In a rare achievement among health systems, Gardner, Mass.-based Heywood Healthcare successfully emerged from bankruptcy on Sept. 31 as a standalone entity, with its original leadership team intact.
For many organizations, bankruptcy is a make-or-break moment. Some health systems liquidate, sell or undergo a complete restructuring, but Heywood's shared values, community commitment and decisive leadership set it apart from others in similar situations.
"Bankruptcy is a crucible moment — one that really tests your core values under extreme pressure, like facing intense challenges in life. It can either pull you apart or bring you together," Rozanna Penney, CRNA, President and CEO of Heywood, told Becker's.
What makes Heywood unique is the shared values of its team, according to Ms. Penney, who was appointed CEO in June 2023 after previously serving as chief nursing officer and chief operating officer of the system.
"We're deeply committed to the community and our patients, often saying it's like family taking care of family," she said. "Everyone cares about the community, so when our values were pressure-tested, we asked ourselves, ‘If we can't serve our community, what's the point of existing?' That moment solidified our commitment."
Heywood, which includes a 134-bed acute care hospital, a 25-bed critical access hospital and a medical group with around 200 providers, filed for bankruptcy in October 2023. Workforce shortages, supply chain issues and low reimbursement rates contributed to its financial instability.
"Most often, when hospitals seek to improve their financial position, they cut services that lose money and eliminate positions. We did have a reduction in force, but we were incredibly thoughtful in our approach," Ms. Penney said. "I personally wanted to know what each position did and what would happen to those duties."
Typically, community programs and maternal care are among the first services cut by health systems undergoing financial restructuring, but Heywood took a different approach.
"If we did that, patients wouldn’t disappear — their needs would worsen, flooding our ED," she said. "Emergency deliveries in the ER would rise, pediatric psych patients would overwhelm us, and finding placements in pediatric psych beds is nearly impossible today. Our expenses would increase in uncontrollable areas without reimbursement or grant support. It's not only our mission to care for the community; it makes financial sense."
Throughout the bankruptcy process, Heywood's acute care hospital remained consistently full, even growing in areas like maternity care as nearby hospitals closed services.
"We also maintained our community programs, partnering with multiple school districts to provide telehealth and behavioral health support where needed," Ms. Penney said. "We never turned our back on our community and kept communication open with state and local officials every step of the way."
Ms. Penney developed resilience growing up in Russia and moving to the U.S. as a high school student who did not speak English. Her first job was as a motel housekeeper because her English at the time was insufficient to work in a grocery store like some of her classmates.
"Overcoming those challenges shaped my perspective," she said. "When we declared bankruptcy, I promised our medical staff I'd be honest about any challenges or threats to what mattered most to them. As a provider and a CRNA, they trusted me, and that trust was key to our success. Keeping our medical staff together meant we could continue services without losing revenue, patients or employees and even expand in areas like behavioral health, which had been closed since COVID."
Ms. Penney admits she is an "extreme introvert" — a rare trait in CEOs — but believes this helped her lead Heywood through its crucible moment.
"While I value my reputation as being trusted, and am comfortable being honest and vulnerable, I am also extremely comfortable with holding accountability over popularity," she said.
For CEOs facing similar challenges, her advice is simple: Be open and honest, even in times of uncertainty.
"Bankruptcy can be a tool to shed burdensome costs and reposition for the future, but it brings many unknowns. I stood before our entire medical staff, admitting I wasn't sure how it would end or if we'd remain independent. I asked for their trust, but you can't ask for that if you're not ready to back it up with actions," Ms. Penney said. "Leadership isn't about 'how to be authentic' — it's about genuinely serving your team and enabling them to do their best work. Healthcare leaders are fortunate in that our teams are motivated by a genuine desire to help others. So, being honest and inclusive can greatly increase the odds of success."
After addressing contract issues, consolidating services where appropriate, seeking commercial rate improvements and reorganizing its finances, Heywood filed paperwork to emerge from bankruptcy in May.
For the first time in five years, Heywood also saw a substantial improvement in employee satisfaction, according to its most recent Press Ganey staff engagement survey.
While acknowledging that Heywood still has work ahead, recent initiatives — such as employee-sponsored childcare and partnerships to develop skills for migrant workers — have bolstered the system's workforce.
"Last year, we partnered with local organizations to help newly arrived migrants fill open environmental services positions, which not only strengthened our workforce but supported community integration," Ms. Penney said. "We're also exploring employer-supported childcare to help single parents and working families manage work and family demands. Addressing these needs can help reduce call-outs and overtime, directly benefiting our bottom line."
Looking ahead, Heywood is focused on expansion opportunities and partnerships, and exploring ways to increase capacity at its critical access hospital in Athol, Mass., which could help address the statewide shortage in post-acute care.
"We're also building partnerships with other hospitals to create a network of shared resources," Ms. Penney said. "In maternity care, for example, we're expanding prenatal support to reduce emergency deliveries and provide better care earlier."
Today, morale at Heywood is high, with a challenging but promising future ahead.
"Emerging from bankruptcy lifted a weight off our shoulders, allowing us to maintain local control and advocate for our community, but challenges remain. Every healthcare organization faces financial constraints, particularly rural hospitals," Ms. Penney said. "We're working with tighter budgets and unique cost pressures. Large suppliers often favor bigger hospitals with discounts, while smaller hospitals like ours must find ways to deliver the same quality care without those advantages."
Rural and community hospitals are closing at a much higher rate than others — 39 have closed since 2020 — yet these hospitals serve a critical function.
"We ultimately need an overhaul of our reimbursement structure," Ms. Penney said. "There has to be guidance on how multibillion-dollar electronic medical records, IT, medical supply and equipment companies treat smaller hospitals. We frequently pay higher costs because of our smaller market share, yet we must provide community services to address overcrowding at larger medical centers. The healthcare system needs to be viewed as a whole, rather than independent business units."