Business Driven Approach
THE CASE: Desoto Memorial Hospital, Arcadia, FL
The Challenges
The 40-year-old facility was straining under modern demands. CEO Jim Chromik brought in QHR consultants to conduct a Business Driven Approach to Facility Decisions project, which combines three areas of expertise: market assessment/ volume projections, financial analysis, and master facility planning. “It looked good: we had a growing market and healthy financial trends,” he relates. But the replacement cost was $42 million. “According to QHR’s strategic partner InnoVative Capital, our debt capacity would only stretch to $20 million. So we needed a new approach.”
Q Solutions
QHR’s American Health Facilities Development created a master plan to replace patient care areas – including emergency, medical and surgical units, operating suites, outpatient care areas, lobby and waiting rooms – within a budget the hospital could afford.
But progress would be interrupted by one more problem: Hurricane Charlie. Shocking central Florida, it turned inland and headed straight for Arcadia. With only a two hour warning, Chromik switched to generator power and prepared for the worst.
Losing 50 feet of roof and 36 windows during the initial blast, the hospital was battered by driving rain for three more days.
“Our staff was amazing, working 36 hours straight,” Chromik conveys. The hospital had been integral to its community for decades. Now it was a mainstay of safety. “After the chaos, we found out how bad the damage was,” he adds. The roof caps had blown away; water had run down inside the walls. Mold spore counts shut the OR down for months.
“Governor Bush and our local officials and legislators were incredibly helpful; they brought us to the public’s attention… which gave us a chance for funding,” reveals Chromik. “Then QHR and our CFO made it happen.”
Desoto CFO Nancy Frisby worked furiously alongside QHR financial experts to compile extensive data. The deadline to apply for USDA money was 45 days away.
Strong financial performance including a six percent margin, zero debt and 145 days of cash reserves set the hospital up for loan approval. “With erratic volumes and a large uninsured population, we have to stay alert,” Frisby observes. “QHR helped us do that with chargemaster and coding reviews and purchasing discounts… so we were ready when our opportunity came.”
The Outcome
- The USDA, which usually gives small loans for rural facility repairs or upgrades, collected funds from many federal sources to offer Desoto a $20 million loan
- The 44,000 square foot project will build staff- and patient-friendly patient care areas
- New equipment and furnishings will advance quality of care and foster staff and patient loyalty
"QHR came through for us. The time-frame was so tight – no accounting firm would do it. But they got the numbers crunched and forms completed... and we won the biggest USDA direct loan in history."
