N.E. Baptist back in the black on increase in surgeries

New England Baptist Hospital returned to profitability last year, as the number of patients scheduling back surgery and knee and hip replacements surged 14 percent.

An orthopedic hospital best known for mending the Boston Celtics, New England Baptist had an operating profit of $3.1 million in the fiscal year ended Sept. 30, turning around losses from the previous two years. Revenue grew 6 percent to $152.2 million.

The improved results continued in the first quarter of the current fiscal year, with the hospital's operating profit nearly tripling to $3.1 million.

New England Baptist is so full that the hospital has asked the City of Boston to approve an expansion plan, which includes four additional operating rooms in a new wing added to its current 13 operating rooms, a new 72,000-square-foot doctors' office building, and a 300-space parking garage.

Chief executive Joseph Dionisio said the extra space will ease the wait for surgery, which averages three to six months. Starting in the spring, the hospital plans to start weekend surgery by booking patients every other Saturday.

Dionisio said he implemented a plan to increase revenue and cut expenses by $24 million, including negotiating better-paying contracts with health insurers and a 15 percent volume discount on the 3,000 synthetic joint replacements that the hospital buys annually.

In the past 2½ years, he said, the number of patients coming to the hospital for joint replacements and spine surgery has grown 25 percent, to 5,141 last fiscal year. The hospital's total number of overnight admissions was 7,638, a 2.6 percent increase, a smaller jump because the hospital closed one of its rehabilitation units.

Dionisio said that business is booming for several reasons, including that the hospital is stealing market share from other institutions and that baby boomers are reaching an age when their joints are failing.

''We're getting more regional business and more active patients who are less willing to live with pain and restrictions," he said.

The hospital's financial position looked dire in 2002. New England Baptist had a $20 million loss, leading longtime chief executive Dr. Alan Robbins to resign. The loss was big for a hospital its size. New England Baptist had just 141 beds and $120 million in revenue, meaning the losses amounted to nearly 17 percent of revenue.

At the time, Dionisio called the bleak financial situation a ''perfect storm": Employees had trouble learning a new computer billing system and didn't mail bills in time to meet insurance company deadlines; hospital executives overestimated payments from Medicare, the federal insurance program for the elderly; and administrators failed to anticipate a steep rise in prices for hip and knee implants. This all occurred at a time when the number of patients was soaring, and the hospital should have reaped financial improvements.

New England Baptist also is part of the CareGroup Healthcare System, headed by Beth Israel Deaconess Medical Center, which dissolved most aspects of its merger two years ago to give its hospitals more freedom.

''They've had a really good turnaround," said Pamela Federbusch, an analyst at Moody's Investors Service in New York.

Liz Kowalczyk can be reached at kowalczyk@globe.com.