Five Rivers Medical Center in Pocahontas nearly closed in 2007.
“This hospital has had a history for probably 15-plus years of being financially troubled,” CEO Luther Lewis recently told Arkansas Business in his office at the 50-bed hospital.
Its worst year came in 2013, when the city-owned hospital reported a $2.4 million loss on $16.3 million of patient revenue.
Five Rivers was in the same boat as other small, rural hospitals, Lewis said. It didn’t treat enough patients to cover its expenses.
But Lewis credited federal health care reform for a dramatic improvement in the hospital’s financial picture. Patients who obtained insurance through Arkansas’ Medicaid expansion known as the “private option” contributed about $700,000 in patient revenue to the hospital in 2014, he said.
The additional insurance revenue combined with ruthless expense control resulted in the best financial performance in decades: net income of $651,000 on patient revenue of $13.6 million. Lewis said the hospital is on a path to post similar numbers for 2015.
Lewis, 63, was named CEO of the hospital in September 2011, and he soon discovered that he had taken on a bigger turnaround project than he had anticipated.
Even though a 1 percent sales tax generated about $1 million a year to support the hospital, it wasn’t enough to offset its losses.
Lewis began slashing programs. One of the first to go was the outpatient psychiatric program that was started by the hospital’s former manager, Allegiance Health Management Inc. of Shreveport. Allegiance, which had managed the hospital for less than a year when the city terminated its contract in 2008, touted outpatient psychiatric services as a way to improve a hospital’s finances.
But that didn’t work at Five Rivers. “That program was losing $25,000 a month,” Lewis said. “There were just not enough patients in our service area to support the program.”
(See: Allegiance Health Faces Lawsuits, Tax Liens)
That program ended in 2012. And between 2012 and 2013, Lewis trimmed the hospital’s staff from 190 full-time equivalents to 130.
The employees who remained saw their benefits shrink and are now covering more of the cost of their health insurance. Employees haven’t had a raise since 2012, and the approximately 15 managers at the hospital took a 10 percent pay cut, Lewis said.
“I can’t stress enough how much the employees contribute to the success that we’re seeing today,” he said.
The hospital is finally paying down outstanding debts. “We’re real close to having everything current, which is the first time in many, many years,” Lewis said.
He wants the hospital to continue to grow its cardiology services in 2016. Lewis also would like to see employees receive raises.
“By and large, we’re over the hump, but we’ve got to keep focusing on new opportunities that this hospital can provide to the citizens of this area,” he said.
Someday, he’d like to offer OB-GYN services so expectant mothers in Pocahontas don’t have to drive nearly an hour to deliver. To get into the baby business would cost about $10 million.
“It’s not impossible,” Lewis said. “We just got to keep building our basics here … and just have that on the table for a long-term project.”