Santa Maria, California
Catholic, not-for-profit
130 acute beds, 99 skilled
Fixed price, heavily regulated environment
Affiliations: academic medical center support in key specialty programs

Background

Profitable only from Non-Operating and Other Revenues; losses from operations increasing; no long-term finance policies; reserves shrunk to $2.0 million; random capital investment without any strategy; 50 percent outmigration from service area; extremely thin margins forced by predatory managed care pricing; highly competitive area with intense utilization pressure; health plans aligned with primary physicians.

Results Under MPA Leadership

• Became one of California’s top performing hospitals
• After 14 years, income from operations rose to $4.4 million; reserves climbed to $30 million
• Outmigration down to approximately 15 percent
• Market share up dramatically over competitors
• Rated “A” by Standard & Poors Corporation through four tax-exempt financings

Key Moves

• Revamped financial policies;
• Improved clinical capabilities through physician recruitment and clinical service development (cardiovascular, oncology, neurosurgery, orthopedics)
• Designed and financed a continuum of services including a 99-bed SNF, home health, infusion therapy, and community clinics
• Developed core competence in managed delivery including capitation
• Modernized and expanded facility

Leadership Focus

• Strategy, long-term positioning, and resource allocation
• Minimal Board involvement in operations 
• Financial and CQI performance measures
• Highly incentivized management team
• Extensive concentration on physician relations