Princess Health andStudy of poor but healthy Appalachian counties aims to find community-based approaches to improving the region's health .Princessiccia

Princess Health andStudy of poor but healthy Appalachian counties aims to find community-based approaches to improving the region's health .Princessiccia

Appalachia county health economy health status poverty research

Gusty 06:59 Add Comment

Though some people equate Appalachian areas with poverty, David Krol seeks to "shine a light" on a different picture�one that reflects "how health can flourish across Appalachia," despite data that confirms economic hardship, Krol writes for the Robert Wood Johnson Foundation.

While Krol was reviewing the Appalachian Regional Commission's county-based economic data, which compares economic indicators like poverty and unemployment rates with national averages and then ranks each county, it occurred to him to overlay this county index with the annual County Health Rankings.

For the most part, Krol said he found what he expected, "that the most economically distressed counties in Appalachia would also be in the lowest quartiles of health outcomes and factors for their state." But some counties that were economically distressed ranked in the top quarter of their state in health factors and outcomes.

"What was it about Wirt County, West Virginia; Pickett County, Tennessee; and Oktibbeha County, Mississippi, that helped them overcome significant economic challenges towards better health outcomes when similarly distressed counties in the same state did not?" he wrote.

The need to know why these "unexpected outliers" occurred has prompted Krol, with the help of the ARC and the Foundation for a Healthy Kentucky, to study how these counties have accomplished this and to look at whether this could be re-created in similar communities.

"This approach is rooted in the belief that communities have the best solutions to the problems they face�as opposed to solutions driven by outside experts," he wrote.

It�s an opportunity to �go beyond the data.. to community conversations about what�s important,� Susan Zepeda, CEO of the foundation, told Krol.

Krol wrote, "Quantitative data can get only get us so far�it�s up to us to ask those critical questions of �Why? How? What can be done? It�s up to us to turn data into action."

Princess Health andDoctors don't tell most patients or caregivers about a diagnosis of Alzheimer's until the disease advances, advocacy group says.Princessiccia

Princess Health andDoctors don't tell most patients or caregivers about a diagnosis of Alzheimer's until the disease advances, advocacy group says.Princessiccia

Alzheimer's disease health costs Medicaid Medicare research women's health

Gusty 20:06 Add Comment

Every 67 seconds someone in the U.S. develops Alzheimer�s disease and most don't find out they have it until their disease becomes more advanced, according to a report by the Alzheimer's Association.

The organization's 2015 Alzheimer's Disease Facts and Figures report says only 45 percent of people with the disease, or their caregivers, were told their diagnosis by their doctor.

One reason, the report says, is that they don't want to cause the patient emotional distress, but the report says studies have found that "few patients become depressed or have other long-term emotional problems" when they learn of their diagnosis.

The Alzheimer's Association says early disclosure of the diagnosis "should be standard practice" because it allows the patient to participate in early decision making about their care plans, deal with legal and financial issues, decide if they would like to participate in research, and gives them time to fulfill lifelong plans. The association said in the release that not enough resources and education are in place to help medical providers with "best practices for telling patients and their families."

"Telling patients the truth about their diagnosis allows them to seek treatment early, when it�s likely to be more effective, and gives them a voice in planning how they want to live the rest of their lives," DeeAnna Esslinger, executive director of the Greater Kentucky and Southern Indiana Chapter of the Alzheimer�s Association, said in a press release.

The report says an estimated 5.3 million Americans have Alzheimer�s disease, including 68,000 Kentuckians. And barring the development of medical breakthroughs, the report says the number of Americans with the disease will rise to 13.8 million by 2050. Other items from the report:

• Almost half a million people age 65 or older will develop Alzheimer�s in the U.S. this year.
• By 2050, an American will develop the disease an average of every 33 seconds.
• Two-thirds of Americans over age 65 with Alzheimer�s (3.2 million) are women.
• Alzheimer�sis the sixth-leading cause of death in the U.S.
• In Kentucky, 1,462 people died with Alzheimer�s in 2012, a 74 percent increase since 2000.
• Nationwide from 2000-2013, the number of Alzheimer�s deaths increased 71 percent, while deaths from other major diseases decreased.

