In the 1930s, South Carolina State Senator James Warren, State Representative J. Morrison Tuten, and a number of dedicated citizens embarked on a 20-year dream to secure a hospital for the citizens of Hampton County. Using the 1946 Hill Burton Act Financing and Design Book Criteria, that dream was realized in 1950: Hampton General Hospital was dedicated by the then-governor of South Carolina, Strom Thurmond, at a total construction cost of $283,000.
Like many rural county-owned hospitals, by the mid-1980s the hospital was showing signs and symptoms of systemic malaise due to the slowing economy, rising costs of healthcare delivery, decreasing reimbursements, antiquated facilities, and a lack of qualified leaders and healthcare professionals. By 1993, it appeared the only practical solution was to close the financially troubled hospital.
Today, Hampton Regional Medical Center (HRMC) is a thriving private, not-for-profit 501(c)3 corporation with new leadership and a brand-new 82,000-square-foot, $23.8-million, state-of-the-art facility (built for a total project cost of $32 million) in rural Varnville, South Carolina. HRMC successfully completed this project and achieved a financial turnaround in spite of the fact that Hampton County is one of the poorest counties in South Carolina, a state with historically low national economic rankings. Moreover, HRMC has continued to grow during the current economic crisis, which has hit rural communities particularly hard. The story of HRMC's remarkable transformation is a model for rural community hospitals across the country that are struggling to achieve a successful outcome. It shows that if a small rural hospital is well-managed and driven by a demand for quality, it can not only survive, it can thrive.
Seven critical lessons
There are seven critical success factors behind the transformation of Hampton General Hospital into a 21st-century healthcare institution:
Restructuring as a not-for-profit private corporation
Community support for the new organizational structure
Investment in the latest medical technology
Effective governance structure comprising a community-based voluntary board of directors
Effective financial management
In fact, the single most important step was the legal reorganizing of the hospital from a county-managed facility to a not-for-profit private corporation in 1996.
There are many successful county-owned hospitals. However, it is often the case that the management of small hospitals, say, 50 beds, in small rural communities of 20,000-40,000 people is often highly politicized. In these cases, reorganization of the hospital as a private entity enables the board and administrators to make objective business decisions and manage the hospital to achieve success in today's healthcare environment.
That said, reorganization of a county-owned rural hospital is a complex legal process. It is essential for the CEO to lay the proper political footwork-lining up political allies-and present a solid business case that reorganization offers the best opportunity for the long-term viability of this important community asset.
Making the business case
In particular, county decision-makers need to be made aware that healthcare is the most complex, most highly regulated industry in the United States, and the financial reimbursement structure for services is determined not by the hospital, but by third-party payers.
County leaders also need to understand that in order for a hospital to be financially viable in this industry, it requires leadership by an effective, experienced healthcare administrator. Recruiting and retaining such a leader-as well as board certified physicians and skilled healthcare professionals-requires compensation that is commensurate with industry standards. In addition, the governing board must comprise a diverse group of individuals with the education and capabilities to make complex business decisions-for example, local business leaders, educators, and federal government employees.
Finally, the hospital's leaders need the freedom conferred by a private, not-for-profit corporate status to make decisions quickly and to structure financial agreements with physicians and other healthcare providers, third-party payers, and local businesses without approval by state and local governments.
In the case of Hampton County Hospital, when these facts were presented to the county commissioners, they opted to allow the reorganization of the hospital, a decision that was supported by the community.
Once private, not-for-profit corporate status is secured and leadership is in place, the CEO and Board must make strategic investments in facilities, equipment, and personnel that will quickly improve the hospital's functionality and financial viability.
In the case of HRMC, initial projects were undertaken in the mid-1990s, including code-required renovations to the Emergency Room (ER) and the Ambulatory Health Center (outpatient clinic). The ER had been designed for 2,000-3,000 visits per year at a time when 80% of healthcare was provided on an inpatient basis, and by the time the renovations were undertaken, the ER was struggling to handle 8,000-9,000 visits a year at a time when 60% of healthcare was delivered in outpatient units. Designed by LS3P ASSOCIATES LTD. in 1993, these renovations immediately improved the functionality and public accessibility of these areas. As a result, HRMC began to experience more patient visits and increasing financial growth and profitability. These efforts led to subsequent investments, including the purchase of a new CT scanner, a new flouro/radiographic table, and upgraded diagnostic laboratory equipment.
This incremental process was strategically calculated to bring the facilities, technology, and range of services of the existing hospital up to the standard of the late 20th century, until, finally, the corporation was in a position to build a 21st-century hospital.
