Laverty out at Northeast Health

Stephen Laverty, the embattled, hard-driving president and CEO of Northeast Health System for the past eight years, has resigned, the Board of Trustees announced yesterday.

No reason was given for the resignation, which leaves Northeast with a leadership vacuum at a moment of intensifying competition.

In their lengthy written announcement, e-mailed to the Times, the trustees said, "There will be no further comment from the hospital on this matter at this time."

Henry J. Ramini, a physician and former chairman of the system's trustees, was named to replace Laverty, 56, on an interim basis. An executive search firm has been hired to find a successor.

"We accept Steve's resignation with a sense of loss but also with a deep appreciation for his accomplishments," said David St. Laurent, chairman of the Board of Trustees. "He leaves this hospital system stronger and more vibrant than when he started."

Laverty said through a Northeast Health System spokesman last night that he would not be commenting.

In their statement, Northeast's trustees made no mention of a settlement for Laverty, whose 2006 salary was nearly $700,000, including benefits, according to state tax records for the last year currently available.

Cape Ann political and medical figures associated with Addison Gilbert Hospital characterized the resignation yesterday as a chance to fix a dysfunctional and mutually mistrusting relationship that has been part of Laverty's legacy.

"Hopefully, an era of anxiety and concern is coming to an end," said state Sen. Bruce Tarr, R-Gloucester, who organized a multi-community, citizen and government task force in 2003 to monitor and challenge Laverty's expressed intention to downsize Addison Gilbert, shifting surgical and in patient services to Beverly Hospital.

"I feel the board is not being open and honest about why there is a change in leadership," said former Gloucester Mayor and task force member John Bell.

Laverty's resignation comes after weeks of speculation about his future following the arrest of a former member of his management team on charges of having stolen artwork belonging to the company in his Groveland home, and after a subsequent vote calling for his ouster by Addison Gilbert and Beverly Hospital nurses.

Paul Galzerano, a former associate vice president at Northeast who worked with Laverty at Winchester Hospital, faces charges of receiving stolen property from Groveland police, who seized over $200,000 in antiques and paintings from his house in that town Sept. 30.

In October, more than 200 nurses from Beverly and Addison Gilbert hospitals, citing a hostile work environment and antagonism from management, called for Laverty's firing. In April, doctors at Northeast cast a vote of no confidence in Laverty.

Northeast acquired Addison Gilbert in a 1994 merger that left a bad taste among residents in Gloucester and in Cape Ann's other communities.

Addison Gilbert had been the Cape's own dependable omnibus source of emergency and surgical medical care for a century; its merger/sale to Beverly Hospital came as a surprise — and was seen by some as a stab in the back. The deal included Addison Gilbert Hospital surrendering a roughly $30 million endowment, amassed over the decades from appreciative patrons, and a significant art collection, including works by Fitz H. Lane and valued at millions more.

Despite the spoils of the merger, Northeast under Laverty seemed to many here to be giving Addison Gilbert short shrift.

In a 2003 interview with the Times, Laverty said "basic logic" and economics argue for concentrating resources for major elective surgery in the larger Beverly Hospital. But he also said Addison Gilbert must continue to have an Emergency Department, and spent more than $500,000 two years later to modernize the ER.

He also presided over a rough halving of the 57 in-patient rooms, closing the second floor of the Steele wing. It was modernized and reopened as geriatric psychiatric ward, and the French Building of doctors' and clinic offices was razed to make room for badly needed parking.

Through it all, Laverty kept Addison Gilbert going, albeit as the lesser half of a dual-campus hospital system based in Beverly. Over the years of Laverty's leadership, Northeast steadily grew financially stronger, while continuing to score legislatively earmarked and voted special subsidies. Laverty also aggressively expanded the subsidized behavioral outpatient services, and Northeast was faring so well financially that a $60 million expansion of the Beverly Hospital campus three years ago was largely self-financed.

Yet he never earned the trust of Gloucester and Cape Ann's surrounding towns. The fierce determination and calls to "Save Addison Gilbert" became the bane of Laverty's tenure in Beverly.

"His resignation was probably overdue," said Gene Villa, a medical consultant from Manchester and longtime member of the Task Force to Preserve Addison Gilbert. "It's important that (the trustees) consider community and public relations part of the CEO's job."