The cost to care for Americans with Alzheimer's and other dementias in 2015 are estimated at $226 billion, of which $153 billion is the cost to Medicare and Medicaid alone, making Alzheimer's the costliest disease to society, the release says. The report projected this cost will increase to more than $1 trillion in 2050.

�Alzheimer�s is a triple threat unlike any other disease � with soaring prevalence, lack of effective treatment and enormous costs. Promising research is ready for the pipeline, but there�s an urgent need to accelerate federal funding to find treatment options that effectively prevent and treat Alzheimer�s," Beth Kallmyer, vice president of constituent services for the Alzheimer�s Association, said in a release.

Princess Health andInitial research is promising for an ancient combination of natural ingredients to kill MRSA, an antibiotic-resistant superbug.Princessiccia

Princess Health andInitial research is promising for an ancient combination of natural ingredients to kill MRSA, an antibiotic-resistant superbug.Princessiccia

healthcare-associated infections hospital acquired infections research

Gusty 11:06 Add Comment

Researchers in England say an ancient folk cure might help kill the superbug MRSA, Justin Moyer reports for The Washington Post.

MRSA, or methicillin-resistant Staphylococcus aureus, is among the infections that have grown resistant to antibiotics because the drugs have been overused, and scientists have been fighting it technologically, Moyer writes.

But researchers have recently found that MRSA is "vulnerable to an ancient remedy" made of garlic, some onion or leek, copper, wine and oxgall, or cow�s bile. Garlic and copper have been thought to have antibiotic or antimicrobial properties.

�We were absolutely blown away by just how effective the combination of ingredients was,� Freya Harrison, one of the researchers from the University of Nottingham, told the BBC, Moyer reports.

The remedy, called eye salve, was found in a manuscript written in Old English from the 10th century called "Bald's Leechbook," a well-respected physician's desk reference from that time, Moyer reports.

The Centers for Disease Control and Prevention estimated MRSA contributed to the deaths of more than 5,000 people in the United States in 2013, Moyer reports. Kentucky has the third highest rate of MRSA bloodstream infections in the nation, according to the National Healthcare Safety Network. Moyer writes that "some say it could eventually kill more people than cancer."

Moyer notes that the abstract for a conference at which the research will be presented cautions that "oxgall was no cure-all," saying, "Antibacterial activity of a substance in laboratory trials does not necessarily mean the historical remedy it was taken from actually worked in toto.�

Christina Lee, an associate professor in Viking studies at Nottingham, told Moyer "that it was the combination of ingredients that proved effective against MRSA, which shows that people living in medieval times were not as barbaric as popularly thought."

Princess Health andPolling shows Kentucky ranks third in share of residents, 24.5 percent, who say they take mood-altering drugs every day.Princessiccia

Princess Health andPolling shows Kentucky ranks third in share of residents, 24.5 percent, who say they take mood-altering drugs every day.Princessiccia

alcohol alcohol abuse drug abuse drug use drugs prescription drug abuse prescription drugs tobacco

Gusty 08:59 Add Comment

Kentucky is the place to be for mood-altering drugs. The state ranked third in a Gallup Organization study that asked 450 adults in each state how often they use drugs and medications to affect their mood or relax them, Christopher Ingraham reports for The Washington Post. West Virginia led, with 28.1 percent of respondents saying they use mood-altering drugs every day, Rhode Island was second at 25.9 percent, but Kentucky was not far behind at 24.5 percent.

Nationally, 18.9 percent of respondents said they take drugs almost every day, while 62.2 percent said they never do, 13.1 percent said they rarely do and 5 percent said they sometimes do.

