[Congressional Record Volume 142, Number 115 (Wednesday, July 31, 1996)]
[Extensions of Remarks]
[Pages E1415-E1417]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  A TRIBUTE TO WOODS MEMORIAL HOSPITAL

                                 ______
                                 

                        HON. JOHN J. DUNCAN, JR.

                              of tennessee

                    in the house of representatives

                        Wednesday, July 31, 1996

  Mr. DUNCAN. Mr. Speaker, I want to congratulate Woods Memorial 
Hospital in Etowah, TN, for being nationally recognized for its success 
in advanced technology as well as its overall business success.
  In addition to its national recognition, the hospital was honored 
with the Tennessee

[[Page E1416]]

Quality Commitment Award and received accreditation with commendation 
from the Joint Commission on Accreditation of Health Care Organizations 
earlier this year. These are fine honors which the hospital should be 
very proud to receive.
  Despite the growing shortage of quality medical care in our rural 
communities, Woods Memorial Hospital remains dedicated to providing its 
patients with the best technology and high quality care from its 
professional staff. I am proud to have Woods Memorial Hospital in the 
2d district of Tennessee.
  I request that a copy of the article ``Critical Care'' which appeared 
in Inc. Technology be placed in the Record at this point. I would like 
to call it to the attention of my colleagues and other readers of the 
Record.

                       Critical Care--Case Study

                           (By Joshua Macht)

