Back from the brink of closure: How a California hospital rebounded after 3 years of losses

At the close of World War II, the people of Tulare, Calif., began working diligently to raise funds to build their own hospital. Their vision became a reality in 1949 when construction began on a $1.1 million, 86-bed hospital. Less than two years later, the dedication ceremony for the Tulare District Hospital took place.

The hospital has undergone many changes over the years — it is now known as Tulare Regional Medical Center and is licensed for 112 beds — and it has also faced some immense challenges. In fact, the hospital was on the brink of closure 18 months ago due to its financial troubles.

Faced with shuttering its facilities, Tulare Regional began exploring its options. The hospital started looking for a lease or affiliation partner in 2013. In December of that year, the Tulare Regional board of directors unanimously selected HealthCare Conglomerate Associates as a possible affiliation partner for the hospital. Tulare Regional entered into a management agreement with HCCA, which is led by Benny Benzeevi, MD, in January 2014.

When HCCA first began working with Tulare Regional, the hospital was losing about $1 million a month and had less than 30 days cash on hand. With the help of its new management team, Tulare Regional made it back to the black and its days cash on hand has tripled. Following three years of large operating losses, Tulare Regional has posted positive monthly operating income since April 2014, which led to its credit rating being upgraded by Fitch Ratings in August.

Tulare Regional's turnaround
Dr. Benzeevi refers to Tulare Regional's journey as "a real life Cinderella story." However, unlike the fantasy tale, it wasn't magic that made the hospital's comeback a reality. Instead, it was empowering those who determine the success of any business — the employees.

Rather than institute cutbacks or layoffs, HCCA hired the hospital's entire workforce. With Tulare Regional in dire straits, Dr. Benzeevi says it was not only critical to identify what was required for the hospital to succeed but also to give employees what they needed to make that success a reality.

"Doubt is what holds us back," says Dr. Benzeevi, and the objective at Tulare Regional was to create an environment where employees had confidence. "We wanted to create an environment where people are using 100 percent of their abilities," he says.

HCCA's approach worked. Although Tulare Regional has the same employees it did when it was financially distressed, they now have "laser focus" and a "clear objective," says Dr. Benzeevi. With the hospital no longer on the verge of closure, its employees can concentrate on improving patient care and experience rather than about potentially losing their jobs.

Along with empowering and motivating the hospital's workforce, HCCA also made several other changes, including streamlining the hospital's management structure and renegotiating supply chain and physician contracts — which is an ongoing process, according to Dr. Benzeevi.

Feeling confident about the success it has had at Tulare Regional — the first hospital it has worked with — HCCA is now looking at two other hospital sites in California. The goal is to replicate the Tulare Regional model to turnaround those facilities as well.

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