The way the question was worded allows for errors, Ingraham writes. The question asked about drugs and medications, but didn't specify which ones, and didn't mention alcohol or tobacco. That left interpretation of the question up to individual respondents.

A recent National Survey of Drug Use and Health said that at least 71 percent of American adults drank in the past year, and 56 percent drank in the past month, which if true, could raise the rates in most states, if respondents were to consider alcohol a mood-altering drug. (Read more) (To view this interactive Post map click here)

Princess Health and The Troubles at Cooper Continue, Lately Gruesomely, But Will Its Leadership and Governance Change This Time? - Part I: Historical Background. Princessiccia

Princess Health and The Troubles at Cooper Continue, Lately Gruesomely, But Will Its Leadership and Governance Change This Time? - Part I: Historical Background. Princessiccia

anechoic effect boards of trustees conflicts of interest Cooper Hospital/ UMC crime governance health care corruption hospital systems leadership

Gusty 09:41 Add Comment

Allegations of Murder-Suicide by a Hospital System CEO

This will be a hard series of posts to write. It wa triggered by the latest, and perhaps most gruesome chapter in the troubled history of the leadership of Cooper Health, the largest hospital system in southern New Jersey (known locally as South Jersey).  As reported by the Philadelphia Inquirer on March 28, 2015,

Cooper University Health System CEO John P. Sheridan Jr. stabbed his wife to death, set their bedroom on fire, and then took his own life, authorities have concluded, closing a six-month investigation into the deaths that shocked New Jersey's political and civic communities.

The Somerset County Prosecutor's Office announced its results in a news release Friday, citing forensic evidence and a lengthy probe that included more than 180 interviews.

But it offered no conclusive motive to explain why Sheridan, described by family and friends as mild-mannered, would brutally stab his wife and kill himself.

'Many possible scenarios and theories were considered,' the prosecutor's office said in a statement after months of virtual silence. The evidence 'supports the conclusion that John Sheridan fatally stabbed Joyce Sheridan, set the fire, and committed suicide.'

The Story in Context: a Long History of Leadership and Governance Problems 

We have often discussed bad leadership of health care organizations, and written a lot about the contrast between the munificent compensation paid to non-profit hospital CEOs and the lack of evidence justifying such pay.  However, a murder-suicide allegedly perpetrated by the CEO of a large non-profit hospital system is way at the tail of the curve of questionable managerial behavior.

But it turns out that Cooper Health System has a very long record of leadership and governance troubles.  The current chapter is the latest, and possibly most gruesome, in this sorry series.  However, the context of this history has been lacking in the recent coverage, which has been so far limited to local media.  The history deserves a more complete discussion, and maybe then it could lead to some reconsideration at least of this one institution's leadership and governance, and perhaps the larger troubles in leadership and governance in health care.

Thus this post will summarize the history that I could find up to 2005.  A second post will summarize more recent history up to and through the terrible deaths of John and Joyce Sheridan.  

In the interests of full disclosure, I started my faculty career at what was then Cooper Hospital - University Medical Center, the main teaching hospital for the University of Medicine and Dentistry of New Jersey (UMDNJ) - Robert Wood Johnson Medical School (RWJMS) branch at Camden, NJ.  During my four years there, 1983-87, I was impressed with the dedication of the physicians, nurses and other health care professionals there.  However, even given my naivete at a young faculty member, the leadership of the institution, which was one of the early adapters of the generic management model,  seemed strange.  Little did I know how strange it was.

In the late 1990s, when I became seriously concerned about what I know call leadership and governance problems in health care, I ran into some folks from South Jersey who told me that Cooper had a tumultuous history since I left.  I got around to researching it, leading to an article in our local American College of Physicians newsletter.  The article, to which I had linked here, is no longer available on the internet.  So I have reposted it below, with some minor modifications, put in square brackets .  Again, the history is of major problems with leadership and governance at Cooper that had inspired no reconsideration by 2005.