       The gurney crashes through the emergency room doors. On it 
     lies a woman, lips pale, fading in and out of consciousness. 
     In the glare of harsh lights, a quickly gathering knot of 
     doctors and nurses steps into crisis mode. Needles, probes, 
     and paddles move in and out of hands; a blood-sample is raced 
     to the hospital laboratory. Moments later the lab sends the 
     test results electronically to the emergency room: the 
     woman's blood pressure is low; she must be losing blood. 
     Images from a pelvic ultrasound are quickly delivered to a 
     radiologist.
       Around the corner, in the operating room, the surgeon 
     prepares for the unscheduled morning performance. Before he 
     scrubs, he dials a voice-mail box and retrieves a 
     radiologist's interpretation of the ultrasound. The 
     diagnosis: a ruptured fallopian tube and massive internal 
     bleeding. The doctors suspect an ectopic pregnancy (an 
     inseminated egg attaches to the wall of a fallopian tube 
     instead of the uterus); the embryo has to be removed. Barely 
     an hour and a half after the woman is rushed to the hospital, 
     she's on the operating table; soon she's recovering in her 
     hospital bed.
       A routine crisis for one of the nation's big-city, high-
     tech hospitals. Except for one thing. This scene is taking 
     place in tiny Woods Memorial Hospital, a 72-bed non profit 
     hospital in Etowah, Tenn., a rural community halfway between 
     Chattanooga and Knoxville.
       Big changes are going on in health care, leaving hospitals 
     across the country reeling from skyrocketing costs, a glut of 
     beds, and all-out efforts by the government and the insurance 
     industry to reduce treatment and reimbursement. Large urban 
     hospitals, though they've felt the squeeze, are often able to 
     weather the crisis because they've invested in sophisticated 
     medical technologies that attract patients and in high-
     powered information systems that improve efficiency and 
     manage costs.
       But smaller hospitals typically don't have the money or the 
     expertise to practice high-tech medicine or to buy computers. 
     Those are some of the reasons small hospitals are collapsing 
     or being swallowed up by larger competitors at an 
     unprecedented rate. The crisis is all the greater for small 
     hospitals like Woods that are located in rural areas, away 
     from large pools of potential patients and technological 
     know-how.
       Woods, however, is thriving. Outpatient care is at its 
     highest level ever, while patient revenues swelled from $16 
     million in 1991 to $28 million last year. Net income, even 
     allowing for money that will never be recovered from federal, 
     state, and private health-care subsidies, rose to $1.6 
     million in 1995 from $953,327 in 1991.
       What makes Woods different? Three and a half years ago, the 
     hospital began to transform itself. The focus: cost 
     containment. The method: automation. Led by an administrator 
     who has applied a near-military zeal to the task of 
     automating every aspect of the institution's operations. 
     Woods has proved that even organizations caught in the vortex 
     of an industry's downward spiral can buck the trend.
       Etowah is a sleepy town of 4,500 people, most of them 
     paper-mill and textile workers, on the edge of the Cherokee 
     National Forest. Etowah didn't get a hospital until 1965. Not 
     surprisingly, when it was built. Woods was a spartan 
     facility: the emergency room was open only during certain 
     hours, and there was no intensive care unit. In fact, 
     there wasn't an internist within 50 miles. Instead, family 
     practitioners and general surgeons mended everything from 
     sprained ankles to burst appendixes while cases of any 
     complexity were referred to larger Bradley Memorial in the 
     next county, the University of Tennessee Medical Center in 
     Knoxville, or Erlanger Medical Center, in Chattanooga.
       Still, Woods was healthy. In most hospitals back then in 
     the fee-for-services days, just about anyone with a medical 
     degree and a stethoscope could make money by patching up a 
     patient and billing the patient's insurance company, few 
     questions asked. In the late 1970s and early 1980s, the 
     hospital, run by a retired air force colonel, added 40 beds 
     to its original 30 and built an intensive care unit.
       Then came the crunch. In 1983 the federal government 
     stopped paying Medicare reimbursements based on a hospital's 
     tally of the actual cost of the care given; instead, it began 
     doling out flat fees based on its estimate of what the 
     treatment of a given illness should cost. The payments were 
     especially meager to rural hospitals, on the theory that a 
     hospital's costs should be much lower outside a city. Woods's 
     Medicare reimbursements plunged to less than 75% of the cost 
     of treating its Medicare patients, who made up two-thirds of 
     the hospital's patient population.
       With its Medicare operations running deeply in the red, the 
     hospital's cash reserves were soon depleted, leaving no money 
     for improvements or even upkeep. Tile walls and floors began 
     to crack. Patients waiting to be admitted sat in the lobby on 
     folding chairs.
       More important, the hospital couldn't afford to keep up 
