Hospital Says It’s on the Mend

Struggling to survive, Santa Paula Memorial Hospital has been forced to borrow money for the first time in its history. But officials say the tiny medical center is in the middle of a remarkable economic turnaround that could keep its doors open indefinitely.

A decade of losses has drained $14 million from its once healthy reserves and forced Ventura County’s smallest general hospital to borrow to pay its bills. But the 39-bed facility made money for the first time in years in November and expects to cut its losses by two-thirds this year, officials said Thursday.

Patient, physician and community support is expected to cut losses from nearly $3.2 million in the last fiscal year to less than $1 million during the 12 months ending in March, officials said.

“We have applied for a million-dollar line of credit that will help us with cash flow,” hospital trustee Anita Tate said. “That makes us take a deep breath because we have not done this before. But that’s the only way we could see to stay in business.”

Closure would strike a blow at the heart of Santa Paula. The hospital is the farm town’s second-largest employer with 265 workers, and its doctors have saved countless lives since it was built solely with community donations in 1960.

Hospital officials said the successes of the last year are evidence that the panicked efforts of a year ago to keep the facility open have given way to a belief in the future.

Surgeons have done 30% more operations since last March than they did during the same period a year before. Obstetricians have delivered 20% more babies. The number of patients has increased from 14 to 18 on a typical day.

The time it takes the hospital to collect for its services has dropped from more than 90 days to 55, said hospital chief executive Mark Gregson. And the hospital has received grants from state and local agencies for $1 million over three years for new programs treating obesity, diabetes in children and teenage pregnancy.

“I think we’ll not only survive but thrive,” Gregson said. “Truly, there’s just been a huge amount of rallying behind us. The community, medical staff, employees and businesses want us here.”

Gregson said a recent holiday fund-raiser made clear the difference a year can make.

“We raised $20,000 at our annual holiday benefit last year, and we raised $100,000 this year,” he said. “The discussion has changed from that of crisis to planning how to meet the needs of this community.”

Jeffery Alexander, a Boston attorney and health-care consultant, said that in his two decades of helping dozens of hospitals, he has never seen a more dazzling reversal of fortune than Santa Paula’s.

“I wouldn’t have taken book on that place staying open six months when I was there last year,” Alexander said. “This turnaround is really unbelievable. It’s Lazarus back from the dead. It’s nothing short of miraculous.”

Alexander, hired by the Quorum Health Group, a national management company that runs Santa Paula hospital, said he now gives the facility better than a 50% chance of survival.

Without effective reform, the little hospital perched on a hill above the orchards of the Santa Clara Valley had no future. It had seen its operating losses mount from $93,000 in 1990 to more than $3 million last year.

In a world of cutthroat managed-care contracts, its prospects were bleak.

Then, as the hospital was celebrating its 40th anniversary, officials developed a plan to keep it from dying.

They pledged to work closer with local doctors to make sure they referred every possible patient there, instead of the private Community Memorial Hospital or the public Ventura County Medical Center, both 15 to 20 minutes away in Ventura.

They took their case to the 45,000 residents of the bucolic Santa Clara Valley, telling group after group about the hospital’s dire financial straits and asking them to stay in the valley for surgeries or to deliver babies.

They persuaded employers and employee groups in Santa Paula and Fillmore to add Santa Paula hospital--and the physician group that serves it--to the list of options on their health plans.

Gary Deutsch, a family doctor in Santa Paula since 1980, said the community finally recognized that its hospital could close any time, and local doctors finally sat down to work out differences with administrators.

“The community decided to support this hospital,” said Deutsch, president of the 40-doctor Valley Care physicians group in Santa Paula and Fillmore.

“I’m encouraged because we’re seeing the turnaround in the hospital’s bottom line each month,” Deutsch said. “The surgical specialists are bringing their cases to Santa Paula, and they’re receiving very favorable feedback from their patients. Surgical cases can make or break a hospital.”

Surgeons now operate at Santa Paula in orthopedics, urology, gynecology, ophthalmology and general surgery.

“That translates straight to the bottom line,” Gregson said.

The hospital has added an obstetrician and pediatrician to its staff, hiking business in two lucrative areas. It also now has a cardiologist and a full-time “hospitalist,” who assumes care of patients from their primary doctors, freeing physicians to see more patients in their offices.

New equipment has also come through the door to enhance laboratories and waiting rooms. A new $1-million CT body scanner is set to arrive soon.

“We haven’t hit home runs,” Gregson said. “But we’ve hit lots and lots of singles, and those singles add up.”

From a broader perspective, a spokesman for the Health Care Assn. of Southern California, a hospital industry group, said he is surprised by Santa Paula’s success in difficult times.

Twenty-six hospitals have closed in Southern California since 1995, and nearly two-thirds of the 440 hospitals in California are losing money on operations, spokesman Jim Lott said.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Santa Paula Hospital’s Fiscal Health

(In thousands of dollars)

*--*

Net Non-

Operating Operating Operating operating Total Year* revenue expenses revenue revenue revenue 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 -$267 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 -$1,442 2000 $11,928 $14,699 -$2,771 $2,321 -$450 2001 $10,522 $13,702 -$3,180 $10 -$3,170 2002** $ 8,543 $ 9,653 -$1,110 $112 -$998

*--*

* Fiscal year ending March 31.

** First eight months of 2001-2002 fiscal year.

Note: Nonoperating revenues include gifts, fund-raising proceeds and assets from the estates of deceased people.

Source: Santa Paula Memorial Hospital