How a critical access hospital bounced back from the brink of bankruptcy: 5 questions with Carthage Area Hospital CFO Rob Bloom

After seven years of steep financial losses, Carthage (N.Y.) Area Hospital, a 25-bed critical access hospital, hauled itself out of the red to post a profit.

The once cash-strapped rural hospital restructured, closing down clinics and reducing inpatient beds — all to keep the hospital afloat.

Leading the way to the first profit in years was Carthage Area Hospital CFO Rob Bloom, who attained his position in November 2011. Through the restructuring process, Mr. Bloom had to make difficult decisions and establish a financial strategy to keep the hospital from bankruptcy and closure.

Here, Mr. Bloom explains how the hospital turned around its finances, offers advice for CFOs of financially strapped hospitals, discusses the challenges Carthage Area Hospital still faces and shares his thoughts on rural healthcare.

Note: This interview was lightly edited for clarity and style.

Question: What were some of the major components of Carthage Area's Hospital's financial turnaround plan?

 Rob Bloom: I largely credit our CEO Rich Duvall's leadership and steadfast belief in the hospital, which allowed us to rally our board, employees and medical staff to work together to revive the hospital. During the early years of the financial crisis, the primary concern was surviving the next payroll, and toward that end, we would not have been successful without cooperation on all fronts.  Our employees and medical staff all sacrificed for the benefit of the facility. We also were blessed to have vendors that worked with us to keep vital supplies and services flowing. New York State also provided us with bridge financing during 2014, which was essential to providing the runway needed to remain afloat.

Regarding operational improvement, very difficult decisions had to be made quickly. The senior team worked together to develop a strategic plan that we are still working from today. The basic premise we worked from was that if the community needed it and we provided a quality service, the financial issue would self-resolve. Accordingly, we retrenched to our primary service area, closing about a dozen outreach clinics on the fringes of our service area that we simply could not afford the timeline required to make profitable. We also reduced our inpatient bed compliment, which allowed us to better leverage reimbursement models and staff more efficiently. This process continues today. We are constantly evaluating service lines to make sure what we offer is what the community needs.  

Q: What advice do you have for CFOs of distressed hospitals and health systems?

RB: The best advice I have is to find the courage to change what must be changed and accept those things that cannot be changed in the short term. Regardless of whether a hospital is profitable or struggling, there will be challenges. The difficult task is to determine where to focus resources while accepting criticism for problems that will not change the short-term viability of the organization. You have to learn to trust your judgment and resist pressures that might seek to alter course based on lack of understanding. It is very much a triage process; stop the bleeding first, then worry about infection later.

Q: After the restructuring at Carthage, what are the biggest financial challenges that remain?

RB: The biggest hurdle is accumulating cash. Since we decided not to file for bankruptcy, the hospital still has significant obligations to pay. There are also the long under-serviced capital and maintenance needs of an aging facility. If there are sweeping changes from the government that again push hospitals into rapid adaptation mode, experience has taught me that cash is king and that even the best plans take time to implement.

Q:  What is one goal you have for Carthage Area Hospital next year and how will you achieve it?

RB: My primary goal is to continue to work to solidify our financial condition, so that the hospital can begin to accumulate enough cash to be able to make future investments into the healthcare of the community we serve. We are working to enhance the services we provide to the community to reduce the travel burden on patients through nontraditional physician partnerships. This will also allow for significant revenue growth with limited additional variable costs.

Q: Are you optimistic about the future of rural healthcare?

RB: Communities in rural America are resilient. I think that if hospitals can stay in touch with the needs of their communities, much can be accomplished. This may mean looking at the hospital's mission. I believe that it is something much larger than healthcare. In many communities, the hospital is one of the last large employers left. As such, it is incumbent upon the hospital to become a steward of the community's overall wellbeing, not just its healthcare.

More articles on healthcare finance:
UPMC to spend $900M on capital projects in 2018
Osawatomie State Hospital is one step closer to recertification, officials say
Alabama county to vote on 1 cent sales tax increase to fund new rural hospital

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