     with the latest medical technology. That, in turn, made it 
     all but impossible to recruit young talent to the staff. One 
     of the few doctors to join the staff in the late 1980s was 
     Charles Cox, who had started at Woods as an orderly in 1976 
     before going to medical school and whose family owned a dairy 
     farm in the area. ``There really wasn't much incentive for 
     young doctors to come here,'' calls Cox, who would sometimes 
     save patients during the day and do farm chores at night.
       To make up for the reimbursement shortfall, the hospital 
     tried raising its prices to non-Medicare patients. But that 
     led to a leveling off of patients. It was clear that the only 
     way to bridge the gap between Woods's costs and 
     reimbursements was to reduce costs by improving efficiency.
       Not an easy task. Inefficiency was ingrained in almost 
     everything that went on at the hospital. Consider patient 
     intake. Patients would wait 30 minutes or more in the dreary 
     lobby while nurses filled in hospital admission forms and 
     then typed hospital bracelets. If a patient needed blood work 
     or X rays, a nurse had to fill in a three-page carbon-copy 
     requisition form and hand-deliver copies to the lab and to 
     billing.
       Ah, billing: two women in a cramped office entering the 
     charges for each patient into a bare-bones minicomputer-based 
     system. and that was the high-tech part. They had to prepare 
     the special forms for billing third parties, like Medicare 
     and Blue Cross of Tennessee, by hand and then mail them. Four 
     to six weeks later, when a batch of reimbursement checks came 
     in, the switchboard operator would use the time between calls 
     to record the payments in a 30-column ledger. ``Things moved 
     slowly back then,'' says Carol Ethridge, chief financial 
     officer and information officer. ``And because everything was 
     done manually, there was plenty of room for error.''
       When Phil Campbell arrived at Woods in 1990 to take over as 
     CEO, the hospital was $200,000 shy of making its payroll and 
     was struggling to survive. Campbell had been working as 
     associate administrator of a health-care facility in Rome, 
     Ga., when Woods's board hired him. ``I had wanted to go to a 
     ``rural hospital,'' says Campbell. ``But I underestimated how 
     difficult it would be.''
       For the first few months, Campbell tried to persuade large 
     suppliers to extend the small hospital's payment schedule. 
     But then, suddenly, he took the offensive. Most hospitals 
     charge for small items--a Band-Aid (as much as $10 in some 
     hospitals) or a single aspirin (as much as $4 or more a pop). 
     Campbell, who seemed determined to become the Crazy Eddie of 
     health care, decided to give them away. Next he slashed 
     prices on lab work, the hospital's biggest profit center. 
     Then, as though the county board of trustees weren't 
     already apoplectic, Campbell presented the group with an 
     expanded budget that called for automating every last 
     department of the small hospital. ``Oh, sure, some 
     employees and citizens thought we were crazy,'' says 
     Campbell. ``But I knew we had no choice.''
       Campbell, a tall imposing figure with the middle-aged-boy 
     looks of a high school football coach, knows he can come off 
     as a little overbearing. ``My wife tells me I'm more 
     conservative than Rush Limbaugh,'' he says, meaning it as a 
     boast. If his administrative style seems somewhat military, 
     it probably is. Campbell spent two years at the U.S. Army's 
     Fort Stewart in Hinesville, Ga. But Campbell wasn't a soldier 
     there; he was a student in a master's of health-services-
     administration program run by Central Michigan University. 
     Alongside army colonels and majors, Campbell was drilled in 
     the mantras of hard-core health-care management: Improve 
     quality. Lower costs. Increase volume. Although he had 
     studied health-care institutes in crisis, he faced the real 
     thing for the first time when he took over at Woods. He was 
     on the front line. And he admits to feeling green: ``There 
     was nothing I could have done to prepare for this job.''
       The single-level brick building looks more like a suburban 
     elementary school than a hospital. In that respect Woods 
     hasn't changed much from the day it was founded. Inside, 
     though, it's a different story. To start, almost every inch 
     of every surface has been redone--with carpet, paint, or 
     wallpaper--in mellow lavender and mauve. A ``new'' Woods had 
     to look the part. An interior designer chose the color 
     scheme. Otherwise, each department was free to redecorate as 
     it saw fit.
       But the hospital's makeover was more than skin deep. 
     Campbell knew that the heart of the transformation would be 
     automation. The only problem was figuring out a way to afford 
     it. The hospital had already solicited a bid from a computer 
     vendor for an automation package; the bid came in at close to 
     $1 million, about four times what the hospital could 
     conceivably spend. Campbell got on the phone to see if he 
     could do better. Exhorting vendors to cut corners and margins 
     wherever possible, explaining that the old health-care gravy 
     train had been derailed, Campbell finally got the proposal he

