History of NPHS continued
the Hospitals served a community that was declining in terms of
socioeconomic factors, the Hospitals continued to expend capital and
invest in numerous program and service expansions.
When prospective payment for services (the DRG Program)
was introduced in 1984, neither of the Hospitals made the changes in
administrative and clinical practice responsive to the incentives of
the DRG program. By the
end of the 1980s, the Hospitals had experienced several years of
declining financial performance, substantial erosion in overall
patient volumes coupled with weak and problematic management.
In 1987, GMC found itself reeling from a succession of
problems in quality of care, governance and management filed for
bankruptcy pursuant to Chapter 11.
In 1989, SJH suffering from the same symptoms, also filed for
bankruptcy pursuant to Chapter 11. At that time, the logic of
uniting the two hospitals became apparent. NPHS was created in
August 1990 as part of the bankruptcy plan of reorganization for
both GMC and SJH. NPHS,
a single corporate entity, combined all assets, employees, medical
staff, management and governance of the Hospitals.
The operative portions of NPHS strategic plan called for
savings through consolidation, expansion of drug and alcohol and
psychiatric services and ability to increase on historical volumes
of medical-surgical admissions.