The Situation

Gainesville Hospital District saw light at the end of the tunnel—a new beginning for North Texas Medical Center (NTMC). The district had leveraged bankruptcy to get the legal protection and time it needed to develop a plan to restructure $40 million in debt, pay creditors, and keep the hospital open. The district secured debtor-in-possession financing and filed a bond validation to enhance the appeal of its bonds as investments. Gainesville Hospital District was on the right track to emerge from Chapter 9, but the district needed to find a long-term resource for hospital management to keep NTMC moving in the right direction.

Community Hospital Corporation (CHC) was tapped as NTMC’s synergistic partner to identify and implement operational improvements.

Background

NTMC is a 60-bed acute care hospital located in rural Gainesville, about 60 miles north of Dallas-Fort Worth and 5 miles south of the Oklahoma border. The campus was rebuilt in 2004, but by late 2016, NTMC was in financial distress with less than 60 days of operational funds available. In the weeks leading to the Chapter 9 petition, GHD was not able to pay its debts and was technically insolvent. Due to financial instability, the hospital also experienced considerable turnover in the executive ranks. Several CEOs and CFOs came and went in a short period of time. Though not the right move for every hospital facing financial challenges, bankruptcy cleared the books of some long-term expenses for NTMC and gave the hospital a fresh start and solid footing for the future. However, because bankruptcy damages an organization’s credit history, the GHD sought to secure better interest and financing rates by entering into a partnership.

The Plan

In 2017, the district had formed what was thought to be a long-term structured partnership with another healthcare provider in the region. When it became apparent that the relationship with the new managing partner was not going to work out, the district contacted CHC because of the organization’s hospital management experience and track record of turning around troubled hospitals. A management agreement was formed with CHC in May 2018.

CHC’s Joe Thomason stepped in as Interim CEO and immediately started searching for his permanent replacement. Simultaneously, CHC conducted an operational assessment of NTMC and began implementing improvements based on the evaluation:

• Reduced supply spending by right-sizing inventory and joining CHC Supply Trust (CHC’s GPO)
• Ensured all physicians are credentialed with all appropriate payer networks
• Encouraged wider use of upfront collections, an underutilized revenue stream accelerator
• Implemented staff training and hourly rounding to improve patient experience
• Developed a stronger regulatory compliance program

Improvements were well underway when Thomas Sledge stepped in as CEO in July 2018 and permanent hires for the Chief Financial Officer and Chief Nursing Officer were made soon after. Continuing to carry out the action plan, Sledge identified and addressed additional areas for improvement.

On December 1, 2018, two major milestones occurred that would set the course for continued success. With a long-term agreement with CHC on the horizon, the hospital district was able to achieve favorable bond ratings for their debt and successfully emerged from bankruptcy. CHC leased the operations of the hospital from the district.

The Results

With CHC’s professional guidance, the Gainesville Hospital District and NTMC are on a renewed, positive path. Since the forming of the relationship, NTMC has exceeded budget and generated positive EDIBA growth for three consecutive years. This financial success has allowed NTMC the ability to reinvest in the facility such as:

•  Conducted the first hospital wide market wage adjustment in over 10 years

• Added new physicians

• Committed millions of dollars for capital investments to improve equipment and facilities

• Implemented a new branding strategy for the hospital and clinics

• Relocated the pediatrics, primary care and women’s health clinics to a newer, more desirable location to better serve the community

• Invested in a new Electronic Medical Record (EMR) that provides better patient care documentation and reporting capabilities

NTMC’s success over the past few years is now paying dividends for the hospital district as well. The hospital’s performance has led Moody’s Investor Service to upgrade GHD’s bond rating to an investment grade of Baa2. This represents an increase of two levels from the initial Ba1 rating.

In addition to improving the financial condition of the hospital, NTMC has focused on quality of care and patient satisfaction. The dedication to the patient experience is evidenced by the Google Star Rating moving from 2.7 Stars to 4.6 Stars over the three years of management by CHC.

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