New American Healthcare Corporation (NAHC) was a for-profit, publicly held system of nine acute-care, community-based hospitals, with headquarters in Nashville and facilities in seven states. In April 2000, NAHC voluntarily filed for Chapter 11 protection in U.S. Bankruptcy Court, Central District of Tennessee. The filing had become necessary as a result of NAHC’s rapid growth, combined with unprecedented changes in key government reimbursement programs. Yet the problems that led to the filing were a function of the parent company’s finances, and did not reflect the underlying viability of each individual hospital. Dix & Eaton was hired to assist in planning and implementing all corporate and hospital-level communications leading up to the company’s filing and continuing through the process as the Bankruptcy Court oversaw sale of the hospitals to new owners. This work is worthy of a SABRE award because Dix & Eaton planned and implemented a specialized, comprehensive and highly coordinated program of communications that helped allow the company to maintain patient care without interruption, to reassure key audiences about the continued viability of the hospitals, to preserve asset values for the benefit of creditors, and to facilitate transfer of ownership in an orderly and timely manner.
An announcement of this kind can create concern among patients, medical staff, employees and the communities that rely on the hospitals. This reliance is particularly strong for small, rural hospitals of the type owned by NAHC. It was essential that rumors and misunderstanding be dispelled and that the facts of bankruptcy be made clear to various audiences, together with an assurance that the same high-quality care would be maintained throughout the legal proceedings. For instance, suppliers to the hospitals needed to understand that they would be paid for supplies delivered after the filing, and medical staff needed to stay focused on patient care.
Also, timing was critical. NAHC was publicly traded, therefore disclosure of information was tightly regulated, and information shared with investors had to be simultaneously delivered to other audiences. It was important that staff and others in the community not learn of developments from the media, but instead directly from their supervisors and management.
The rapid progression of events did not allow time for primary research, but Dix & Eaton conducted secondary research to review community reactions and media interpretation of hospital Chapter 11 situations in various markets around the country.
The success of Dix & Eaton’s strategy required:
Equipping and preparing management to share information with internal and external audiences in a timely, candid manner.
Reaching out to local media to explain bankruptcy and relay key messages to audiences.
Over an approximately one-month period, Dix & Eaton was the key member of a small, confidential working group that prepared and planned internal communications and investor and media relations for corporate management and the leadership of the individual hospitals. Individual tactics included:
Communications kits for hospital CEOs
Media training and rehearsal for management
Letters from management to staff and to community leaders
Scripts for on-site meetings between management, medical staff and employees
Calls to reporters and editors
The Chapter 11 process, and the orderly sale of NAHC hospitals to new, financially strong owners, went quickly and smoothly:
There was no disruption in patient care or supplier deliveries.
Medical staff, employees and community leaders quickly grasped the situation and rallied around the hospitals.
Individual hospital CEOs, who had front-line responsibility for staff and community level communications, performed well, and, during process reviews and debriefings, praised the level of detail and preparedness.
The individual hospitals retained their asset value and were sold to new owners, who have since continued to operate each facility.