The Curiously Quiet Case of Cooper�s Corrupt CFO

Embezzlement by Top Management

    In 1994, two powerful executives at Cooper admitted their guilt in an elaborate embezzlement scheme.  In 1978, John H. Crispo, the owner of Financial Management Corporation Inc., to keep his contract with the hospital, began paying monthly kickbacks of $2500-$10,000 to John M. Sullivan, the Cooper Executive Vice President for Finance.  Sullivan then referred delinquent hospital accounts for collection to a new company Crispo set up.  In turn, Crispo repaid him $340,000 in more kickbacks.  Sullivan recruited Cooper�s Controller, P. John Lashkevich, and the three devised a scheme to defraud the hospital using fabricated bills, established a fictitious company to launder money, and falsified tax returns.  A prosecutor claimed �Mr Sullivan blew this money on wine, women, parties, and a lavish lifestyle,�which included trips with girlfriends to the Plaza Hotel, and jewelry shopping at Tiffany�s.  Sullivan had driven a Porsche, and lived in a $700,000 house.  The conspirators also bought cars, boats, and racehorses.

    Other conspirators were also found and prosecuted.  Helene Weinstein admitted to helping establish a shadow company as a conduit for Sullivan to send money from the hospital to his estranged wife, Elarba Pagan.  Pagan was accused of receiving money sent by Sullivan from Cooper to another firm.  Weinstein testified that Pagan carried �briefcases of cash from the hospital to shop in New York for $1500 shoes.�  Also, Cooper�s Vice President for Finance, Robert Schmid Jr, admitted embezzling money from Cooper to pay for home improvements. Finally, Thomas J. Damadio admitted helping launder up to $600,000 stolen from Cooper, and evading income taxes.  

    Sullivan was sentenced to 55 months in federal prison, Lashkevich, 25, Pagan, eight, Weinstein, three years of probation, Damadio, six months of house arrest.  Crispo died before serving prison time.

The Internal Report, and the Murder Conviction of One of Its Authors

    After these stories became public in 1994, Cooper�s Board of Trustees established a special committee to investigate its financial operations, which included Peter E. Driscoll, Chairman of the Board, Kevin G. Halpern, Chief Executive Officer (CEO), and a local Rabbi, Fred Neulander.  The hospital pledged to make its investigation public, but then fought to keep it secret.  Its report was finally released in 1998, after a discovery motion in a civil lawsuit.  Prior to then, the Philadelphia Inquirer had revealed numerous financial conflicts of interest affecting Board members,  including those on the special committee.  For example, Cooper paid the law firm of Archer & Greiner, of which Driscoll was a senior partner, $2.1 million over three years from 1993-96.

    The report revealed that the conspiracy had bilked the hospital of at least $21.8 million from 1987 to 1994, while �Cooper has been the victim of a massive crime wave.�  It stated Sullivan, Lashkevich, and Crispo �had unrestrained and absolute control of virtually all the important financial functions at Cooper and they took full criminal advantage....� It also noted that �employees who became suspicious and questioned the accounting practices or tried to alert management were intimidated, transferred, or dismissed by the high-ranking executives.�  Furthermore, it suggested �the ability to bypass or defeat controls grew from an institutional culture that delegated and outsourced too much responsibility, without developing effective controls....� The report also raised questions about how the internal investigation was conducted.  It noted that Driscoll and Halpern �often locked horns with [the other] committee members....�  Driscoll had objected when other board members called for an independent investigation.  Halpern and Driscoll resigned their positions within days of the forced release of the report.


    One member of the special committee became particularly notorious.  Soon after the internal investigation was set in motion in 1994 Rabbi Neulander�s wife had been murdered.  Soon after, Neulander had failed a polygraph test when questioned about it.  He then resigned his clerical position after his extramarital affairs with members of his congregation were revealed.  In September, 1998, he was charged with hiring the �hit men� who committed the murder.  In 2002, he was convicted  and sentenced to life in prison.

