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CHAPTER 16:
FINANCIAL PROBLEMS PLAGUE THE HOSPITAL
The hospital did not do well financially during its first few years, however. Although in January 1961, income was greater than operating expenses, depreciation and debt brought total expenses $27,144 over income. Northwest began to borrow against receivables to finance its cash flow, a situation that would continue well into the 1970s.

This was also the new era of Medicare, which had just become part of Social Security. Northwest was one of the first five hospitals in the country to be accredited for Medicare (its national account number is 0001), and in time, the bulk of the hospital's revenues would come from this source. The paperwork involved with Medicare and Medicaid would, however, also greatly increase the hospital's cost of doing business.

Several issues of Kloshe Kumtuks carried articles about the rising cost of health care. (It's not a new issue, it seems!) In 1968, Justin Greene wrote that technology and the higher levels of education among staff members helped raise costs, but, of course, that also meant that care was better.

"Not too many years ago," he wrote, "hospitals offered mainly custodial care for serious, long-term or terminal illnesses. ... [Today] the majority of patients come in for diagnosis, treatment, and rehabilitation ... Costs of care vary according to the level of self-care of which the patient is capable. Some services can be provided on an outpatient basis. "Our future emphasis," he prophesied, "will have to be, paradoxically, on keeping people out of the hospital. The accent will be heavily on preventive and prophylactic treatment, to avoid the need for hospitalization as often as possible."

Funding became such a high priority that in 1965 the board asked Torchy Torrance to contact Gordon Gemeroy again. This time the puzzle contest nearly cost the hospital several thousand dollars, but Messrs. Torrance and Gemeroy came up with a closing consolation contest that netted $6,000 profit.

Clearly, there was a need for financial planning. Board member Kelly Waller suggested establishing a long-range planning committee that would handle long-range financial planning, including capital-formation, major capital purchases, ancillary improvements, and long-range site development. The first long-range planning committee members were Harry Givan, Chapin Henry, Ery Parent, Peter Wick, R. C. Torrance, Kelly Waller, and John Osberg. In 1971, the hospital would produce a long-range site plan that, with modifications over the years, still governs the hospital's land-use choices.

While the hospital was progressing in patient care and foundering financially, it sustained one very serious loss. Justin Greene, the hospital's first administrator, died of a heart attack at the age of 44 on December 11, 1968.

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