Community Hospitals: Dying Breed or Community Cornerstone?
Posted Jul 31 2009 11:47am
/PRNewswire/ -- In the widespread discussion of universal health insurance and soaring medical costs, one of America's most cherished traditions -- the hometown community hospital -- has been largely forgotten.
Many analysts suggest that small community hospitals are especially vulnerable -- with smaller populations, limited services, and small medical staffs. Yet their value is unquestioned. A 2007 AHA study on The Economic Contribution of Hospitals documented the importance of hospitals to communities beyond healthcare, with each hospital job supporting two additional jobs, and goods and services purchased by hospitals creating additional economic value.
Yet while governmental attention focuses largely on cost controls and insurance for all, Atlanta- based Hospitalogic(TM), a family of companies providing physician services, consulting and hospital management, is championing change to ensure their viability for future generations.
"Our vision is for financially successful community hospitals across America," says Hospitalogic CEO Jim Burnette. "We believe it is attainable by approaching the challenge differently."
Financial distress, rooted in the late 1990's when Medicare and commercial insurers systematically reduced prices paid to hospitals and physicians, turned the industry revenue model upside down, causing pressures. This transformation caused most hospitals to struggle, with nearly 80% having lost money at some point over the last 5 years.
Although propped up by such Federal programs as Critical Access Hospital reimbursement, reduced revenues and rising costs squeezed profits or caused losses for many -- triggering financial deterioration and hospital closures impacting hundreds of communities since 2000.
Viewing soaring costs and reduced reimbursements as symptoms rather than causes of the problems, Hospitalogic's leadership has owned, re-opened, and operated small community hospitals -- pioneering new approaches and achieving profitability while doing so.
"We know what it takes to succeed, and our methodology is proven. We've sat in the Board member's and CEO's chair, negotiated with lenders, met payrolls and worked with regulators," states Burnette. "We take on transformation projects without regard to condition because we understand first-hand the difficulties hospitals face."
In 2000, Hospitalogic purchased and reopened Tattnall Memorial Hospital in Reidsville, Georgia. The hospital continues to operate successfully today in a service area with a population of 18,000.
For-profit North Oak Regional Medical Center in Senatobia, Mississippi had lost money for 10 straight years and was within days of closing when Hospitalogic took over in 2002. Within 18 months, the hospital was at break-even. By 2004, the organization's unique emergency and inpatient medical practice had achieved a 936% return on investment, with profitability continuing annually since.
Sometimes the distress call comes too late, admits Burnette. Hospitalogic successfully re-opened a community hospital in Brownsville, Pennsylvania in 2008, overcoming regulatory and financial hurdles. Yet the hospital closed nine months later following a multimillion judgment against the hospital's board dating to the facility's prior ownership.
"America needs successful community hospitals," Burnette adds. "They are essential to community success. With passion and the right approach, it can be done."