"Hip, hip hooray, and you can quote me," John Wolfe, a recently retired leader of the private practice Cape Ann Medical Center, said when told of Laverty's exit. Wolfe and his colleagues clashed repeatedly and openly with Laverty over what the doctors considered Laverty's lack of commitment to the community here.

At the height of the struggle, more than two dozen physicians on the Addison Gilbert medical staff purchased a full-page ad in the Times in 2003 to complain to the trustees about Laverty and plead for a hearing.

Weeks later, U.S. Sens. Edward M. Kennedy and John Kerry sent a public letter to Ramini, then chairman of Northeast's trustees, describing Addison Gilbert as a "cornerstone" of the Cape Ann community and urging him to keep it that way. Laverty was reportedly furious at the intervention.

At the end of 2004, the task force published a lengthy report noting that Laverty had described Addison Gilbert as "a financial drain on the system that must be reversed, or the hospital could face ultimate closure."

Laverty made the statement in a closed-door meeting with invited government and business leaders at the Emerson Inn in Rockport.

Former Mayor Bell, who maintained a cordial relationship with Laverty, praised him for pushing forward in a partnership with the city to open a community health center this fall. But Bell also faulted the trustees for a lack of candor and respect for the system's patients on Cape Ann.

"The board cannot escape their responsibility," said Bell. "Powder puffs and makeup, that's been about it."

In October 2006, responding to a formal complaint filed by the Massachusetts Nurses Association, the state Department of Public Health found that Laverty had been improperly entering operating rooms without the explicit permission of the surgical patients.

The Department of Public Health report concluded the Massachusetts Nurses Association's complaints were "partially valid." It noted that surgical patients at Beverly Hospital were asked to sign a consent release allowing "observers" to be present but indicated the general waiver was inadequate to protect patients' rights.

"Patients signed a consent for observers in the OR," the report said. "However, the names of the observers were not listed."

The state investigation corroborated the nurses association's complaints that Laverty made a number of unannounced visits after surgeries had begun to witness portions of the operations. It quoted an unidentified Beverly Hospital nurse as recalling that, on one occasion, Laverty entered an operating room and then left for 10 minutes before returning for another 10 minutes of observation before departing again.

Laverty and the hospital agreed to require explicit statements waiving privacy rights before allowing him to enter surgical suites.

Longstanding distrust of Laverty by nurses boiled over last month following the arrest of Galzerano, who some nurses accused of seeking retribution against those who complained and creating a hostile work environment.

"I have watched a lot of nurses injured by this CEO and administration," said Charlene Richardson of Gloucester, who spent 18 years as a full-time nurse at Beverly Hospital. "We are absolutely overjoyed he resigned. He closed his eyes to workplace violence."

Richardson called Laverty "best friends" with Galzerano, who she said was not disciplined after an altercation with a nurse and security guard that ended in a visit from police in 2006.

Laverty was hired to run Northeast from Children's Hospital in Boston where he had been for less than a year. Before that, he was CEO at Winchester Hospital.

On his watch, Northeast found itself overshadowed and threatened by the Partners Health Care system, a comparative colossus organized on the platforms of Massachusetts General Hospital and Brigham and Women's. Its facilities at Salem Hospital and North Shore Medical Center were positioned as a step away from Massachusetts General General.

Northeast could not offer the range of sophisticated medicine available at Partners, so it forged alliances with Beth Israel-Deaconness Medical Center and Lahey Clinic. Partners has been expanding rapidly in Northeast's home territory, the concentrated, lucrative eastern Essex County market. Northeast and Partners have raced to finish and open large new outpatient facilities in Danvers.

The Northeast Health System CEO who Laverty replaced in 2002, Robert Fanning, received $922,501 in back pay, including $528,000 described as vacation pay.

Peggy O'Malley of Partners for Addison Gilbert Hospital, a local group that advocates for the hospital, said she was pleased to see Laverty's tenure at Northeast end, but was anxiously watching to see if his successor would improve the atmosphere of the system.

"I think it is tempting to think with that with Mr. Laverty gone, things at AGH and Northeast will improve," O'Malley said.

"But unless they select someone who will really take into account the wishes and needs of the community they serve," she added, "just because he is gone doesn't mean that things will get better."

Richard Gaines can be reached at rgaines@gloucestertimes,com