Despite bailout, Clayton hospital struggles to survive

A $50 million county bailout last year may have saved Southern Regional Medical Center from immediate shutdown. But its future remains in peril, an Atlanta Journal-Constitution examination found.

Unless the Clayton County medical facility can continue slashing costs, attract more paying patients and persuade the county to provide ongoing financial help, some fear Southern Regional won't survive until the end of the decade. If it doesn't, Southern Regional would be the largest acute care hospital to close in Georgia since at least 1980, when the Georgia Hospital Association began keeping closure data. It also could create a medical desert on the south side of metro Atlanta.

While there are other hospitals within a 15-mile radius of Southern Regional, those hospitals don’t have the capacity to absorb the more than 74,000 emergency room visits Southern Regional sees each year. And many of the Clayton hospital’s patients are uninsured, creating a financial burden that other hospitals might not be able to take on.

The Riverdale hospital has been locked in a downward spiral for much of the last decade — a descent hastened by dramatic socioeconomic changes in the county that left it with an escalating number of patients who can’t pay. Greater competition in the health care field and changes in the way medical care is dispensed and paid for these days also squeezed revenues.

“Those forces worked in tandem and left the hospital in an untenable position,” the hospital said in a written statement.

A revolving door of top administrators and a host of back-office and operational issues over the years added to the hospital’s problems. Among them, hospital bills weren’t being sent out in a timely manner, and at times vendors weren’t getting paid, according to interviews with those who work at the hospital.

The perpetual financial crisis left Southern Regional without the money to hire enough nurses, make repairs or stock enough of the routine supplies doctors need.

Problems cascaded from there, even as some doctors and other dedicated staff members donated their own money to try to help.

In the cramped emergency room, patients waited, on average, about seven hours before being admitted to the hospital. Some lay on cots in a hallways, because there weren’t enough hospital beds or enough nurses to staff rooms in some units, hospital officials acknowledge.

Once patients were admitted, a federal survey showed they didn’t always get help as soon as they wanted it. Phones and nurse call buttons didn’t always work, patients said. The hospital looked worn. It didn’t have funds to replace its air-conditioning chiller unit. Frustrated doctors said there weren’t enough workers to set up operating rooms or clean between surgeries. While some patients told the AJC they were happy with their care, the federal survey shows fewer than half of patients would definitely recommend the hospital.

In January 2014, after Jonesboro resident Guadalupe Ybarra suffered a stroke and was rushed to Southern Regional, he spent three days being moved around the ER waiting for a bed in the hospital’s intensive care unit, according to his wife, Deborah.

That wasn’t his only experience with long waits at Southern Regional. He waited 13 hours in the ER after suffering his first stroke five years earlier. It wasn’t until his doctor stepped in that Ybarra was finally taken by ambulance to Emory in Atlanta, his wife said.

“In that 13 hours he was offered nothing to eat. His stroke was coming on real quick. All they’d do is come and help me sit him up,” Deborah Ybarra recalled recently.

Guadalupe Ybarra died Aug. 6 at the age of 64, six days after learning he had stomach cancer. Even after the family got to the hospital that day, they had to wait nearly 30 minutes to be officially told he was dead because hospital staff couldn’t find the keys to the grief room.

The bailout that taxpayers approved last May relieved the hospital of about $42 million in bond debt, paid to replace its chiller unit and provided a one-time payment of $7.4 million to help cover some costs for the poor. In return, the hospital cut expenses by $12 million, brought in new leadership and sold off some properties. The county got four seats on the hospital board.

Southern Regional also has gotten a boost through its association with Emory, which has negotiated a better deal with insurers and helped the Clayton facility attract some doctors.

But those moves may not be enough to overcome the challenges of operating a hospital in an economically distressed county amid new cost-cutting pressures by insurers and the government.

“I want to see Southern Regional hold on. We need Southern Regional,” said Ali Dadpay, an associate professor of economics at Clayton State University. “The way the economy is working in Clayton and policy-making is working in this country, I foresee Southern Regional shutting down if things continue the way they’ve been going. I don’t think it’ll make it to the end of the decade.”

Competition, changing demographics

Such a sobering assessment was unthinkable at the start of the new millennium.

Southern Regional was in expansion mode. It was in the process of building a Women’s Life Center and expanded some departments. By fall 2006, work on Spivey Station, a satellite campus with outpatient facilities and medical office buildings, had begun.

Then the bottom fell out.

In late 2007, the recession plunged Clayton into a foreclosure crisis, as many homeowners lost jobs. The school system’s 2008 loss of accreditation accelerated a trend of middle-class flight. Then in 2010, county officials shut down its C-Tran bus service, leaving thousands of residents stranded.

The turmoil left Clayton floundering. While the school district regained accreditation, it still suffers from the fallout. The county’s median household income of $40,606 is nearly $9,000 below the state average, according to the latest U.S. Census Bureau data. More than one in four residents — 26.9 percent — lives below the poverty level. Clayton still has the highest unemployment rate in metro Atlanta. It is an impoverished county trying to reconnect with the recovering economic fortunes of the rest of the region.

The recession really hurt Clayton County and that started a real negative trend in which a higher percentage of their patients were either uninsured or underinsured,” said Kevin Bloye of the Georgia Hospital Association. “You can only sustain huge losses for a very short period of time before you have to begin making difficult decisions.”

Even many of those with Medicare or other hospital coverage were left unable to cover their deductibles and co-pays, and Medicare lowered some reimbursements.

During its fiscal year 2014, which ended on June 30, the hospital provided more than $21.6 million in uncompensated care.

As the patient mix changed, physicians began relocating their practices to more favorable areas, further cutting into admissions. In 2010 alone, Southern Regional reported a net loss of 42 doctors.

