Mass. Eye and Ear to hit suburbs

The Massachusetts Eye and Ear Infirmary , searching for ways to boost its bottom line after years of operating losses, plans to follow the lead of other downtown Boston teaching hospitals by opening satellite clinics in the suburbs.

``We're moving in a new direction, outside the Boston area, with a new style," said Diane Kaneb , chair of the hospital's board of trustees. The 180-year-old hospital, which has 42 inpatient beds, will continue to offer advanced care at its central facility, alongside the Charles River .

Branching into the suburbs could be key to the Harvard Medical School-affiliated infirmary's stability. Because of technological advances, many of its core services no longer require expensive inpatient hospital stays. Doctors have opened at least 15 outpatient centers in Eastern Massachusetts to perform a variety of eye surgeries, according to the hospital.

The lost business has resulted in persistent operating losses, according to performance figures disclosed by the hospital to the state. Its bond rating was reduced to below investment grade, or junk status, by Moody's Investor Services in 2002, although Moody's says the hospital's outlook is now stable. The hospital said it finished the last fiscal year, which ended Sept. 30, with a $1 million surplus.

``Financial performance should remain stable. They have very little debt. They have a nice balance sheet profile. They are a sizeable organization," said Lisa Goldstein , a Moody's analyst.

Mass. Eye and Ear considered joining Partners HealthCare , the parent corporation of Massachusetts General Hospital , its wealthy next-door neighbor, but the hospital and its doctors ultimately decided to remain independent to preserve a reputation as a stand-alone research and advanced care center, Kaneb said.

Now the board of trustees is looking for a new chief executive after this month's announcement that president F. Curtis Smith is resigning at the end of the year. Meanwhile, the board has delayed launching a $100 million capital fund-raising campaign while it decides the best course for the future.

Pending the results of a consultant's study, that will include leveraging the Mass. Eye and Ear brand outside the downtown Boston core of teaching hospitals. The number and locations of suburban clinics have not been determined, Kaneb said.

``We are just trying to serve the patients in the outside community, too," she said.

The hospital's chief financial officer, Peter Chinetti , said it is being squeezed by doctor-operated medical centers that have proliferated over the last decade. About 90 percent of eye surgeries are done on an outpatient basis, and doctors have aggressively opened their own outpatient operating and laser units, Chinetti said.

``That is eating away at our business," he said.

Doctors, who do not have the same overhead as the hospital, can do the procedures more cheaply in their offices. That means insurance reimbursement for the procedures is also less expensive, said Chinetti.

``When you start talking about negotiating with third-party payers, there's a tendency [for them] to pay you at the lowest-common-denominator rate," he said.

Christopher Rowland can be reached at crowland@globe.com.