The Aftermath, Financial Woes and Impact on Patient Care

    By 1997, Cooper was in financial trouble, although none of its managers ever admitted a connection to the conspiracy and resulting losses.  However, during a related civil lawsuit, Cooper officials alleged �the hospital�s general operating fund was depleted� by the conspiracy.  Cooper began merger discussions with several partners, including AHERF, although none were ultimately successful. Physicians started leaving in 1997, when all but one full-time cardiologists announced their resignations.  Cooper revealed a $16 million loss for 1998, the largest ever incurred by a New Jersey hospital.  Its bonds were down-graded to junk. The hospital then announced that it would stop accepting uninsured patients for elective treatments, departing from its historic mission of charitable care.  Losses continued in 1999, again totaling $16 million, leading to additional budget cuts.  [CEO Halpern and Chairman of the Board Driscoll resigned within days of each other in 1999, both denying their actions were related to the report.]  By 2000, the hospital had cut its work-force to 3100, from 4000 in early 1999. and had closed various clinical sites and units.  Only thereafter did Cooper began posting budget surpluses.  [By 2002, more physicians quit Cooper en bloc, and the hospital was on its second new CEO since Mr Halpern.]

 The Lurid Stories Remain Anechoic

    The only published reaction to Cooper�s woes came from the related legal proceedings.  The prosecutor in Sullivan�s trial claimed that his thefts were so big that they �threatened the financial stability of the hospital,� and �hurt the image of the city as a whole.�  At Pagan�s sentencing hearing, Judge Joseph H. Rodriguez stated �society could not tolerate a system in which hospital executives �rake millions off the top� that were intended for medical care for the poor.�

    It does seem likely that Cooper�s scandals had major effects on its patient care and academic missions.  Yet, I could find nothing  published about such effects.  Despite the luridness of this case, I also found no reaction from local or national medical groups, from academic organizations, accrediting groups, or government agencies.

Summary

In 2005, I wrote,...  The case of Cooper�s corrupt executives can be viewed as the forerunner to the even more massive bankruptcy of AHERF [Allegheny Health Education and Research Foundation, see posts here].  One can only speculate that learning the lessons of the Cooper case could have mitigated the AHERF disaster.  However, as noted in my last article,  the lessons from AHERF are also not widely known.  Yet, as George Santayana wrote, �Those who cannot learn from history are doomed to repeat it.�

As I will address in another post, events at Cooper after 2005 also generated few echoes, up to the latest tragedy.  These events did not suggest much had been learned from the events through 2005. 

So the unfortunate, and sometimes terrible case of Cooper Health has become one of the longest running examples  - starting in 1978 - of the troubles with leadership and governance of large health care organizations, the bad effects of these problems on health care and the values of health care professionals, the lack of public attention to and discussion of these problems and their effects, and the failure of organizations to address on their own their problems with leadership and governance.

True health care reform, as we have said endlessly, requires governance that is accountable, transparent, true to the organization's mission, and honest, ethical, and without conflicts of interest; and leadership that understands health care, upholds its values, is honest, ethical, and without conflicts of interest, is transparent and open, and is willing to be accountable and subject to appropriate incentives. 

References

Embezzlement....

Lewis L. Former official gets jail term for bilking Cooper: John M. Sullivan was sentenced to 55 months - the scheme netted $4 million.  He spent his take lavishly. Philadelphia Inquirer, April 26, 1996.

Graham M. New panel at Cooper plans review: embezzling of $3.8 million by two former top aides and a vendor prompted the study. Philadelphia Inquirer, July 27, 1994.

Lewis L. Ex-hospital executive gets 2 years: he helped steal $4 million from Cooper Hospital - his lawyer said the investigation was going to spread.  Philadelphia Inquirer, November 9, 1996.

