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Sunday, May 1, 2016

OMC to begin managing Fulton County Hospital

Wednesday, October 19, 2011

Ozarks Medical Center CEO, David Zechman, explains his proposal to begin management of the Fulton County Hospital. To his right is Kim Thompson, an OMC executive, who will serve as interim manager for 60 days, as a permanent CEO is hired. After 60 days, OMC wants to begin a three year agreement to manage the hospital for a monthly fee, while investing resources to solve persistent financial problems.
Nine weeks after terminating its CEO and voting to seek a partner, it appears the Fulton County Hospital Board of Governors has finally found one.

Ozarks Medical Center CEO David Zechman was a surprise visitor to an Oct. 12 special meeting of the board.

Zechman, who indicated on Sept. 26 that OMC would not make a lease proposal, told the board, "I'm back. Judge Willett had called us after the last meeting, a couple of weeks ago, and asked if we'd consider an opportunity to manage and help the hospital."

Zechman went on to outline a proposal to provide interim management, at no charge, for 60 days. During the 60 day period,

OMC and the hospital board will negotiate an agreement which will allow OMC to manage the hospital for a three year period.

"This isn't about business and those type of things," Zechman said. "It's really about doing the right thing and helping support the health care of this area."

Zechman indicated that, under a management agreement, the hospital will pay the salary of a CEO, who OMC will recruit, along with a monthly management fee, expected to be about $10,000 a month.

OMC wants the hospital to put a percentage of a $1.7 million dollar windfall from the sale of its home health license into a trust fund to cover management fees and the salary and benefits of the CEO.

In return, OMC will work to reduce expenses and staff at the financially troubled hospital, improve billing and debt collection, recruit physicians and begin a marketing campaign to emphasize that the Salem hospital is affiliated with OMC, to develop a positive image for the hospital.

Under the management agreement, OMC wants a "performance incentive," 10 percent of the total when there is a "positive operating margin."

Zechman said half of any bonus will be returned to the Fulton County Hospital to be used for program development.

"We are going to invest a significant amount of resources into this (hospital), and that's why I think it's important to have a guaranteed three year agreement," said Zechman.

After two years of two million dollar losses, the board voted on Aug. 9 to ask the Baxter Regional Medical Center and Ozarks Medical Center if they were interested in leasing the hospital.

On Sept. 26, Zechman indicated OMC was interested in helping the hospital, but faced challenges of its own and was not going to make a proposal.

The same day, Baxter Regional proposed managing the hospital for a two year period, for a management fee.

In year three, it would have begun paying the county to lease the hospital. It, too, made promises to invest in the hospital and help it solve persistent financial problems.

On Sept. 29, the board rejected Baxter Regional's proposal, partly because another company, the LHC Group, offered to pay the hospital $1.7 million dollars to buy its home health care license.

The hospital board is working to close the deal for that money, which will help the hospital pay down its debt and get on more stable financial footing.

After the OMC presentation, the board voted to accept the 60 day management offer.

Zechman introduced Kim Thompson, OMC Senior Executive Director

of Finance. She has agreed to be the hospital's interim administrator, starting on or around Oct. 20.

Thompson, who is a resident of Cherokee Village, said she was excited about the opportunity to help the hospital.

"We will have a lot of our department heads down here working with you and finding out what you do," Thompson said. "If there are any areas where we can help, we'll give you our input and things we've done. We're going to work with you, side by side."

As the interim management begins, Zechman indicated that David Pointer, from his staff, will continue to negotiate with Fulton County Judge Charles Willett on the management agreement he had outlined.

In other business, the board authorized Chairman Bill Pace to seek a $250,000 loan from White River Planning and Development.

"This is what we need to get some short-term money to keep the hospital operating until we can get the sale money from the home health care license," Pace explained.

To close the license sale, the board must get approval from USDA, which is still owed a construction loan.

Hospital staff has been revising the budget the board approved in June, which showed a $766,961 loss this fiscal year.

The revised budget initially proposed showed a $328,710 surplus, when cost cutting measures and the $1.7 million income from the home health license sale was figured in.

Because the revised budget shows reduced patient revenue, board members also reduced the amount of expected bad debt.

The revised budget, which will be submitted to the USDA, now shows a surplus of nearly $1.5 million.

At an Oct. 3 meeting, the board directed department heads to implement cost cutting measures they had recommended.

According to Administrative Assistant Jennifer Perryman, cost cutting measures reflected in the revised budget include putting most employees on a 36 hour work week, and sending some workers home when there is a low patient census.

Pharmacy Director Darla York is working to cut pharmaceutical expenditures by $200,000 through improved management of her stock.

The dietary department is spending less by ordering less food, keeping only one week's supply on hand in the kitchen, instead of two.

Grant money the hospital is in line to receive should reduce the amount spent on maintenance and plant operations by nearly $60,000.

Administration and Medical Records has decided to delay purchase of an electronic medical records system, cutting $685,000 originally budgeted for this fiscal year.

As the OMC executives prepared to leave the meeting, interim administrator Leslie Batterton told them, "Fulton County Hospital has some great employees."

CEO Zechman responded with some encouraging words to employees.

"I've been here a couple of times and you can look and see the group and see the dedication of the group here. I know there's been some angst recently and I certainly understand that, so we're happy to come in and support (the hospital)."

Since Zechman mentioned identifying "cost reduction opportunities, especially in staffing," hospital employees remain on edge, as the new direction in management of the Fulton County Hospital appears set to begin.

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