying vendors and even salaries.

Regarding Heywood, Dickson said UMass Memorial may not have closed the door on merging with the system since Heywood patients would be redirected to the overtaxed UMass Memorial system if it fails.

UMass Memorial itself has suffered losses in the COVID-19 area, Dickson said, and isn’t immune to the challenges facing the industry. In its fiscal 2023 year-end financial statements, UMass Memorial showed a modest turnaround, posting operating income of $147 million compared with a $38-million loss the year before. The system is buoyed by its many ventures generating non-operating income to keep the system afloat, he said.

The chief problem, said Dickson, is that post-acute care facilities like skilled nursing centers are still facing labor shortages, so there’s nowhere to discharge sick patients when the need for acute care ends. This reduces revenue for hospitals, which are paid per discharge.

Kelly and Dickson each said the parties have agreed there will be no major changes to core patient services in the first couple of years following a corporate affiliation, but Dickson insisted the hospital will need to become solvent.

Notably, Milford Regional operates a labor-and-delivery unit, which is among services cut at other hospitals that UMass owns, including HealthAlliance Clinton Hospital in Leominster, which had a controversial closure in the fall. Dickson said labor and delivery in Milford, however, has much higher volume compared with HealthAlliance, and Kelly said that is one of area of hospital services he would like to see expand.