Hillcrest Hospital needs a face-lift and a new manager or it may be forced to close its doors. After years of financial struggles, the city-owned community hospital in Calhoun City, Miss., wants to sign a long-term lease with a strong hospital system that can manage Hillcrest's daily operations and provide capital for needed structural improvements and new equipment.
Tiny Calhoun County, with only about 16,000 residents, can't afford to pump dollars into improvements. Last year the county appropriated $20,000 in tax dollars to improve the hospital, but its tax base can't support continuing investments in the facility, says James Franklin, Hillcrest administrator.
"The big reason for the lease is to provide access to capital expenditures that are necessary to maintain the building," Franklin says.
The 30-bed hospital is one of three organizations in a package leasing deal. A 120-bed nursing home and an ambulance service, both county-owned, were added to sweeten the pot. During some of the past 10 years, the hospital has lost money, but the nursing home and ambulance service have posted profits.
The hospital lost almost $232,000 on total operating revenues of $3.4 million at the end of fiscal 1998. But the nursing home earned $203,000 on revenues of $3.6 million, and the ambulance service earned $78,600 on revenues of $375,000.
Hospital income mostly hovers near break-even, Franklin says.
The hospital posted a profit of $75,889 on revenues of $3.3 million in the year ended Sept. 30, 1997, a profit of $58,371 on revenues of $3.3 million for the same period in 1996, and a loss of $10,408 on revenues of $2.5 million in 1995, according to Neptune, N.J.-based American Hospital Directory information service.
The poor performance in the past few years has stemmed from reduced Medicare reimbursements imposed by the Balanced Budget Act of 1997, Franklin says. The hospital's patient base is 80% Medicare.
The hospital's admission rates have decreased during the past 10 years because patients have migrated to other facilities and the trend has been toward outpatient visits, Franklin says.
The county has hired St. Louis-based Farris Consultants to facilitate a lease deal. Farris has begun exploring opportunities with regional healthcare organizations such as Baptist Memorial Health Care Corp., Memphis, Tenn.; North Mississippi Health Services, Tupelo; and Premier Living Center, which operates nursing-care facilities in Louisiana.
But North Mississippi has already rejected the opportunity. "The consultant's report did not show a favorable financial future," says Jeff Barber, the system's president and chief executive officer.
A Baptist spokeswoman confirms that the system has had preliminary meetings with the consulting company but says Baptist has not made any proposals or decisions to bid on the organizations.
Some local physicians and private investors have shown interest in the three organizations, but Farris has not talked directly with them, Franklin says.
Calhoun County supervisors say they hope to have a serious bid by year-end. Brent Farris, president and CEO of Farris Consultants, says, "If they don't find an organization to lease the hospital, they have only two options: first, to close the hospital or second, to immediately convert the facility into an urgent-care, outpatient or critical-access facility. That's not really what the city or the county wants to happen."