[[Page E1417]]

     was looking for; an extensive new system for $250,000. That 
     proposal came from Health Systems Resources Inc., in Atlanta. 
     HSR agreed to install an IBM RS6000 and a UNIX-based work-
     station, along with 60 terminals and 12 PCs--enough to put 
     every department in the hospital on-line.
       Now all Campbell had to do was come up with a way to get 
     the system to pay back. The key would be using the system to 
     cut costs. Campbell divided the entire medical staff into 
     small teams, each one with access to a PC and a mission--to 
     examine a different element of the hospital's service with an 
     eye toward reducing waste.
       Take the pharmacy and therapeutics committee, headed by 
     Brandon Watters, an internist. One of the committee's tasks: 
     to assess the hospital's use of cephalosporins, a type of 
     antibiotic. Harry Porter, a member of the committee and 
     director of the pharmacy, called up records of what the 
     hospital had been spending on antibiotics. It turned out that 
     in the previous year, Woods's use of all cephalosporins had 
     gone up 204%, mainly because its use of Rocephin, the most 
     expensive antibiotic, had gone up. So Porter, who documents 
     the use of all drugs in the hospital, had the computer graph 
     the applications of Rocephin. The chart revealed that 70% of 
     the time the powerful antibiotic was dispensed to treat 
     infection but that 30% of the time it was administered to 
     prevent infection in patients undergoing surgery.
       After a bit of research the committee determined that far 
     less expensive (but equally effective) antibiotics could be 
     substituted for the surgical use of Rocephin. The result; an 
     estimated $40,000 savings on Rocephin in 1995. To keep the 
     medical staff up to date with his committee's findings, 
     Watters imports all of his results from Quattro Pro into 
     Microsoft Publisher, which he then uses to publish 
     inPHARMation, the hospital's pharmacy and therapeutics 
     newsletter.
       Food waste was another target. Thanks to the dietary and 
     food-services committee headed by Michele Fleming, director 
     of food and nutrition services, Woods now uses a PC 
     spreadsheet to track virtually every aspect of food service, 
     from patient's satisfaction with portion size to seasoning 
     preferences. As a result, patients are less likely to end up 
     with food they don't like and won't eat. Fleming knew, for 
     example, that in the second quarter of 1995, only 92% of 
     patients said they received the correct seasoning packets 
     with their food. By the fourth quarter the number was up to 
     100%.
       To save nurses and administrative employees time, the new 
     system streamlined the laborious admissions process. Today 
     patients zip from the lobby to their hospital bed in minutes. 
     With just a few keystrokes, an admissions clerk enters a new 
     patient's record into the system and instantly creates an 
     electronic billing form on the main server. The clerk then 
     hits another button to print out an embossed plastic 
     identification card on a special printer. Using an imprint of 
     the card, the clerk can also quickly manufacture a plastic 
     hospital ID bracelet. Because billing and accounting have 
     been integrated into the system, patient charges and 
     insurance bills are tallied electronically during the 
     patient's stay.
       Gone, too, are the days of carbon-copy requisition forms. 
     Now nurses simply order lab work and diagnostic images 
     through the computer system. In addition, lab equipment has 
     been electronically connected to the mainframe. Now Cindy 
     Glaze, supervisor of the laboratory, can transfer blood-test 
     results from her lab instruments to her computer terminal and 
     then, with a keystroke, on to the emergency room, the 
     operating room, or a nursing station.
       Automation has all but eliminated some of the worst 
     administrative chores. When a nurse electronically orders 500 
     ccs of erythromycin from the pharmacy for a patient, the 
     system automatically charges the patient's billing record. It 
     used to take weeks for the hospital to finalize patients' 
     bills; today bills are ready whenever patients are ready to 
     leave the hospital. And no one fills in forms by hand or 
     licks envelopes and mails them off to Blue Cross or Medicare; 
     instead, charges are automatically transferred to the proper 
     electronic form, and then, using a dial-up account, a bill is 
     transmitted to the third-party payer. Ethridge says that 
     reimbursement takes about 14 days.
       As for the new switchboard operator, Virginia Huff, she 
     rests easier knowing that the computer takes care of the 
     Medicare logs. When a doctor orders an MRI for an elderly 
     patient, the charge automatically transfers to an electronic 
     log. Running the log for the entire year takes just a couple 
     of hours of computer processing time.
       Campbell's plan has worked. Not only have Wood's outpatient 
     utilization rates increased by 25%, but the hospital's net 
     income has nearly doubled in the past five years. Last year 
     outpatient utilization rates actually surpassed inpatient 
     rates--which means higher revenues because insurance 
     companies typically reimburse outpatient procedures at a 
     higher rate. After Campbell dropped the prices of lab work, 
     the volume of work in the small lab increases dramatically--
     300,000 tests in 1995, up from 115,000 in 1991. Remarkably 
     the hospital has not raised the prices of care in five years, 
     nor has Campbell added any clerical positions to the staff, 
     even with all the increased billing. ``If we were still 
     keying in bills, we would need at least twice as many people 
     in the billing department alone,'' says Ethridge.
       Fewer nonmedical positions means more dollars to recruit 
     doctors--a critical goal. The average can general $1 million 
     in revenues for the hospital annually. Woods uses some of the 
     freed-up money to pay for new recruits' medical education in 
     exchange for a commitment to practice there. The difference 
     in the opportunities for young doctors today and in 1988, 
     when he joined the hospital, is huge, says Cox. ``Today we 
     have all the technology that big urban medical centers 
     have. So doctors can come here and not feel at a 
     disadvantage.''
       Active recruitment efforts along with a healthy cash 
     surplus have allowed Woods to expand services. For example, 
     Campbell hired Dan Early to direct the new Resource 
     Counseling Center. In addition, to reach African Americans in 
     the county (a population that traditionally has had trouble 
     accessing health care), Campbell founded the Minority Health 
     Alliance for education and care.
       Recently the University of Tennessee Medical Center in 
     Knoxville chose Woods as one of its first partners in its 
     telemedicine program, which allows doctors to work via 
     videoconferencing hookups. Woods's telemedicine facility is 
     located in what used to be the gift shop. So far the state-
     of-the-art satellite link has been used primarily for 
     dermatology. But doctors can also keep up to date with the 
     medical advances at U.T. without leaving Etowah. Craig Riley, 
     for example, an internist, attends live conferences at U.T. 
     via satellite and can even use the live link to complete the 
     continuing medical education credits he needs to meet Woods's 
     credit requirements.
       As Woods moves into a new era of health care, Campbell 
     continues to position the small hospital for aggressive 
     growth. Last year Woods joined Galaxy Health Alliance, in 
     Chattanooga, a managed-care network of 13 rural and suburban 
     hospitals in four states. (Woods is also part of another 
     managed-care network that includes U.T.) Although managed 
     care may represent a controversial new road for medicine, few 
     hospitals want to be left out of the loop. An Zuvekas, senior 
     research staff scientist at the Center for Health Policy 
     Research at George Washington University Medical Center, in 
     Washington, D.C., predicts that rural hospitals increasingly 
     are going to depend on advanced electronic networks for their 
     survival. She reasons that it's more effective for managed-
     care plans to interact just once with a group of hospitals 
     than to deal with them individually; consequently, says 
     Zuvekas, rural hospitals that are able to share both data and 
     expertise over a wire are going to distinguish themselves as 
     worthy partners in the managed-care relationship.
       The road ahead is filled with uncertainty. Potential 
     Medicare cuts could make it even more difficult for rural 
     hospitals to make ends meet, and managed care might force 
     many more hospital mergers and acquisitions. Still, Campbell 
     has a grand outlook for Woods. On a tour of the hospital, he 
     points out the window to a mound of dirt. ``That will be a 
     state-of-the-art women's center,'' he says. ``We are finally 
     going to start delivering babies again.'' A nearby parking 
     lot will soon be transformed into an expanded intensive care 
     unit and emergency room, he adds.
       Ethridge, meanwhile, is just trying to enjoy the fact that 
     for once Woods isn't struggling. ``We've been waiting six 
     years to slow down,'' she says. Given Campbell's ambitions, 
     Ethridge probably shouldn't plan on too long of a lull.

                          ____________________