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Asante merger stabilizes Ashland hospital's finances

After years of hemorrhaging millions of dollars, Ashland's hospital is turning around its finances and boosting services after a merger with Asante Health System.

The struggling independent hospital had been on the brink of closure before it merged to create Asante Ashland Community Hospital in 2013. Asante's operations include the Rogue Regional Medical Center in Medford and Three Rivers Medical Center in Grants Pass.

Ashland Community Hospital suffered a more than $4.2 million net loss for the fiscal year that began in 2012, then another $3.6 million loss in 2013.

After the merger, the hospital's losses were reduced to an estimated $1.5 million for the fiscal year that began in October 2013 and ended this September, according to Asante figures.

The hospital hopes to have a positive operating margin of $100,000 to $200,000 for the current fiscal year that began in October, according to Ashland hospital CEO Sheila Clough, who was brought on board in 2013.

"We're budgeted to have a positive operating income for the first time in seven years," she said. "To turn operations around in 12 to 18 months is pretty cool. I expected three years. It really is tremendous."

Clough said there is still room for improvement in the Ashland hospital's finances. Highly successful hospitals have a 4 to 7 percent operating margin. For a hospital of Ashland's size, that would equal positive revenue of $1.5 million to $2 million, she said.

Ashland City Councilor Dennis Slattery, who helped with merger negotiations, said he is impressed with the hospital's financial turnaround.

"It's an extremely fine performance considering where the hospital was," he said. "Moving it toward break-even and then a positive track takes a lot of work. That improvement in one year is actually excellent."

Slattery, an accounting professor at Southern Oregon University, said the hospital is now on a sustainable track.

"It's been a terrific marriage. They've done a wonderful job," Slattery said. "We have a functioning hospital that is getting better by the day."

The hospital is one of Ashland's largest employers and has the highest average pay.

"People understand we saved a whole lot of jobs and peripheral jobs by keeping the hospital in place," Slattery said.

Emergency Room Supervisor Rick Landt said the hospital has improved since the merger.

"It's become evident to me we're part of a very professional organization that strives for excellence. It's more than just lip service," he said.

There was apprehension and fear of the unknown before the transition, said Landt, who is also an Ashland Parks and Recreation commissioner.

"As we've experienced what that change has meant, in reality most of the fears were unfounded," he said.

To shore up the hospital's finances for the long term, Clough said Asante put in a new computer system. The Ashland hospital now uses correct insurance codes so it gets paid for the procedures it performs.

The hospital was caring for patients in a way that was more costly than at comparable hospitals. Certified nursing assistants now handle more tasks, such as helping patients to the bathroom, freeing up nurses for higher-level tasks, such as managing medications, Clough said.

When support staff members leave their jobs, the hospital evaluates whether they should be replaced. That has led to a reduction in support staff but an increase in nursing staff, she said.

Using the Asante system's bulk discount buying power, the Ashland hospital is paying less for supplies and equipment, Clough said.

Ashland's hospital can use Asante staff for human resources, marketing, information technology support, risk management and other duties, rather than having to duplicate those jobs, she said.

Asante ended a pay freeze at the hospital. Employees who qualified for raises received them in fall 2013 and fall 2014. The hospital also aligned its pay and benefits with the Asante system, which increased pay and benefits as well, Clough said.

With the hospital stabilized, more doctors are having their patients give birth at the hospital, Clough said.

"They weren't sure we would even be open. Their trust in and relationship with the hospital wavered," she said. "Now that we've established we'll be here and are investing in the building, training and staff, their confidence in our facility is returning."

The hospital is promoting its unique services, including water birth and vaginal-birth-after-Caesarean options. A doctor and anesthesiologist remain on standby during the entire labor process in case a VBAC birth doesn't work and a C-section is needed, Clough said.

The hospital hopes to attract pregnant women who prefer the care of midwives, or who want to give birth at home.

"We're looking to expand to using midwives. Additional births could be done at the hospital," Clough said, noting midwives could be backed up by physicians and the hospital's equipment if something went wrong.

Urology and sports medicine are other areas where the hospital hopes to expand services.

The hospital has recruited additional doctors and nurse practitioners to the area and formed new partnerships with local doctors and surgeons.

Added services include breast reconstruction for cancer survivors and pediatric dental procedures done in an operating room under anesthesia.

Early on, Asante recognized the Ashland hospital's surgical capacity was underused.

Since the merger, inpatient surgeries are up 3 percent and outpatient surgeries increased 6 percent, Clough said.

Use of the emergency room has shot up 20 percent, she said.

The federal Affordable Care Act is providing subsidized health insurance to people, but many are still going to emergency rooms — which are required to treat patients — rather than establishing relationships with primary care doctors, Clough said.

"As patients come to the ER, we steer them after discharge into primary care," she said.

That eventually should help reduce costs for the hospital and the health care system overall, she said.

Many patients who would like to avoid costly emergency rooms end up going there or to urgent care clinics because their doctors don't offer same-day appointments for immediate medical problems.

Asante Physician Partners, Asante's clinic branch, is addressing that problem by offering more same-day appointments for urgent medical care, Clough said.

On the technology front, Asante is investing $3.5 million to move the hospital to an electronic medical records system. Doctors can access patient records wherever the patient goes, reducing duplication of testing, the chance of medication errors and other problems, Clough said.

Patients can also access their own medical records, she said.

Asante replaced an archaic nurse call system that frequently broke down. At one point during a weeklong breakdown, patients were using hand bells to summon nurses, Clough said.

Nurses now carry responders and can receive calls from patients, even if they are away from the nurses' station. The call system is also connected to alarms in patient rooms, she said.

The hospital continues to use volunteers to augment services, including the Pink Ladies organization. The hospital took over that group's administrative tasks, freeing them up to do their volunteer work.

Clough said the community, hospital staff, Asante and local health care providers are showing their commitment to Asante Ashland Community Hospital.

"One year ago, people were concerned whether Ashland Community Hospital could continue to operate," she said. "In one short year, I believe we've made sure the hospital can operate and can operate effectively. We will be here for the future of the Ashland community."

Reach reporter Vickie Aldous at 541-776-4486 or valdous@mailtribune.com. Follow her on Twitter at www.twitter.com/VickieAldous.