Tiny Hospital Battles Big Odds

After all these years, despite all the work to keep it afloat, Santa Paula Memorial Hospital endured the most humiliating period of its history this summer.

Officials at the tiny hospital call the episode “the recent embarrassment.”

Essentially, the cash-strapped hospital’s top bookkeeper was caught playing the float with employee retirement funds, sometimes holding workers’ payroll deductions for extra weeks before depositing them in annuity accounts.

Although 65 employees temporarily lost about $1,000 in interest, and federal regulators left it to hospital officials to clean up the mess, leaders at the Santa Clara Valley’s only community hospital still blanch at the blunder that threatened to undercut their most treasured asset.

“It’s all about trust,” hospital Administrator William Greene said. “We’re just trying to bring this to closure with our employees.”

That the employees seemed in the mood to forgive right away says a lot about the Santa Paula hospital and the people who work there. “We’re like a family here,” said nurse Nikki Diaz days after complaining that deductions to her credit union account were posted late.

That was only a month ago.

Yet last week there was hardly a ripple of discontent in what numerous workers had to say about their bosses and the place where so many have worked for so long.

That’s probably because Santa Paula’s hospital is unlike just about any other.

Staggering changes in the health-care industry have created a harsh new reality for small community hospitals such as Santa Paula’s. Dozens have closed statewide as larger hospitals have siphoned off patients by reshaping themselves as specialty centers and by cutting their rates to the bone to grab health maintenance organization contracts.

But Santa Paula has stayed open against all odds because of a rare commitment by the bucolic Santa Clara Valley farm communities it serves.

And things have been that way right from the start, nearly four decades ago.

Founders say Santa Paula Memorial is one of three hospitals in California built by a community without any outside help and paid for in cash. No government grants or low-interest loans. And no mortgage.

All the money came from the pockets of families who wanted their children born near home, or who knew that lives would be saved if they could only build an emergency room nearby.

The people of Santa Paula, Fillmore, Piru and Saticoy ponied up $1 million in 1959 and 1960, and by October 1961 patients were filling the new hospital’s 50 rooms, which feature spectacular views of the Topatopa Mountains and one of the prettiest farming valleys outside of Iowa.

Pioneer farm families got the ball rolling--brother and sister Albert and Mary Thille gave $350,000.

“Albert twisted the arms of all the rest of his siblings,” recalled relative Dorcas H. Thille, still a Santa Clara Valley farmer. “He had no children. He’d never married. He felt that if he made [his money] here he had an obligation to invest in the community.”

Milton Teague’s ranch donated the hospital site, 11 acres up a hill at the end of 10th Street. The Thille family--including Grace, the first female physician in Ventura County--gave another 15 acres next door a few years later.

The rest of the money was donated by farmers and merchants, teachers and principals, doctors and nurses, tractor drivers and trash haulers. The local newspaper ran their names each day. Now, on the door of almost every hospital room, a plaque bears the name of a person who gave generously to make sure there was a hospital not too far down the road.

Over the years--as more hospital rooms were added, an administration building completed, an office building constructed, an intensive-care unit built and equipped--the donations never stopped.

Artist and banker Douglas Shively gave the hospital landscape paintings that now brighten corridor walls. Recluse Jeanette Kellogg, who lived up a nearby canyon, turned over a $300,000 estate. Sisters Marguerita and Maria Geier, retired from teaching school in Los Angeles, donated a house worth $110,000.

Actor Kirk Douglas, bruised and battered in a 1991 helicopter crash at the local airport, gave thousands of dollars. So did the chopper’s seriously injured pilot, Noel Blanc, son of legendary cartoon voice-actor Mel Blanc.

On a nursery wall, retired nurse Claudette York painted a bright tree of life on which the limbs are covered with snapshots of hundreds of babies born there. In May, a Boy Scout earning his Explorer’s badge built a heliport for the hospital.

On Wednesday, hospital administrators revealed a $650,000 gift by longtime Saticoy rancher Ord Toomey and a donation worth $250,000 from Fillmore seamstress Dorothy M. Duncan, who died at the hospital in June.

And just a few days ago, Fillmore rancher Russell Hanscom displayed a more typical level of generosity when he dropped by Greene’s office and wrote a $4,000 check.

“He said that years ago one of his children got a safety pin caught in the throat and it would have taken 40 minutes to get to Ventura,” Greene said. “He thought it was a very close call.

“And that’s the basic issue here--the availability of emergency care in this valley,” Greene said. “A lot of people say it’s the difference between life and death. And another thing here is that people know each others’ names.”