Graham M, Turcol T. Inquiry widens into finances at Cooper Hospital: a federal grand jury subpoenaed several officials this month - the inquiry was spurred by testimony from two former Cooper executives indicted for fraud. Philadelphia Inquirer, February 27, 1996.

Lewis L. Woman admits role in bilking Cooper Hospital. Philadelphia Inquirer, September 6, 1996.

Lewis L. Ex-hospital executive admits theft: Robert Schmid Jr. pleaded guilty to embezzling about $50,000 from Cooper Hospital. Philadelphia Inquirer, September 24, 1996.

Lewis L. More charged in theft at hospital: six people have now been indicted in the embezzlement at the Camden facility. Philadelphia Inquirer, December 12, 1996.

Lewis L. Ex-wife of jailed Cooper Hospital official sentenced in scam: Elarba Pagan bought $1,500 shoes with medical center money, her business partner said. Philadelphia Inquirer, July 2, 1998. P. B5.

Lewis L. Business owner pleads: Thomas J. Damadio said he helped Cooper Hospital executives launder stolen money.  Philadelphia Inquirer, January 18, 1997.

The Internal Report...

Anonymous. Cooper forms committee. PR Newswire, July 26, 1994.

Graham M. FBI is probing Cooper Hospital for violation of securities laws. Philadelphia Inquirer, April 3, 1997.  P. A1.

Hollreiser E. Cooper urged to release audit results. Philadelphia Business Journal, May 30, 1997.

Graham M. Hospital gives state its audit: Cooper complied after the state threatened to withhold funding - the report will be kept secret.  Philadelphia Inquirer, May 14, 1997, P. B1.

Graham M. N.J. finds nothing amiss at Cooper: the Attorney General�s office reviewed an internal hospital audit - no criminal wrongdoing was uncovered. Philadelphia Inquirer, July 11, 1997. P. A1.

Graham M, Cusick F. Listing Cooper�s board deals: companies associated with the hospital�s trustees have gotten some of its largest contracts. Philadelphia Inquirer, June 15, 1997. P. A1.

Anonymous. Report says Rabbi failed polygraph on wife�s death. The (Bergen County) Record, September 5, 1996.

Burney M. Rabbi charged in wife�s killing. Associated Press State & Local Wire, September 10, 1998.

Mulvihill G. Judge declares mistrial in case of Rabbi charged with arranging wife�s murder. Associated Press State & Local Wire, November 13, 2001.

Bell T. Rabbi found guilty of murder in wife�s 1994 death. Associated Press State & Local Wire, November 20, 2002.

Mulvihill G. Jury spares life of rabbi in wife�s murder; faces life in prison.  Associated Press State & Local Wire, November 22, 2002.

The Aftermath...

Uhlman M. Cooper talks with Allegheny: the Camden hospital wants a partner, and the Pa. chain plans a further push into South Jersey. Philadelphia Inquirer, May 20, 1997. P. C1.

Gerlin A. Philadelphia hospital raids New Jersey system�s cardiology staff.  Philadelphia Inquirer, September 27, 1997.

Kastor JA. Governance of Teaching Hospitals: Turmoil at Penn and Hopkins. Baltimore:  Johns Hopkins Press, 2004. P. 41.

Goodman H. As Cooper suffers loss, it says care won�t suffer. Philadelphia Inquirer, February 11, 1999.

Rizzo N. Cooper Hospital announces cuts in staff. Associated Press State & Local Wire, March 18, 1999.

Goodman H. Cooper Health system cuts 103 employees: financial problems were cited - about 400 jobs could be lost this year, and uninsured care will be curtailed. Philadelphia Inquirer, March 19, 1999. P. A1.

Anonymous. As losses mount, Cooper Hospital�s debt rating falls. Associated Press State & Local Wire, April 16, 1999.