Political machinations and changes in the health care system at the state and federal level dragged the hospital further down.

Gov. Deal rejected Medicaid expansion — a key provision of the Affordable Care Act — a decision that is expected to leave some $33.7 billion in federal money on the table between 2013 and 2022, according to an Urban Institute study released last August. The governor’s opposition has rankled local officials and reverberated throughout the Southern Regional network.

The Rev. Edward J. Best Jr., a retired minister who has been on the hospital’s board for 15 years, said he and the hospital’s former chief executive officer, James Crissey, went to the Capitol to show the governor how his decision was affecting Southern Regional and urge him to change his mind.

“We lost $21 million over the last year because [of] Medicare cuts… and lots of other factors affected the hospital,” Best said.

Dr. Edwin Davis said Deal’s decision means Clayton taxpayers are “paying a double tax.

“Clayton county taxpayers are providing additional funds to the hospital because the governor has declined to take federal money to expand Medicaid,” said Davis, an ear-nose-throat doctor who has been with the hospital 40 years.

Complicating matters is the recent federal clampdown on reimbursements, including a phase-out of Medicare bad debt reimbursements. That’s a significant blow. Southern Regional’s bad debt expenses nearly tripled between 2004 and 2012, to more than $50 million a year.

As all this hit, Southern Regional, once the chief dispenser of medical care on the south side, also became surrounded by all sorts of competition.

Day surgery centers opened in the market after the state in 2008 passed a law allowing them to skip the state’s certificate of need process if they are limited to a single specialty. A new orthopedic center was a particular blow, Southern Regional officials said. Doctors who had used the hospital in the past began sending their patients to the outpatient centers, cutting into Southern Regional’s admissions.

Legislation also allowed Cancer Treatment Centers of America to open, 25 miles to the south. And insured patients have their choice of Piedmont Fayette Hospital to the west and Piedmont Henry to the east.

Between 2007 and 2012, Southern Regional reported more than a 50 percent drop in admissions covered by third-party payers, such as private insurance.

Clayton State’s Dadpay said that loss is hard to overcome. He spent a day at Southern Regional as part of his Clayton Leadership program.

“A lot of the staff members donated money to Southern Regional,” Dadpay recalled. “It showed they care about it deeply. (But) everybody ignores the business environment. The fact is, Southern Regional, no matter how dedicated the staff or how efficient management becomes, they cannot compensate for the loss of paying patients.”

Promising new leadership

These days, Dr. Davis, who had little hope about Southern Regional a year ago, is more optimistic.

He hopes that new CEO Kim Ryan, an ER nurse by training, will guide the Clayton hospital out of its financial troubles and rebuild its image. He and others point to her role at Tulane Medical Center during Hurricane Katrina, where she oversaw the hospital’s evaluation and helped rebuild its downtown campus. Her style — warm, engaging and accessible (her business card has her personal cellphone on it) — so far has drawn people to her.

In her short time with the hospital, Ryan has met with 80 of its doctors — many of whom have toughed it out over the years. She is working her way around to the various departments and also has reached out to the community, attending town hall and chamber of commerce meetings to talk about her vision for the hospital.

In a lengthy interview with the AJC, Ryan laid out her strategy for making improvements, though she conceded that it will be months — if not years — before some of the plans are fully implemented. Her agenda includes higher salaries for nurses. Post-discharge calls to patients from nurses who took care of them. New practices in the emergency room, including triaging patients within minutes of their arrival and making regular rounds in the waiting room. Weekly quality meetings involving doctors and nurses who have had a “miss” involving patient care. A process to inspect rooms and ask patients if they are being properly cleaned.

Already, the hospital has won quality awards for improvement in stroke and chest pain care.

The hospital’s affiliation with Emory, which began late in 2012, is another reason for hope. Administrators said that has given Southern Regional better negotiating power with insurers. For the three contracts negotiated so far, it has saved Southern Regional $2.4 million a year.

“We didn’t have the ability to negotiate with insurers on our own without getting murdered,” said Crissey, Ryan’s predecessor.

Administrators say the Emory name also has helped it attract more doctors, and that the partnership provides Southern Regional with access to Emory’s experts and education.

Some physicians are impatient for closer ties to happen, saying they have yet to see the collaboration they had expected when the association was formed. “We’ve been with Emory about two years. I haven’t seen a whole of changes going on,” said Dr. Jeffrey Kunkes, an ENT surgeon at Southern Regional.

Vince Dollard, a spokesman for Emory Healthcare, said there have been extensive quality and cost-saving initiatives since the partnership began.

With the bond debt burden behind them now, Southern Regional officials say the relationship with Emory will strengthen. “Last year, work was all about preserving this hospital,” Ryan said.

Administrators concede, though, that their turnaround efforts alone won’t secure the hospital’s future, without more money for indigent care. Southern Regional leaders told the AJC they would like to see something similar to what Grady gets from Fulton and DeKalb counties, and they are now starting to talk with Clayton County about future payments.

It’s unclear whether the county, which is in midst of funding a restart of public transit through MARTA, will continue financial support of the hospital. Chairman Jeff Turner said the hospital has made clear that it will need ongoing support. “We’re working with the hospital staff to try and address that,” he said.

Commissioner Michael Edmondson, the only other commissioner to respond to written questions and repeated phone calls about the hospital, said the special-purpose sales tax approved by voters last year was a large component of the hospital’s requests for ongoing financial support, by relieving the debt.

“Future financial assistance within the framework of state law and county budgets is an annual consideration by the Board of Commissioners as part of its budget process and within the limits of its financial resources,​” he said.

And even with more taxpayer support, Chief Financial Officer Jay Hoffman said Southern Regional must continue to cut overhead and find efficiencies.

“We will always be in cost-reduction mode,” he said.

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