A 99-year-old Kansas hospital that was in danger of closing has found new life for at least six more months.
Halstead (Kan.) Hospital and Leslie Kitchenmaster, a local businessman, last week reached an agreement under which Kitchenmaster's company, Peak Management Corp., will manage the 126-bed hospital for an undisclosed percentage of net income and loan it an undisclosed amount of money. Without a capital infusion, the hospital had expected to close by October.
But Kitchenmaster expects a quick turnaround of financial results, said his lawyer, Christopher Costello. Philanthropy isn't Kitchenmaster's main motivation, Costello said. "It would be devastating to the town if this closed entirely, but he also sees this as a business opportunity," Costello said.
Kitchenmaster's business interests also include oil and gas production, cable TV franchises and two trade publications.
Dennis Turney, Halstead's president and chief executive officer, said the contract runs for six months, during which time the hospital, known in the state as the "Little Mayo Clinic," must reverse its daily losses of $6,000 and earn a profit margin. The contract includes an option for Kitchenmaster to buy the hospital, and Kitchenmaster is studying whether the hospital should remain not-for-profit or be converted to for-profit, Turney said.
Turney doesn't expect layoffs but added, "There's not anything that's not going to be turned (over)" as the hospital looks to improve its finances. Employees have been told to expect a turnaround plan today.
Halstead Hospital faces debts of $3.1 million and lost $460,000 on $9.4 million in revenue in the six months ended June 30.
The Hertzler Research Foundation, a not-for-profit group affiliated with the Hertzler Clinic, the physician group practice started by the hospital's founder, Arthur Hertzler, M.D., will continue to own the hospital.
Turney said three out-of-state groups expressed interest in Halstead Hospital. Two of the groups conducted site visits, but Turney said the deal with Kitchenmaster came together before the others.