Ohio Hospital’s Chief: Massillon hospital’s closure unwelcome, but not suprising

Ohio Hospital’s Chief: Massillon hospital’s closure unwelcome, but not suprising

Via Columbus Business First »

The latest closing of an Ohio hospital is unwelcome but “absolutely not surprising,” the Ohio Hospital Association’s CEO said this week. The only unknown before the announcement was which one.

There were 43 Ohio hospitals operating in the red in the federal fiscal year that ended in September 2015, and 17 more had operating margins of less than 2 percent, Mike Abrams said. That’s 10 more troubled hospitals than the trade group counted the prior year. The group represents 220 hospitals and 13 health systems.

“The local hospital is the crown jewel of every community in Ohio,” Abrams told me. “Whenever one closes or has to make service line changes like stop doing obstetrics or behavioral health, it’s always the headline – and it’s never welcome.”

Affinity Medical Center, a 156-bed hospital in Massillon in northeast Ohio, will close Feb. 4. The hospital has had operating losses for six consecutive years, said its owner, Quorum Health Corp. of Brentwood, Tennessee. It’s a 20-minute drive from Affinity to Aultman Hospital in nearby Canton.

“Their finances just caught up and they were not able to continue as a going concern,” Abrams said.

Affinity was acquired in 2009 by Community Health Systems Inc. (NYSE: CYH), which spun it out among small-market 38 hospitals in 2015 to form Quorum (NYSE:QHC). It’s the company’s only Ohio property. The Canton Repository reports that a group of Affinity doctors is seeking investors in an effort to buy the hospital.

The last hospital to completely shut down in the state was Georgetown’s Southwest Regional Medical Center in 2014, according to the hospital association. It had been Brown County’s second-largest employer.

The association and industry analysts have long warned about tenuous finances for rural and small-city hospitals.

“We have seen this industry stretch and change and work very hard to accommodate a different method of bringing health care to consumers, different demands by consumers, and just the economic realities that 233 hospitals in our state confront every day,” Abrams said.

“You do have to find yourself doing difficult gymnastics to keep your doors open,” he said. “You can gain efficiencies and you can make cuts and work on your supply chain, but ultimately you cannot cut your way to solvency.”

That doesn’t mean 43 hospitals are about to close, he said. It means many will contort themselves with more gymnastics.

“I believe there will be more acquisitions,” Abrams said.

Circleville-based Berger Health System is leaving government ownership so it can open talks with OhioHealth or another potential acquirer. Yet former OhioHealth member Southern Ohio Medical Center in Portsmouth ended talks to rejoin the Columbus system four years ago. It had a 2 percent operating margin in the year that ended June 30, according to its audit.

A larger system can pour in resources to turn a hospital around: OhioHealth built an addition and recruited physicians for the former MedCentral Health System in Mansfield, and last year its two hospitals turned the corner to profitability.

Large systems also have closed inpatient hospitals, but replaced them with updated outpatient facilities and kept emergency services:

Smaller independent hospitals also might shift to expanded outpatient care or the new trend of 15-bed “micro-hospitals,” Abrams said, because often patients are demanding it.

“People are changing the way they wish to receive hospital and health care services,” Abrams said. “Microhospitals are going to be the perfect solution for a lot of communities in our country.”