Once-Frail Ojai Hospital Now Is a Role Model for Survival

Times Staff Writer

As Santa Paula's tiny hospital struggles to survive, it might look 16 miles north over a twisting mountain pass to Ojai, where another small community hospital traveled the same uncertain road and then saved itself through change.

Owned by four hospital chains since 1987, the 110-bed Ojai Valley Community Hospital is now independent and stands today as the rare success story of a rural hospital that actually makes money.

Not much money. But any profit in these days of Darwinian competition and tight-fisted HMOs counts as a soaring achievement. Nearly two-thirds of all California hospitals are unprofitable, according to industry officials, and the plight of small rural hospitals looks even worse.

"Most rural hospitals are losing about 4% annually," said Ojai department store owner Alan Rains, who is chairman of the hospital board of directors. "So, if we're making a [slight] profit, that makes us stable."

Ojai Valley netted $115,000 on revenue of $15.9 million for the fiscal year ending Sept. 30, officials said. That doesn't count $350,000 in gifts and donations. By comparison, Santa Paula's 49-bed hospital has lost about $13 million on operations its last five years, draining all reserves. Officials say it faces closure by summer and are studying a partnership with a larger medical center.

Ojai's facility also faced a harsh reality in recent years when the national chain that owned it raised the possibility of closure because of costly earthquake upgrades required by the state.

Its response was to remake itself step by uncomfortable step. Three years ago, hospital administrators closed the hospital's popular but money-losing maternity ward, angering prospective mothers who had counted on delivering their babies near home.

In October 2000, a group of local leaders borrowed $2.5 million and bought the Ojai hospital as a community foundation, putting it in the hands of local citizens for the first time since its opening in 1959.

Since then, the Ojai Valley Community Hospital Foundation has plowed $550,000 back into the facility, making upgrades deferred for many years. It hired a director of business and development to oversee marketing and fund-raising. Gifts and donations reached $350,000 last year as a group of volunteers acting as The Guild hosted a black-tie fund-raiser.

"People now understand that the hospital is a community-owned asset and that all of the funds that are generated are poured back into hospital improvement," Rains said.

The hospital converted the maternity ward space to money-making outpatient surgeries. It began to prepare its own meals for patients instead of contracting out. Ojai's third-largest employer with 280 workers, it increased wages and benefits. It also took every opportunity to get its name and good deeds in the local newspaper.

"The hospital has been able to generate some trust and respect," said Rains, who spearheaded the purchase drive. "It's now owned by the community."

The hospital also increased its efforts to reach out to the broader Ojai Valley community, buying a health clinic in Oak View last year.

That has increased the number of hospital patients from that community by 30%, Rains said. "It becomes a feeder to our hospital for cases where somebody needs general surgery."

Importantly, Ojai physicians have staunchly maintained their loyalty to the Ojai Valley hospital, routing as many patients there as possible. In Santa Paula, a principal hospital complaint is that too many local doctors refer patients to Ventura hospitals for treatment.

"There is a loyalty to this hospital," said family doctor Gordon Clawson, chief of the medical staff. "I like getting up in the morning and seeing my patients here," he said. "There would be a hardship to have to get up and go to Ventura. Even when the profit was going back to Tennessee and the [hospital chain] was leeching off the hospital, we still wanted to support that entity."

Ojai Valley has a built-in advantage over Santa Paula, as well. Sixty-six of its beds are dedicated to skilled nursing care, a profitable niche that targets Ojai's large senior citizen population and underwrites less-profitable services.

Comparing Santa Paula and Ojai Valley hospitals, "is not an apples-to-apples thing," said Monty Clark, regional vice president of the Hospital Assn. of Southern California. "A big portion of the revenues in Ojai come from their skilled nursing.

"But give them credit: The community of Ojai recognized that they couldn't be all things to all people with their hospital. Losing O.B. [obstetrics] was a tough choice," he said.

Ojai Valley has shown that a small hospital can remain viable by limiting services, fostering goodwill and finding an unfilled niche, Clark said.

Clawson said that eliminating baby deliveries was a necessary, but difficult, choice. He said it so upset his own wife, Kristen, that she vowed not to have another baby until Ojai Valley restored its obstetric services.

"She had our first two daughters there, and it solidified her love for the hospital," Clawson said. "She used to go in just to look at the babies.... but three years passed and she finally overcame her objections."

The Clawsons' third daughter was delivered recently in Ventura.

Santa Paula officials were criticized in recent public hearings for being out of touch with the Santa Clara Valley communities. But they say they have studied Ojai Valley's operations and now are trying similar techniques.

"I'm aware they've had considerable success there," said Phil Romney, chairman at Santa Paula hospital. "And I think the turnaround we've seen here the last couple of months reflects some of the same efforts we've made to reach out to the public and our physicians."

Santa Paula hospital hired a marketing director a year ago and now runs ads almost daily in Spanish-language publications and radio stations that reach the mostly Latino farm towns of Santa Paula, Fillmore and Piru.

Santa Paula directors are considering the Ojai Valley hospital as one of many operating models as they try to figure out a way to stay open, Romney said.

"We've already looked at skilled nursing," he said.

Santa Paula hospital received approval from the city last year to build a 60-bed assisted-living facility on the 25-acre parcel where the hospital is located. But there has not been money for such an investment.

"It makes sense," said Mark Gregson, chief executive of Santa Paula. "It would be a location for seniors who would more than likely seek medical care from their neighbor."

Whether Santa Paula will cut costly services it can longer afford is another question. A special committee appointed by local community councils to save the hospital reported last week that keeping a maternity ward was a top priority.

Romney said obstetrics are picking up in Santa Paula. After reaching a low of 10 babies, about 30 are now delivered monthly. If deliveries reach 40, it would make financial sense to keep the service, he said.

"These are the things we're going to continue to look at," Gregson said. "We're evaluating all services."

For The Record Los Angeles Times Tuesday March 04, 2003 Home Edition Main News Part A Page 2 National Desk 1 inches; 52 words Type of Material: Correction Ojai hospital --A photo caption in Monday's California section incorrectly stated that Ojai Valley Community Hospital was rescued from impending bankruptcy two years ago. The hospital runs an operating profit and was not facing bankruptcy when community leaders purchased it in October 2000.
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