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Case Study

Rural Hospital Makes a Remarkable Comeback: Huntsville Memorial Hospital, Huntsville, Texas

THE SITUATION

After emerging from bankruptcy and narrowly escaping closure, Huntsville Memorial Hospital (HMH) in Huntsville, Texas, was on the path to recovery when it was dealt another blow. Like many hospitals in Texas, for years, the hospital had relied on a certain amount of supplemental funding from the state of Texas, but in 2022 the annual payout was reduced by a staggering $7 million. Such a sudden and drastic shortfall might have been ruinous, but HMH leaders were so far along on the comeback trail that they weren’t about to let this latest setback break their stride. With Community Hospital Corporation’s guidance, the hospital honed its turnaround strategy into a two-pronged recovery plan to reduce expenses and increase top-line revenue.

Remarkable Comeback Strategies

  • New Executive Team
  • Leader Patient Rounding
  • Changed ED Group
  • Launched Family Medicine Residency Program
  • Formed Nurse Residency Program
  • Added New Services & Partners
  • Rebuilt Community Relationships

BACKGROUND

Founded in 1927, HMH is a 123-bed, not-for-profit community hospital located 70 miles north of Houston in the “micropolitan” city of Huntsville — the county seat of Walker County, Texas, and home to both a state university and a state prison. After the hospital filed for Chapter 11 protection under the federal bankruptcy code, the Walker County Hospital District (WCHD) and CHC partnered in 2020 to create a new company to oversee HMH, which draws from surrounding communities and serves a population of about 72,000. WCHD is consistently instrumental in offering financial support to HMH through appropriate governmental actions.

The new entity, formed as Huntsville Community Hospital Inc., put HMH on a path to renewal, but a series of misfortunes brought progress to a halt. Not long after the partnership was announced, the COVID-19 pandemic forced hospitals across the nation into crisis mode, and HMH was no exception. Next, a fierce winter storm and lingering deep freeze triggered a state-of-emergency declaration and hampered hospital operations due to power outages, water disruptions, overflowing emergency rooms and staffing shortages.

HMH weathered the real and proverbial storms. Then, 2022 brought the $7 million reduction in state funding for HMH.

Patrick Shannon took over as HMH’s new CEO in June 2021, right in the midst of this rocky stretch. He immediately saw opportunities for improvement, including a significant number of people leaving the hospital’s emergency department without being seen. In addition, the hospital had about 60 agency nurses under contract driving up labor costs.

Addressing these issues would only go so far to make up for the withdrawal of state funding. To bridge the gap, the hospital had to come up with roughly $500,000 per month, which they’ve achieved through cost reductions as well as revenue enhancements.

THE PLAN

As a CHC-affiliated hospital, HMH had a turnaround plan in place prior to Shannon’s arrival and had already triaged certain existential threats, so the focus had turned to long-term sustainability. For example, to address the nursing shortage and overreliance on contract nurses, HMH redoubled its recruitment and retention efforts. Working with area nursing schools, the hospital established a one-year residency program for nurses to cap off their clinical training.

HMH had also replaced its ED and anesthesia providers under more favorable terms with increased anesthesia capacity to foster surgical growth.

The plan moving forward focused on cost reductions and, concurrently, top-line revenue growth. In terms of cutting costs, “We had an extensive spreadsheet; nothing was left off the table,” Shannon says. “One of the starting points that made a significant impact was renegotiating contracts with vendors.”

As far as revenue, “revenue cycle was one of the areas where folks from CHC rolled up their sleeves and really helped by making sure we were collecting every last dollar from a billing standpoint.”

The hospital also put the leadership in place to succeed. Besides Shannon coming on board as CEO, a new executive team that included a COO, CFO and CNO came in for support. The hospital also created corporate and advisory boards to work with the hospital district board.

Of course, financial and operational improvements aren’t the only target areas of a turnaround strategy. Patient care and satisfaction was the main focus, from front-line employees on up to C-Suite executives. That’s why HMH began “leader-patient rounding,” giving hospital leadership an opportunity to see firsthand the care being provided.

Such initiatives are a fairly standard part of any turnaround strategy, as are action plans to hit the usual key performance indicators in healthcare. But HMH intended to go all out by adding service lines, making robust perioperative investments, forging partnerships and being the first to bring advanced technologies to the region. The hospital envisioned a notable recovery, not just a turnaround, moving beyond its pandemic and financial struggles.

RESULTS

1. Despite starting the fiscal year with $7 million less than usual, HMH — through its cost reduction and revenue enhancement programs — is on track to meet and perhaps exceed its earnings before interest, taxes, depreciation and amortization (EBITDA) objective.

2. Reduced ED wait times have drastically decreased the percentage of patients leaving without being seen by clinical staff.

3. HMH invested in a state-of-the-art AquaBeam Robotic System to deliver aquablation urology therapy. That, along with the hospital’s new VELYS Robotic-assisted Solution for orthopedic surgery, is the community’s first — the closest being 70-plus miles away. HMH also upgraded its surgical towers, endoscopy equipment and anesthesia machines.

4. HMH’s new Dialysis Access Management service line meets a community need and benefits the hospital financially, drawing many End Stage Renal Disease patients in need across their primary service area, secondary service area and even tertiary service area.

5. Orthopedic cases have expanded by 52% over prior year with the addition of a surgical physician’s assistant.

6. The OB/GYN service line is primed for expansion, fulfilling a community need while benefiting the hospital financially.

7. The Cath Lab was also a big opportunity and HMH began pursuing cardiologists to build the program. This effort resulted in a successful recruiting process with a full time cardiologist planned in 2024.

8. Efforts to create a better overall patient experience paid off through gains in patient volume and satisfaction, as well as community trust. The total number of surgical procedures increased 30% in a year’s time, and outpatient surgeries alone rose 47%. The hospital’s Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) scores have risen consistently. HMH’s Google star rating also improved from 1.9 in 2022 to 4.1 in 2023.

9. To achieve HMH’s goals for reducing patient length of stay rates, HMH conducted a thorough RFP process and transitioned to a different hospitalist group with the goal of keeping HMH’s length of stay rate at or below the national geometric length of stay (GMLOS) mean.

10. In addition to establishing the nurse residency program, HMH partnered with nearby Sam Houston State University to build a Family Medicine physician residency program to strengthen the community’s primary care physician base.

Download a PDF of the Huntsville Memorial Hospital Case Study

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