Austin Hospital Experiences Stunning Turnaround after Nearly Closing

by HCE Exchange on April 1, 2014

Diana-Zamora-thumbIn July 2013, Arise Healthcare took on its first owned hospital venture with the purchase of Austin Surgical Hospital in Austin, Texas. Plagued with financial troubles since its opening in 1997, the hospital was on the verge of closure.

Since Arise has taken over, however, the renamed Arise Austin Medical Center has seen a major turnaround in both services and finances.

Demonstrating a new approach to care

Arise Austin Medical Center (AAMC) is a 23-bed acute-care hospital located on the western edge of Austin. Austin is a fairly competitive healthcare market with a population of more than 800,000 and with 33 hospitals across its metropolitan area, some of which are run by large healthcare organizations.

According to Chief Executive Officer Diana Zamora, however, AAMC is not focused on competing with the larger facilities, but rather in providing necessary services in patients’ neighborhoods.

“We offer healthcare as it was intended — uncomplicated, friendly,” Zamora said. “We will not build a tower and become a 12-story complex entity. We provide services in the communities where patients need the care delivered.”

In addition to the hospital, the medical center has a wound-care facility and recently opened an outpatient imaging and women’s services facility, both located in Austin communities where the services are most needed. AAMC has also broken ground on another facility for imaging and women’s care in the Austin area.

Zamora said providing high-touch, high-quality care is one way that AAMC has and will set itself apart. Although Austin is a large metro area, AAMC is a community and physician-focused hospital, with an unwavering commitment to doing what’s best on behalf of patients at all times. This includes making investments in the latest technologies and being aware and responsive to the tools and equipment doctors need to remain on the forefront in their fields.

“We want to make sure that our patients understand the care they are receiving and at the end of the day, feel like we listened to them and helped them through the process,” she said.

Embracing the physician-owned hospital model

Austin Surgical Hospital was built in 1997 by the Renaissance Women’s Center, but closed in 2001 because of financial troubles. OrthoNeuro Corp. purchased the hospital in 2002, and in 2009 Symbion Inc. bought a majority stake of the hospital. Arise Healthcare purchased the assets from Symbion without assuming its debt, allowing the new hospital to start with a clean slate.

Not assuming the debt has been a key factor in AAMC’s financial success.

AAMC is a physician-owned hospital and is unique among most because the facility was already Medicare-accredited, and the hospital has been able to continue seeing Medicare patients without having to screen them. The Affordable Care Act limits what percentage of a hospital physicians can own, but Arise worked within those restrictions and resyndicated the facility, offering partnerships to desired physicians.

AAMC is Arise Healthcare’s first venture into owned hospitals, but it has had management agreements with other hospitals and owns three freestanding surgery centers, which are majority-owned by physicians, as well as a compounding pharmacy and real-estate company.

Zamora said the hospital has a strong focus on building relationships with physicians who operate within the organization and those who refer to the hospital. She also said with AAMC’s smaller size, it is able to respond faster to requests made by physicians. And, as proven with many physician-owned healthcare facilities, when the physicians are involved in decision-making and hospital finances, costs usually decline even as quality continues to improve.

Although the physician employment model is becoming more common, “we think there is something to be said for independent physicians still having control over how healthcare is delivered,” Zamora said. “It should be easy for physicians to provide services for patients. We should partner with them and facilitate that.”

Restructuring services for turnaround

One of Zamora’s first jobs as CEO was to evaluate the existing service lines and look for areas to improve based on the community’s needs. Surgical services were a major focus, adding or expanding orthopedic and neurological spine, ENT, urology, gynecology, orthopedics, bariatric surgery, podiatry, and pain-intervention services. Existing service lines were restructured and new services were added. Aside from knee and hip replacements, most surgical services now provided were not previously available.

Furthermore, AAMC discontinued cosmetic plastic surgery, which made up about one-fifth of surgical procedures at the hospital. However, AAMC did begin to offer minimally invasive surgery with the da Vinci robot.

As with all hospitals, managing costs is also part of the turnaround, but AAMC has had a positive revenue stream right out of the gate, which Zamora plans to continue. To maintain this, AAMC is evaluating cost-saving measures and value-based purchasing, while focusing on quality.

Because many new services have been added, the hospital has limited data on the impact it’s having, but Zamora said patient response to the care they have received has been extremely positive. She said patients feel welcomed and listened to throughout the process.

AAMC will be watching as healthcare reform solidifies and will respond to requirements and changes in the near term. In the coming years, it plans to grow based on the needs of the community, offering more services at the hospital or building freestanding clinics in the communities where healthcare is needed. Zamora said additional services will be evaluated based on patient needs.

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