That goes for patients and employees as well.

“You’re walkin’ on heaven’s floor right now,” surgical nurse Ana Bailey quipped recently on a hot and slow-moving afternoon. “We call this place a little bit of heaven on the hill. We take care of each other and our patients.”

For Bailey, it’s all in the family. “My mother-in-law has been a registered nurse here for 30 years. And she recruited me.”

There are other mothers and daughters on the staff, such as Sheila Pena in housekeeping and her daughter, Lily, in food services.

There are sisters such as nurse Lisa Endicott and lab technician April Booth. And April is married to Brett Booth, also a lab technician.

Supervising nurse Kris Ortiz came to work as a Santa Paula High School candy striper in 1973 and never left.

“I just think we’ve got a lot of good loyal employees who stand by this place,” Ortiz said.

And in recent years, as insurance plans have funneled a few patients from Oxnard, Ventura and Moorpark, Santa Paula’s little hospital has made converts of them.

“They’re a little bit leery about coming over here. A lot of them never knew we had a hospital,” Ortiz said. “But I don’t think I’ve ever run into a patient from another town who wasn’t pleased with our homey touch.”

Still Losing Money

But if Santa Paula’s hospital is a rare slice of small-town Americana, the question is for how long.

It won’t close tomorrow, because it has physical assets of $12.3 million, and owns stocks and bonds worth $5 million. And it is no longer bleeding red ink the way it did in 1992 and 1993, when operating losses totaled $2 million.

But of Ventura County’s eight general hospitals, Santa Paula is by far the smallest. And it’s the only one that is still losing money on its day-to-day operations.

The hospital’s best performance of this decade came in the fiscal year ending in March, when it lost $75,000 on an operating budget of nearly $13 million. It balanced its budget only because of a $1.2-million return from investments that include $500,000 from a fund-raiser born of desperation in 1993.

Nor does Santa Paula have a large corporate coffer on which it can depend when times are tough. Santa Paula and Community Memorial in Ventura are the only two independent community hospitals in the county. The rest are owned by health-care corporations.

Most hospitals in Ventura County are doing better than a few years ago because they’ve eliminated middle management and cut payrolls and medical supplies to the nub.

The county’s other two small community hospitals have changed to meet the challenge. Pleasant Valley Hospital in Camarillo merged with Catholic Health Care West, owners of St. John’s Hospital in Oxnard. And Ojai Valley Hospital, sold repeatedly over the past decade, now uses most of its beds for convalescent care.

Changes have helped Santa Paula survive too. It once had a staff of 260 and an annual payroll of $6 million: Today, its 220 workers are paid $5.3 million a year, still the city’s second-largest employer. But the hospital now uses only 45 of its 60 beds, and more than half of those are usually empty.

While cutting back, however, the hospital has added a number of services that bring in more business--kidney dialysis, eye surgery, a walk-in health clinic and a rehabilitation program for patients recovering from surgery.

Also, the number of surgeries is up, though patients still have to go to Ventura or Oxnard for some specialty treatments such as brain and open-heart surgery and the care of premature babies.

“A few years ago we really wondered if we could survive,” said longtime trustee Anita Tate, a descendant of a pioneer ranch family and who still operates a 200-acre ranch. “But now we think it’s possible if we get some money from the community for new equipment and [building] improvements. We think we can break even or have a slight profit.”

The hospital’s biggest problem right now, the trustees said, is getting HMOs to pay their bills on time. Not too long ago, administrators said, they could count on collecting within 60 days. And the hospital paid its bills within 30.

But Derek Jones, the interim finance director, said it is not uncommon now for laggard HMOs to delay payments for 150 or 180 days. As a result, the hospital can’t pay its own bills for 80 days. That angers vendors and ends discounts on services the hospital used to receive.

Jones’ predecessor, Dennis Good, was removed last month after superiors learned he had held onto employee payroll deductions--mostly for annuity accounts--for too long.

Good was playing the float with other people’s money just like the HMOs were playing the float with the hospital, officials said. “It was a matter of making a choice of which obligation to pay first. . . . It was poor judgment,” Greene said.

According to trustee Tate, “We have to do something drastic very shortly to alleviate this cash-flow problem.”

That means hiring more workers to hound debtors and make accounts current, and that is happening, Greene said. In the meantime, the hospital is borrowing short-term to cover its payment gap.

Still, the situation is better today than just a few years ago, when huge losses prompted Santa Paula to consider turning over its operations to Ventura’s Community Memorial Hospital. That option was finally rejected in favor of hiring a national management firm, Quorum Health Group, to run the hospital under the direction of the local trustees.

