New York Times Profiles Turnaround of One Rural Pennsylvania Community Hospital

The New York Times today profiles the successful turnaround of Kittanning, Pa.-based Armstrong County Memorial Hospital, a small, rural hospital that stands in contrast to the majority of such hospitals now in "crisis." According to HHS, more than 450 community hospitals closed between 1989 and 1998, having faced "decreased payment from insurers, weak management and inefficient technology." Of the 4,900 still in business, "most ... run with at least one in three beds empty, suggesting that still more will close," the Times reports. In 1994, Armstrong faced closure because of low managed care and Medicare reimbursements and declining patient enrollment. The hospital then brought in the human resources consulting firm Modern Management Inc., which quickly "cut all salaries 5%, dismissed 106 workers ... and reduced employees' time off." A new CEO and CFO were hired, and the hospital "reviewed and tightened" its contracts with doctors and improved its billing practices to reduce the waiting time for payments. The changes resulted in a $5.3 million reduction in costs from 1994 to 1996, and in three of the past four years the hospital has operated in the black. Addressing the needs of the community, Armstrong expanded its local services, opened a center for elderly diabetes patients and improved both its emergency room and obstetrics wing. However, the Times reports that there is "still much to accomplish," as Armstrong faces rising prescription drug and technology costs as well as trouble retaining nurses. Also, an economic slowdown could increase the number of uninsured patients who use the hospital, thereby increasing costs. Still, Richard Szymkowski, Armstrong's CFO, said, "We're trying to stay ahead of [the] curve" (Freudenheim, New York Times, 4/17).