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"WILL THE LAST PERSON IN SEATTLE ..."
On January 14, 1969, the board adopted this resolution:
Just two months ago, Justin Greene hailed the work of Northwest's trustees, saying, 'These men are dreamers. A long time ago, they felt a need and saw a potential, and they took the raw land and planted it with a dream.' As we worked the land, Justin Greene cultivated the people, the raw material that turned the bricks and mortar of Northwest Hospital into a living thing. As the bricks and mortar grew into a modern hospital, he took his pride in the people of Northwest, in personal abilities and in service to the community. Justin Greene mapped a path in the pursuit of excellence, and we can pay our greatest tribute to him by following his path.
Mr. Greene was succeeded by a young man named Allan Davis, whom the board had hired two years earlier as assistant administrator. It was probably just sound management principles that led Mr. Greene to urge the board of trustees to hire someone who could be groomed as his replacement, but in hindsight, it seems almost to be a presentiment on his part.
When the trustees named the 29-year-old Allan Davis to the administrator's post, they did so believing that his appointment would offer the least interruption to day-to-day operations of the hospital.
The board could not have known what it would have to face in the coming years. Times were changing, and the hospital would have to change with them.
Anyone who lived through the early 1970s will remember the trauma of the Vietnam War. A new generation was asserting its adulthood in baffling and often violent ways, so strong was its sentiment against that tragedy. Watergate threatened our self-confidence. Gasoline was scarcer than gold.
Economic issues affected the hospital more directly, however. A downturn in Boeing's business led to a severe local recession and inspired the famous "Will the last person in Seattle please turn out the lights?" billboard. Inflation was a double-edged sword, for while the hospital struggled to keep up with ever-increasing prices for goods and services, government wage and price controls designed to control inflation hindered its ability to recoup these added expenses. John Alexander McMahon, president of the American Hospital Association, told Kloshe Kumtuhs that "The Cost of Living Council is playing Russian roulette with the needs of patients."
The first phase of President Nixon's economic stabilization plan called for a 90-day freeze on all wages and prices. Phase II, which went into effect in November 1971, was aimed directly at hospitals. "Since the [Price] Commission considered that past advances in hospital-care costs were a 'significant element leading to the need for Phase I controls,' it took further action. It wanted to cut in half the rate of increase in health-care costs," Kloshe Kumtuhs recounted for its readers in 1974. "These limitations ... restricted hospitals to no more than a dollar-for-dollar recovery of cost increases. In some cases, they could not recover the full amount of increases.
"Other sectors of the economy were permitted to increase their prices to cover allowable cost increases, and to add their customary markup."
Government interference in hospitals' management was taking new turns, too. Medicare and other government-funded programs were becoming a larger and larger share of their income; "medical necessity" and "utilization review" became part of the hospital's lexicon.
State and government agencies were already interfering in medical care decisions that had heretofore been the prerogative of physicians; they were now beginning to pre-empt financial decisions that had heretofore been the prerogative of administrators and boards of trustees.
In 1972's annual report, for example, Northwest Hospital related that "Economic Stabilization Program guidelines now limit our charges, salaries, and the amount of community equity for expansion and development." Hospitals were limited to 1.7 percent of their previous year's total expenditures for new technology. In other words, the hospital was being scrutinized and regulated. It could no longer do whatever it thought best for the community it served. The newly created State Hospital Commission began exercising its authority to approve hospital budgets, including capital expansion plans, and to set rates. If the hospital made more money than it needed to cover operating expenses, it had to reduce its rates.
On the surface, this appears to be a laudable attempt to keep hospital costs down. Unfortunately, in the long run it has an opposite effect. Hospitals that cannot grow and change to meet the needs of the communities they serve, hospitals that cannot buy new diagnostic and treatment technologies, not only do a medical disservice to their patients, but eventually they go out of business altogether. And although technology itself is expensive, people want the newest and best, and with good reason: it saves lives. Given the choice, they will go to the hospital that meets their technological expectations. As the low-tech hospital's census declines, its fixed costs must be spread over a smaller base, resulting in higher rates, which also drives patients away.
In the early 1970s, unemployed, uninsured Seattleites were coming to the hospital less frequently, and when they did come, they didn't stay as long. Technology was certainly one reason for shorter stays. As Allan Davis wrote in his "Pursuit of Excellence" column in Kloshe Kumtuks in early 1971, "These new devices ... are providing our patients with better care than ever before. They speed the diagnosis and treatment of patients, resulting in shorter hospital stays. This cuts the actual care and returns the patients to more productive lives faster than ever before.
"Statistics prove this fact," he continued. "In 1950, the average length of stay in general acute hospitals in the United States was 8.1 days. In 1969, the average Northwest Hospital patient (not counting newborns) was discharged after 4.8 days. This year, through October, stays have averaged 4.5 days.
"Yet, technology will never be able to provide the entire job of health care. Is still takes competence, dedication, and the pride of service that goes with it. At Northwest, we are pleased to be able to provide our competent and dedicated staff with the modern technology to assist them in their continued pursuit of excellence."
There were fewer "competent and dedicated staff," however, as the hospital was forced to adjust its work force in response to the declining census. People who left or retired weren't replaced. Employees found themselves with new assignments and fewer scheduled hours. "The outstanding spirit of Northwest's family emerged," wrote Allan Davis, "and we were able to meet this challenge successfully."
By 1973, the hospital's financial condition was becoming critical. Financial committee chairman Forrest ("Frosty") Richardson re-ported in July that the hospital, never very much in the black but holding its own, would be in the red for the first time in its history during the first seven months of the year. Sixteen administrative employees were laid off, and the hospital finished the year with a loss of $150,000.
The situation did turn around a bit, though. A year later the financial committee reported, "We are now in the best financial position we have ever been in, due to the high census and to the fact that we are not now involved in expansion projects."
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