“We’ve survived by maintaining our independence,” said trustee Ernest Carlson, a retired physician who chaired Santa Paula’s first hospital construction committee in 1955. “It’s important to those of us in the community. It gives us a feeling of pride.”

Trustee Edwin Beach, a retired appellate court justice, said that without community control “there would be a tremendous loss in the personal feeling the patients have for this hospital.”

“This hospital is a trust, and we should continue as the kind of hospital that was envisioned by the founders, those people who gave $5 and $10 at a time. We just can’t give up.”

Samuel Edwards, administrator of the county hospital in Ventura and the doctor who opened Santa Paula’s intensive-care unit in 1971, said keeping the community hospital open is absolutely essential not only for community pride, but for good care.

“The more personal medicine is, the better it serves the community,” he said. “Whether this hospital can survive in the long run probably depends on the economy. But they’ve sure done it since 1961, and the medical staff hangs in there because they believe in community medicine.”

Benefactor Dorcas Thille said the little hospital has a future because local residents still believe in the old-time value of helping themselves.

“There is not another town in this county that has the history of charitable giving to institutions that Santa Paula has,” Thille said. “Santa Paula built their hospital. Santa Paula built their library. Santa Paula built their community center. And they purchased the railroad station with all local dollars.”

And Edwards believes time may be on Santa Paula’s side too.

Trends toward centralization of care in large hospitals are already losing ground in England, which the United States tends to follow in terms of medical care, he said.

“They’re going back to local infirmaries and clinics,” he said, “because proximity to medical care saves lives. If you’re bleeding badly or have a heart attack or ruptured appendix, 15 minutes make a huge difference. The question is not what’s right medically, but how do you pay for it.”

Like an Old Friend

At least for now, patients say they are thrilled their hospital is still around.

They like it because it’s close and it’s familiar, like an old reliable friend they see when they’re in trouble.

Nearly everyone has a mother or brother or cousin who says the hospital did right by them when they were sick.

Youngsters and old folks seem to agree.

“It’s a perfect hospital,” said Wheeler Canyon rancher A.E. “Bud” Sloan, 82. “My granddaughter had a baby there. My sister was in there too. I had a load of hay fall on me, and I was banged up so much I forget. And I broke my arm, and they made me a new elbow. Hell, they done everything right.”

William Foster, a Fillmore High School freshman, ended up at Santa Paula hospital not long ago after his appendix ruptured.

“There was a sharp pain in my abdomen,” the thin 14-year-old said. “But it’s been nice here. There’s not too many people, so you get to know everybody.”

Fillmore farmer Dale Palmer, 65, felt much the same when he dropped in this month for knee surgery.

“I’ve always come here and I’ve had good luck,” he said, glancing out the window as a bright sun shone on Santa Paula Mountain one recent afternoon.

Down the hall, Joseph Dennis, 83, might have been the hospital’s most satisfied repeat customer. The Fillmore resident was there for a hip replacement this time. And he was there 10 years ago, when Dr. Thomas Golden stitched Dennis’ shattered elbow back together, and again last Thanksgiving, when Dr. Mike Sparkuhl removed a cancer from Dennis’ colon.

Dennis, a retired plumber from Los Angeles, and his wife, Marie, even went to a fund-raising dance and wrote the hospital a little check, he said.

“There are so many people who use this hospital for tests and illnesses,” Marie Dennis said. “And a lot of time if you’re not able to drive, you can get someone to drive you here. If you have to go to Ventura, you’re out of luck.”

The city of Fillmore would be in trouble if this little hospital had to close, her husband said.

“I have good insurance, and I can go to any hospital, anywhere,” he said. “But I thoroughly enjoy it here. They give you a lot of attention. They make you feel special.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Santa Paula Memorial’s Fiscal Health

* in thousands of dollars

*--*

Operating Operating Operating Nonoperating Total Year Revenue Expenses Balance Revenue** Revenue 1990 $14,465 $14,558 -$93 $392 $299 1991 $13,704 $14,299 -$595 $489 -$106 1992 $15,437 $16,540 -$1,103 $617 -$486 1993 $14,467 $15,441 -$974 $650 -$324 1994 $13,821 $14,415 -$594 $845 $251 1995 $13,976 $14,529 -$553 $844 $291 1996 $12,947 $13,930 -$983 $716 -$230 1997 $12,797 $13,294 -$497 $863 $366 1998 $12,837 $12,912 -$75 $1,334 $1,259

*--*

** Includes gifts and return on investments.

Source: Santa Paula Memorial Hospital