At the same time, the CEO and board of HRMC set about the process of recruiting board-certified physicians and staff. The Board approved a compensation package designed to retain these highly qualified professionals. The improvements in facilities and technology also were key to attracting high-caliber professionals.
Subsequently, the CEO and Board decided to renovate the antiquated and underutilized Surgical Suite. The newly renovated Surgery Department, coupled with strategic recruitment of board-certified physicians, enabled HRMC to introduce surgical and endoscopic services in the community-needed services that had not been available in more than 15 years.
Planning the “Rural Hospital of the Future”
By 1999, these investments had turned around the financial viability of the HRMC. Subsequently, the CEO and Board began planning to replace the aging Hampton General Hospital-era facilities with the “Rural Hospital of the Future”-the hospital of choice for the surrounding three-county area.
In 1999, LS3P ASSOCIATES LTD. was hired to provide programming and conceptual planning for the replacement hospital. The planning process was also supported by participation from government officials, healthcare providers, and other healthcare experts. The planning team developed a master plan for an economically viable approach to the new replacement hospital. The biggest initial barrier to making the Rural Hospital of the Future remained its low total net worth and, therefore, limited access to capital. However, by 2003, the HRMC had grown its balance sheet and generated consistent profits over nine of the previous 10 years, exceeding industry-standard profitability margins. A feasibility study was performed for HRMC's applications for U.S. Housing and Urban Development (HUD) and Department of Agriculture (USDA) financing, and both agencies approved the applications. Based on HRMC's financial improvement, an investment banking firm approved a tax-exempt bond issue for the new replacement hospital, and HRMC went ahead with this more attractive financing alternative.
In late 2004, LS3P began to develop a community-centered design for a 21st-century hospital reflecting HRMC's organizational structure and governance. The 82,000-square-foot building is concave shaped to metaphorically embrace the community, with a lower front porch arcade that creates a warm, neighborly welcome. The main lobby acts as the community living room, or a central public space that provides convenient access to major services, including the registration area for inpatients and outpatients, cafeteria, meeting rooms, and ER. The relationship between the registration area, labs, ER, diagnostic radiology, surgery, and support areas are carefully planned for ease of access, efficiency, and future expansion. A gracious, grand stair and associated elevator make the two-story atrium space a continuation of the community living room into the patient's units on the second floor.
Trident Construction was selected as the construction management advisor for the design phase of the work. Following completion of construction documents in December 2006, Trident provided a guaranteed maximum price (GMP) of $23.8 million. The new hospital was constructed behind the existing hospital on the same property, enabling the existing hospital to remain operational until the new facility was completed; then, the existing hospital was demolished.
By July 2008, HRMC had succeeded in building a rural hospital of the future. The grand opening event was a joyful celebration that expressed the community's appreciation for the magnitude of what had been accomplished over the course of 15 years. Twenty-first-century medicine had arrived in Hampton County packaged in a warm, welcoming, contextually appropriate, comfortable building that will support HRMC in fulfilling its mission: “Compassion, commitment and excellence: every person, every time.”
HRMC's New Hospital at a Glance
Hampton Regional's new 82,000-square-foot facility is designed for patient comfort and confidentiality, and to support state-of-the-art medical technology. Patient rooms are private, large, and tastefully decorated. The waiting areas are also well-furnished and comfortable.
32-bed Nursing floor (expandable to 64 beds) with two separate 16-bed units, one with a six-bed ICU suite
Surgical Suite with two operating rooms equipped with the most advanced technology available; one endoscopy room; expandable to four ORs and two endoscopy rooms
64-slice CT scanner with cardiac capabilities
1.5 Tesla MRI
State-of-the-art radiology and nuclear medicine rooms
State-of-the-art digital mammography and ultrasound rooms
Full-service Clinical Laboratory
Full-service Rehabilitation Department
24-hour Emergency Room Service with helipad, enabling patient transport to tertiary Trauma Centers and Heart Centers within a 100-mile radius
Master site plan to include up to four or more medical office buildings along the Grand Entry Drive
In early 2009, HRMC became an affiliate of Roper St. Francis Healthcare in Charleston. This affiliation brings the residents of the hospitals and service area east of Hampton County access to the finest healthcare technology, virtually every medical specialty, and almost 800 physicians. Since moving into the new facility, HRMC has experienced a 23% increase in inpatient admissions, a 15% increase in ER visits, and a 34% increase in charges. HDDavid Hamill is President and CEO of Hampton Regional Medical Center
Byron M. Edwards, III, AIA, ACHA, LEED AP, is Vice-President/Principal and Director of the Healthcare & Technology Group of LS3P ASSOCIATES LTD., an architecture, interior architecture, and planning firm. For further information, e-mail email@example.com. Healthcare Design 2010 August;10(8):40-50