Americus, Ga.-based Sumter Regional Hospital-owned by Sumter County and the town of Americus-has struggled financially for most of its 46 years.
The 221-bed public hospital serves a mostly rural and impoverished population of 120,000 in southwestern Georgia. More than 30% of the facility's patient revenues come from Medicaid and nearly 40% from Medicare.
Things got so bad that in 1987 Sumter posted a loss of $1.8 million.
Public facilities nationwide have experienced similar financial pressures. In 1987, there were 1,509 publicly owned hospitals nationwide, but a decade later that number dropped about 17% to 1,260, according to the American Hospital Association's 1999 Hospital Statistics.
While financial problems have caused some public hospitals to close or be sold to investor-owned corporations, most in Georgia have converted to privately operated, not-for-profit status, according to the GHA: An Association of Hospitals and Health Systems.
After Sumter's losses of 1987, it hired Jerry Adams, 56, as president and chief executive officer in 1988 with the understanding that the facility would be converted to private operation.
Adams, who had been CEO of Willis-Knighton Medical Center, Shreveport, La., immediately ordered cost-cutting measures. "We didn't discontinue services, but we had to cut our operating expenses and go through a recovery period," he says. "We had to change the way we did business." That was accomplished by reducing the labor force and renegotiating vendor contracts.
Sumter may have cut back previously, but it has expanded in the past five years. The hospital has added 23 new services and increased its medical staff to 48 from 27. New services include providing a school nurse, jointly operating oncology and cardiology programs with 418-bed Phoebe Putney Memorial Hospital in nearby Albany and taking over a voluntary local hospice.
Adams' turnaround was successful early on, with the facility back in the black since 1988. The hospital's profits climbed to $2.9 million on revenues of $42 million in 1998, according to HCIA, a Baltimore-based healthcare information company.
The conversion took place in 1991. Sumter remains a public hospital; the county commissioners and the city council still own the facility's assets and are represented on its authority and board. But a private, not-for-profit organization operates the hospital.
Adams says the transition was smooth. "We did our homework," he says. "We had to draft new bylaws and select new board members who had new responsibilities."
Local merchants and bankers were added to the board, bringing strong business expertise, Adams says.
"The secret was having a good working relationship with our county and city governments, and communicating with them throughout the process," he says. "I've seen people make the conversion without doing that, and they were more likely to have opposition."
Adams says the conversion was needed because of obsolete hospital authority regulations and government bureaucracy, which prevented Sumter from growing and reacting to the massive changes in healthcare.
"We evolved from a hospital to a health system that includes a hospice, nursing home, rural health clinic and paramedic service with doctors' offices around the region," Adams says. Those ancillary businesses were prohibited by the hospital authority laws that governed the hospital before its conversion, he adds.
To gain flexibility, 25 of Georgia's 80 public hospitals converted during the past decade, GHA President Joseph Parker says.
"Given how our healthcare delivery system has changed, in many cases they had no choice but to restructure to get the flexibility they needed to operate in their marketplace," he explains.
Parker agrees with Adams that problems have stemmed from the state's cumbersome hospital authority laws, which prohibit hospitals from extending services more than 12 miles beyond their county line and limit the services hospitals provide.
State lawmakers eventually changed the laws to allow public hospitals to convert, Parker says.
"The due process way government does business and the (lack of) access to capital are the predominant reasons public hospitals have converted to some other form," Jim Bentley, vice president of strategic policy and planning for the American Hospital Association, says.
Despite its problems, however, Sumter had powerful allies. Former President Jimmy Carter and his mother and brother all served on the local hospital authority or hospital board and supported the facility. Jimmy Carter's Uncle Alton Carter was a founding member of the hospital authority board and helped plan and finance the hospital in 1949.
Jimmy Carter dedicated the hospital's $23 million addition in May. That expansion includes a new emergency room and areas dedicated to physical therapy, critical care, inpatient and outpatient surgery, and administration.
"We didn't even have to ask the county to endorse our bonds," Adams says. "We did it on the strength of our own credit (which carries an A rating)."
One of the publicly expressed fears about the conversion hasn't been realized, Adams says. "We've always accepted people regardless of their ability to pay," Adams says. "Our charity care didn't change a lick. And the change in status didn't affect any of the people we served."