Goodman H. Cooper�s debt rating tumbles as losses rise: the 1998 figure is twice as bad as estimated - the poor rating means the hospital must pay more to borrow. Philadelphia Inquirer, April 16, 1999. P. B1.

Kent B. In Camden, a hospital finds itself seriously ill: Cooper, the city�s biggest employer, has �heavy losses.�  New York Times, May 9, 1999.

Anonymous.  Cooper Hospital announces more cuts in staff.  Associated Press State & Local Wire, May 20, 1999.

Anonymous.  Camden hospital posts $16 million loss: president sees turnaround.  Associated Press State & Local Wire, February 23, 2000.

Kiely E.  Cooper Hospital to forgo charity-care payments - the state will not reimburse the Camden facility for uninsured patients for four months - the reason: the beleaguered hospital received the money from the state in advance last year.  Philadelphia Inquirer, April 11, 2000. P B1.

Anonymous.  Cooper Hospital president quitting.  Philadelphia Business Journal, January 15, 2002.

Anonymous.  Hospital company sues six departing surgeons.  Associated Press State & Local Wire, July 4, 2002.

Princess Health and My Buddy and Me. Princessiccia

Princess Health and My Buddy and Me. Princessiccia

April fool's

Gusty 03:00 Add Comment

Warning -- Satire -- April Fools Post

I have a sheepish confession to make: until recently, I had a tapeworm, and that's why I'm lean.

In 2006, I took a trip to Mexico with a few friends. We often traveled through rural areas, and of course sampled the local cuisine wherever we went. In many parts of Mexico, pork is an important food. Some of it may have been a bit undercooked.

At the time, my interest in food and health was growing, and I was making many changes to my diet. I was glad to see the chubbiness around my neck and waist begin to disappear. The diet was working! Or so I thought...

Read more �

Princess Health andUp to 1/3 of rural hospitals in poor financial shape, auditor finds, calling report a baseline for local decisions that could be tough.Princessiccia

Princess Health andUp to 1/3 of rural hospitals in poor financial shape, auditor finds, calling report a baseline for local decisions that could be tough.Princessiccia

health reform hospitals managed care Medicaid Medicare obamacare state government

Gusty 17:34 Add Comment

By Melissa Patrick and Al Cross
Kentucky Health News
For a video of Edelen's press conference, click here. For a cn|2 report with video, go here.

FRANKFORT, Ky. -- As many as one-third of Kentucky's rural hospitals are in poor financial shape, and the survival of some will likely depend on their willingness to adopt new business models, state Auditor Adam Edelen said Monday.

Unveiling a nine-month study, Edelen said 15 of the 44 hospitals examined were in "poor financial health," and warned, "Closure may be an unfortunate reality for some."

Rural hospitals in purple declined to make useful financial information available to the auditor's office.

The study did not include 22 of the 66 Kentucky hospitals that are located outside metropolitan areas, which declined to participate or didn't provide the type of information requested. Edelen said those hospitals are mainly privately owned. If they had been included, Kentucky Hospital Association CEO Michael Rust said, the financial picture "would be better, but I don't think they would be substantially different."

Gov. Steve Beshear said the report was "a dated snapshot" because its most recent data was from 2013, before federal health reform was fully implemented. "Conditions are no longer the same," Beshear said in a news release. "Hospitals received more than $506 million in 2014 through new Medicaid expansion payments, while seeing significant reductions in uncompensated care costs.  Those are huge changes to hospitals� bottom lines that are not shown here."

Edelen, who was Beshear's first chief of staff, said the full effect of federal health reform isn't certain. His report noted that Kentucky hospitals have had higher-than-average penalties from Medicare for readmitting patients within 30 days, a newly implemented feature of the law. Forty of the 63 hospitals penalized were rural, and nine of the 39 in the U.S. that got the maximum penalty were in Kentucky.

"This report doesn't speak to causation" by the reform law or the state's relatively new managed-care system for Medicaid, Edelen said, it is "not a rebuke" of either, but provides "a baseline for monitoring" by policymakers at the state and local levels.

