KELLY MCEVERS, HOST:
Here in California, people who live in the tiny city of Fort Bragg are worried that they are about to lose their only hospital. It went bankrupt a few years ago, and it's barely hanging on. Fifty-eight rural hospitals have closed down in the U.S. in the last five years. In Fort Bragg, there's a fight about how to keep the hospital open. April Dembosky of member station KQED reports.
APRIL DEMBOSKY, BYLINE: It's been a long time, but finally, Bill Rohr's report from the Mendocino Coast Hospital finance committee isn't terrible.
(SOUNDBITE OF ARCHIVED RECORDING)
BILL ROHR: This is the first black ink I've seen at the end of the month in quite some time.
DEMBOSKY: Things started going bad for the hospital in 2002 when the local lumber mill closed down. People lost their jobs and their private health insurance that paid good rates to the hospital. About 7,000 people are left in the blue-collar town along the rugged Mendocino coastline. Now the economy is propped up by tourists who come here to hike or fish. By 2012, the hospital fell into bankruptcy, and locals got scared it would close. Sue Gibson started hosting meetings in her living room. She tells me how people would spread out on the pink Victorian sofas to talk about how to save the hospital.
SUE GIBSON: Nobody can live here without that hospital. I mean, the nearest hospital is an hour-and-a-half away on treacherous mountain roads.
DEMBOSKY: Gibson also worries that the local economy would be wrecked. The hospital is the largest employer.
GIBSON: Probably the best-paying jobs. And if they close that, all that income would go away.
DEMBOSKY: That means less money for the local bait shops and seafood restaurants.
GIBSON: Also, people's property values - they would be cut in half immediately.
DEMBOSKY: Many people who live in remote areas like this are older or low-income. The government used to pay hospitals extra to account for that, but after the recession, the money was slashed. CFO Wade Sturgeon says Medicare basically tells the hospital what it will pay.
WAYNE STURGEON: So it'd be like going into Safeway and saying, hey, there's a jug of milk; I'll give you $2. But the price is $3.50. You're only going to get $2.
DEMBOSKY: Now leadership at the hospital is split over how to cope with the new economic reality. On one side are the hospital demonstrators, a new CEO and a brand-new CFO, Wayne Sturgeon.
STURGEON: Do the math.
DEMBOSKY: The days the finance committee meets, Sturgeon wears a mint-green shirt and a tie with a $100 bill on it. He says the hospital should focus on increasing revenues, drum up more patients.
STURGEON: If you're not growing, you're dying.
DEMBOSKY: And they should charge more for patients with private insurance.
STURGEON: Any time we don't raise prices, we're leaving money on the table.
DEMBOSKY: Now, on the other side of the debate are two new members of the board of directors. They say new patients are not the answer. The hospital should focus on controlling costs.
ROHR: It's obviously an expense problem.
DEMBOSKY: That's Bill Rohr, a steely orthopedist with gray hair tied back in a tight ponytail. He spent years in the corporate world and vowed to bring financial discipline to the tiny Fort Bragg hospital.
ROHR: This is not about being ruthless. It's about keeping this business alive, and it's only alive if it makes money, OK?
DEMBOSKY: A lot of his sentences are punctuated like this, as if to make sure you don't miss his point, like when he's giving a finance presentation, staring daggers at the CEO.
(SOUNDBITE OF ARCHIVED RECORDING)
ROHR: $870,000 loss - not acceptable, OK?
DEMBOSKY: Or when he's explaining the difficult decisions the hospital will have to make to balance its budget.
ROHR: There's 20 people in the water about to drown, and there's a rowboat there. But the rowboat can only hold 10. If 11 people get in that rowboat, it sinks and all die, OK?
DEMBOSKY: At the hospital, this means tough choices. They just closed the cafeteria, and they can't afford a full-time cardiologist. Walking into the hospital itself is like stepping into 1971 - painted cinderblock walls, drab brown carpets and the smell of Salisbury steak.
ROHR: This building is - its days are numbered.
DEMBOSKY: Dr. Rohr says the flooring is layered with asbestos. The concrete isn't strong enough to hold the weight of modern-day MRI machines. And in 2030, new state requirements kick in for earthquake readiness.
ROHR: We're going to have to build a new hospital.
DEMBOSKY: Where's the money going to come from for that? For once, hospital administrators and doctors are united around a possible solution - a new tax on homeowners. And people like Sue Gibson are reluctantly supporting it.
GIBSON: The only way we're going to be able to save this place, really, is with a parcel tax. But they can't even think about that until they clean up their act.
DEMBOSKY: After the Wall Street meltdown, banks were too big to fail. The feeling here is that the local hospital is too important to fail, and the residents will be tapped to fund the bailout. For NPR News, I'm April Dembosky in Fort Bragg, Calif.
MCEVERS: This story is part of a reporting partnership between NPR, KQED and Kaiser Health News.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.