Tiny Hospital Tries to Rise From Its Sickbed

Amid pledges that it will not be allowed to die, Santa Paula’s Memorial Hospital celebrated its 40th anniversary last month by holding the first meeting of a committee formed to save it.

The hospital--one of just three in California built solely from community gifts--continues to lose $6,000 a day as backers scramble to staunch the flow of red ink that threatens Ventura County’s smallest general hospital.

“Our environment is Darwinian; we have to adapt,” hospital board Chairman Phil Romney said. “And that’s what we’re doing.”

In the world of managed care, it is survival of the fittest. And Santa Paula Memorial has seen its operating losses mount from $93,000 in 1990 to about $2.77 million in the last fiscal year.

Without effective reform, the little hospital perched on a hill above the orchards of the Santa Clara Valley has no future. With reserves of about $4 million, it cannot continue to lose $2 million a year for long. And if it were to close, Santa Paula would lose its second-largest employer and a safety net that has saved lives.

The former 60-bed community hospital has shrunk to 39 staffed beds; only 14 are filled on a typical day. That is down from 18 daily patients in 1999, a fact that reflects the little hospital’s struggle in a battle against bigger rivals and long odds.

Staggering changes in the health care industry have created a harsh reality for small 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.

Many of the larger hospitals also are in trouble. State officials reported last spring that nearly two-thirds of all California hospitals are losing money on operations, and half remain in the red even when gifts and investment income is included to pump up the bottom line.

“This hospital has no intention of closing or selling to an outside organization,” Romney said. “It intends to remain locally governed and independent.”

Bold goals, but are they realistic?

Several industry experts say they are. They say that with the right moves right now, Santa Paula hospital directors can save the institution that was built from scratch without grants or loans or a mortgage in 1960.

“It is not written that Santa Paula hospital must close: It can survive,” said Jim Lott, executive director of the hospital industry’s Southern California Health Care Assn. “It just depends on whether or not that community can get behind it.”

He cited Long Beach Community Hospital, which closed earlier this year but soon will reopen after the City Council and community groups rose up to support it.

Raising the Money

The Santa Paula hospital has reason to remain independent. Trustees consider that an obligation borne of the hospital’s history.

Founders say it is one of three hospitals in California built by a community without any outside help and paid for in cash.

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

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 featured spectacular views of the Topa Topa Mountains and one of the prettiest farming valleys in the country.

Pioneer farm families got the ball rolling--brother and sister Albert and Mary Thille gave $350,000. And 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 15 acres right 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. Now, on the door of almost every hospital room a plaque bears the name of a local donor.

Over the years--as more hospital rooms were added, an administration building completed, an intensive care unit built--the donations kept coming.

Artist and banker Douglas Shively gave the hospital landscape paintings that now brighten corridor walls. Recluse Jeanette Kellogg, who lived in a nearby canyon, turned over a $300,000 estate. Sisters Marguerita and Maria Geier, retired schoolteachers from 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, the 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. A Boy Scout earned his Explorer’s badge by building a heliport for the hospital.

How long it can count on such goodwill to balance its books is another question.

Campaigning for Patients

Santa Paula hospital officials say they have begun their own turnaround.

In recent months, the hospital has made changes to draw more patients to the hospital, especially senior citizens covered by Medicare and poor pregnant women covered by Medi-Cal. Because miserly HMOs are now the dominant private insurance method, once-laggard government health programs have become the preferred source of payment for hospitals. They usually pay more and faster than private insurers.

The recent moves helped push the number of patients at the Santa Paula hospital on a typical day from 14 to 17 in October, officials said.

But the crux of the hospital’s recovery plan is to rally the community on its behalf by:

* Informing the 45,000 residents of the bucolic Santa Clara Valley that they can save their hospital--not through one more fund-raiser--but by using it when they need an operation or to deliver their babies.

* Working more closely with staff physicians to ensure that they refer every possible patient to the local hospital, instead of treating them at the private Community Memorial Hospital or the public Ventura County Medical Center, both 15 to 20 minutes away in Ventura.

* Persuading major employer and employee groups in Santa Paula and Fillmore to insist that Santa Paula Memorial Hospital--and the physician groups that serve it--are included as options in their company health insurance plans.

“Volume will save us,” said Sharron Tiedjens, a Tennessee-based consultant who has been helping Santa Paula this year. “And that comes from educating the community about our services and being diligent about our relationship with our medical staff.”

Doctors and administrators at Santa Paula Memorial acknowledge that they took each other for granted for a long time. And that hurt the hospital.

“There was a communications gap between the hospital and the doctors,” Romney said. “Doctors, for example, were referring patients to other hospitals that could have been referred to Santa Paula.”

Now, while emphasizing the urgency of more patient referrals, hospital officials are helping doctors by filing electronically on their behalf for small Medi-Cal payments that the doctors otherwise would waive because of paperwork.

There also have been discussions about using the doctors more at the hospital’s rural health clinics, which would qualify them for higher Medi-Cal payments.

“The idea is that everyone wins,” Romney said.

Regaining Lost Revenue

Dr. Gary Deutsch, a family doctor in Santa Paula since 1980, said he has been working to buttress the hospital for years. He helped found the 40-doctor Valley Care physicians group in 1993, he said, because patients were being channeled out of the Santa Clara Valley by large regional physician groups to hospitals in Ventura and Oxnard.

The Valley Care group treats about 7,000 local patients, but doctors say thousands more rely on the Oxnard-based Seaview Medical Group for family physicians, specialists and hospital services. Seaview no longer has contracts with surgeons who work at the Santa Paula hospital in areas of general surgery, urology, orthopedics and obstetrics. Such contracts have ended over the last 14 months, hospital officials said.

“The lost revenue is in excess of a half-million dollars a year, and that’s conservative. It could be double that,” said Bill Greene, who ran the hospital from 1996 until he was replaced recently by chief administrator C. Mark Gregson.

General surgeon Gosta Iwasiuk, the hospital’s chief of surgery, said that Santa Paula hospital surgeons have not been able to reach agreements with Seaview because that group’s payments are so low.

“They either refuse to deal with us, or they make the reimbursement so ridiculously low you can’t deal with them,” Iwasiuk said. “The consequence is that a large number of patients are channeled elsewhere.”

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Santa Paula Memorial Hospital’s Fiscal Health

(in thousands of dollars)

*--*

Operating Operating Operating Nonoperating Total Year revenue expenses revenue 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 $12,607 $13,727 -$1,120 $1,382 $262 1999 $13,459 $15,382 -$1,923 $481 -$1,443 2000 * $11,928 $14,699 -$2,771 $2,321 -$450

*--*

*

Fiscal year, ending March 31

Source: Santa Paula Memorial Hospital