Welcome to Northwestern Human Services

It was a highly improbable pairing - a Philadelphia politician, defeated in his last big race, taking the helm of a huge nonprofit company mired in scandal and financial crisis.

But the marriage in 2000 of former State Sen. Joe Rocks, a onetime candidate for Philadelphia mayor, and Northwestern Human Services Inc., a troubled provider of mental-health and mental-retardation services, seems to have been a success.

Under Rocks' management as chairman and chief executive officer, Northwestern, which operates 450 residential and outpatient programs in Pennsylvania , New Jersey , Virginia and Ohio , appears to have emerged from a crisis that had threatened to destroy it.

Four years ago, the Lafayette Hill firm was in chaos. It was under investigation for overbilling Medicare and Medicaid. It was entangled in a misguided acquisition of a minor-league baseball stadium near Easton , Pa. And its chairman and president were locked in an acrimonious power struggle.

Today, the company appears to be past all those problems and in good - at least fairly good - financial health.

Standard & Poor's credit rating service recently took Northwestern, which has $51 million in outstanding bonds, off its negative credit watch and pronounced the company's outlook "stable."

Rocks, one of Philadelphia 's best-known politicians in the 1980s and 1990s, is credited with assembling a management team that accomplished the turnaround. He inherited a lot of problems," said John Fargnoli, an analyst for Standard & Poor's who issued the cautiously favorable report on Northwestern in October. "He's done a fairly impressive job of righting the ship."

"We were in death throes," said Rocks, 57, in an interview. "Looking back, I think I should have been more terrified than I was."

For a man who always wanted to run a big organization but had no experience doing it, Rocks now might be qualified to market himself for corporate salvage work. But he said he wants to remain at Northwestern, where his pay is $317,000, until he retires. Rocks said many of Northwestern's 7,000 employees - social workers, therapists and counselors - see themselves as doing "God's work," and he views his role as making sure they have a solid organization behind them. "We have very, very vulnerable people in our care," Rocks said.

The company, which has revenues of more than $250 million a year, provides mental health, mental retardation, juvenile justice, elder care, and drug and alcohol programs to about 50,000 people, primarily in Pennsylvania, where it has contracts with more than 50 counties. Northwestern's heaviest concentration is in the Philadelphia area, where the city and four surrounding counties paid it $121 million last year for services to 21,700 people.

Michael Covone, deputy city health commissioner in charge of mental health and mental retardation, said that Northwestern's past internal troubles were distressing, but that the company now appeared to have stabilized. "They're doing well," he said.

Rocks came into power at Northwestern in early 2000 after the company's longtime chairman, former Common Pleas Court Judge Armand Della Porta, and its president, Robert C. Panaccio, feuded over financial problems. Ultimately, both men were ousted by the company's board. Rocks, a Northwestern board member, was elected to lead the company, first as chairman and then as chief executive.

Best known for a colorful political career, Rocks, who has been both a Republican and a Democrat, did stints in Philadelphia as a ward leader in the city's Roxborough section, a state representative, a state senator, and a candidate for city controller. In 1995, he ran for mayor as a Republican and suffered a lopsided defeat to then-Mayor Ed Rendell.

Northwestern grew from a single mental-health center in the city's Mount Airy section into a human-services empire in the 1980s and 1990s by setting up community programs for people being released en masse from state mental hospitals and homes for the retarded. But by the late 1990s, the company, though huge, was in a financial mess, deeply in debt, overdue on its bills, and facing possible prosecution for overbilling Medicare and Medicaid by millions of dollars. Further, the company had made a decision to build a minor-league baseball stadium in Northampton County - a project that bogged down halfway to completion and cost Northwestern nearly $6 million. The blowup between Della Porta and Panaccio related largely to a dispute over who was responsible for the stadium debacle. The unfinished structure remained a liability for Northwestern until June, when the company sold the property to a private developer for $2.5 million. Rocks said the disposal of the stadium was an immense relief.

An even greater relief was the resolution of an investigation by the U.S. Attorney's Office.

In 2002, Northwestern settled the overbilling case by agreeing to repay $7.8 million to the government and to enter a guilty plea on behalf of the corporation to two mail-fraud charges. As part of the settlement, Northwestern agreed to establish an internal corporate integrity plan to avoid future malfeasance in billing practices. Assistant U.S. Attorney Margaret L. Hutchinson, the prosecutor who handled the case, said last week: "As best we can determine at this point, the corporate integrity plan has been honored."

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