Steven Sonenreichs second tenure at Mount Sinai Medical Center has been more tumultuous than his first. When he started working at Mount Sinai in 1976 in the billing office, he was a young college graduate. He quickly rose through the ranks to chief operating officer, served as COO from 1989 until 1996, then became chief executive officer of the old Cedars Medical Center in Miami, now known as University of Miami Hospital. When Sonenreich came back to Mount Sinai five years later as its chief executive officer, the waterfront hospital overlooking Biscayne Bay was nearly insolvent.
When I returned to Mount Sinai at the end of 2001, the hospital had only about 10 days of cash left, Sonenreich said. There were a great deal of problems with many of the operations of the hospital. The Miami Beach landmark institution hemorrhaged a net loss of $65 million in 2001, the worst annual loss since the hospital opened in 1949, and for the first time in its rich history, it was suffering.
Today its financial prognosis is far healthier. Management soon expects to report its fourth annual profit in a row. Management estimates that net income totaled $16.8 million last year, about $1 million more than in 2011. Cash reserves are ample enough to cover about 145 days of operation. Mount Sinais long-term debt has declined to approximately $220 million from $251 million in late 2011 as the hospital has used fatter cash flow to pay down principal on a level of about $7 million to $8 million a year, Sonenreich said.
Moving into 2013, management at this not-for-profit medical center expects yet another profitable year. Among other reasons for bottom-line optimism, a $135 million bond refinancing last summer has produced annual savings of $1.5 million, and the sale of an underutilized medical facility, the old Miami Heart Institute in Miami Beach, has reduced annual expenses by another $2 million.
Last year Mount Sinai also bought out a joint-venture partner in a profitable cancer treatment center, called the Mount Sinai Comprehensive Cancer Center, which will allow the hospital to keep all of the centers earnings instead of sharing them. The cancer-center acquisition was great for us because it accretes to earnings, and we feel that there is a lot of additional opportunity, Sonenreich said.
The turnaround came at a cost. Unhappy with upheaval and Sonenreichs management style, several prominent high-profile medical staffers left or were forced out. The hospital has replaced multiple department heads since Sonenreich became CEO. Over the last 10 years, we replaced 14 different medical department chairs and chiefs. Thats never an easy thing to do, Sonenreich said. But sometimes, in order to change people, you need to change people, and thats what we did.
The hospitals executive board members have plenty of experience with staffing issues: Many of them are among the most best-known business minds in the Miami area. They include biotech billionaire and philanthropist Phillip Frost, auto dealer and civic activist Norman Braman, former Claires Stores co-CEO and co-chairman Bonnie Schaefer, and Laurans A. Mendelson, the chairman and CEO of aircraft parts maker Heico. The current chairman of Mount Sinais executive board is Wayne E. Chaplin, president of distributor Southern Wine and Spirits.