The report says that to survive, rural hospitals must adapt to new business models, such as merging with larger hospitals or hiring them as managers, forming coalitions with other rural hospitals, or finding a health-care niche that hasn't been served.

Edelen cited Rockcastle Regional Hospital, which has become a niche provider of ventilator dependent care and the coalition formed by Morehead's St. Claire Regional Medical Center and Highlands Regional Hospital in Paintsville to provide more efficient care, improve patient access and adapt to changes under the reform law.

Adaptations might be a hard pill to swallow for many rural hospitals because they call for yet more change in the rapidly changing health-care landscape of electronic health records, managed care, Medicaid expansion and full implementation of the Patient Protection and Affordable Care Act.

Edelen said adaptation is important for rural communities, for whom "the importance of rural hospitals cannot be understated. They provide health care to 45 percent of Kentuckians and in every community they serve they act as one of the larger employers, paying a significantly higher wage than the average the community experiences."

He also cited the many small hospitals that have formed relationships with larger networks to relieve the increased administrative burden associated with the three-year-old managed-care system. The report says half the hospitals studied have reported an increase in hours spent on administration.

The report suggested that the state Cabinet for Health and Family Services negotiate better contracts with managed-care organizations, partly to streamline MCO rules and paperwork to reduce the administrative burden. "We are optimistic that the current work of the cabinet to improve those contracts is going to bear real fruit," Edelen said.

The new contracts will start July 1. In an interview, cabinet Secretary Audrey Haynes sounded optimistic about them but said she couldn't give details.

Haynes has been saying since she became secretary three years ago that many hospitals must change the way they do business. She said in an interview that the readmission penalties have forced hospitals to change by providing better discharge planning, and utilizing outpatient services like home health, nursing homes and rehabilitation.

One Kentucky hospital, in Nicholas County, has closed in the last year. Haynes said the cabinet is working with Fulton County, whose hospital is scheduled to close March 31, to explore how to continue providing care at the facility, such as an emergency room or an ambulatory surgical center.

Haynes recommended in the interview that all nonprofit hospitals put audited financial records and their tax returns on their websites and adhere to open-meeting laws.

In a lengthy response, included in the report, Haynes rejected Edelen's suggestion that her cabinet regularly monitor the fiscal strength of rural hospitals. She said in the interview that would pose a conflict of interest, since the cabinet regulates the hospitals.

Edelen's analysis of hospitals' financial health was based on percentage of revenue kept as profit, number of days of cash on hand, debt financing and depreciation. It found that the financial condition of 68 percent of Kentucky�s rural hospitals scored below the national average.

Edelen's office also surveyed rural hospital administrators, held 11 public hearings and met with representatives of all five Medicaid managed-care companies. His report found that:

• Rural hospitals that were geographically well-positioned, such as Pikeville Medical Center, scored high while geographically-isolated hospitals, like those in Clinton and Wayne counties, scored low. The Clinton County Hospital is in bankruptcy to restructure debt incurred for an expansion and modernization.
• The Pikeville hospital, formerly Pikeville Methodist, was one of only three judged to be in excellent financial health. The others were critical-access hospitals in Franklin and Morganfield.
• Critical-access hospitals, which limit their beds, services and patient stays to qualify for federal reimbursement at 101 percent of cost, scored better than regular acute-care hospitals. They accounted for seven of the 14 that were above the national average and thus were rated "good."
• Fifteen hospitals were rated "fair" and 15 were rated "poor." Westlake Regional Hospital in Columbia, which is in bankruptcy, was at the bottom, far worse than the next highest, St. Joseph Mount Sterling.
• The number of health-care providers across the state � particularly in rural Kentucky � dropped significantly between 2013 and 2014. The cabinet disputed that finding, based on different measurements.

Here are the rankings (click on the image for a slightly larger version):