Challenge
By early 2024, Hutchinson Regional Healthcare System (HRHS), a 190-bed, not-for-profit hospital in Hutchinson, Kansas, faced a severe financial and operational crisis. After years of instability, 80% of the senior leadership team had been eliminated, the hospital was losing tens of millions annually, and critical workforce reductions had left gaps in essential functions such as revenue cycle management and emergency department (ED) operations. Workforce challenges were further compounded by an over-reliance on costly contract labor, and a 9% left without being seen (LWBS) rate in the ED signaled serious patient access issues. On top of these challenges, HRHS’s operational losses represented a violation of its debt-service agreements with bondholders, and the system needed a forbearance agreement to avoid immediate repayment of its debts. The hospital was at a crossroads: without intervention, closure or acquisition by a multi-state system was a real possibility.
Recognizing the urgency of the situation, newly appointed CEO Benjamin Anderson took immediate action. On his first day, he brought in Stroudwater Associates, leveraging funding from the United States Department of Agriculture (USDA) in partnership with the National Rural Health Association (NRHA), to assess the hospital’s strategy, finance, and operations.
Anderson’s goal was clear: Before making sweeping changes, he needed a full understanding of the hospital’s challenges and opportunities. Stroudwater’s team worked closely with hospital leadership, board members, and frontline staff to conduct in-depth interviews, financial reviews, and workflow analyses, identifying key areas where HRHS should focus its turnaround strategy.
The goal was not a surface-level analysis but a deep dive into the hospital’s biggest challenges, opportunities, and path to long-term success.
Solution
Anderson approached the assessment with a clear directive: HRHS needed an actionable plan that would result in meaningful change. Partnering with Stroudwater, he engaged hospital leadership, board members, and frontline staff to align on key areas for improvement.
The strategic planning process was not just about uncovering problems—it was about developing an actionable roadmap for change. Stroudwater conducted extensive interviews, data analysis, and workflow reviews across HRHS departments to pinpoint inefficiencies and identify key focus areas for improvement, including:
- Emergency Department Overhaul: Address patient throughput, reduce LWBS rates, and improve triage and staffing models.
- Revenue Cycle Optimization: Implement a more aggressive denial management strategy, optimize coding and billing, and capture lost reimbursement.
- Outpatient & Specialty Growth Strategy: Expand primary care, imaging, and specialty services to increase outpatient volume.
- Facility & IT Modernization: Invest in critical infrastructure updates and improve system operability to support future growth.
- Provider & Workforce Stability: Conduct a full compensation and contract review to address compliance risks and ensure retention of key staff.
- Financial Sustainability: Reduce contract labor dependency, restructure costs, and fully utilize 340B drug pricing program (potentially unlocking $5M in savings annually).
Results
The partnership between HRHS and Stroudwater Associates has led to tangible improvements across key operational and financial areas:
Emergency Department Transformation
- LWBS Rate Reduced: Dropped from 9% to below the national benchmark for nine consecutive months.
- Physician Recruitment: Transitioned from contracted ED providers toward a stable, full-time physician and APP team in the coming 12 months.
- Infrastructure Investments: Implemented new imaging and diagnostic upgrades, reducing delays in patient care.
Financial & Workforce Stability
- Contract Labor Cost Reduction: Cut contract expenses from $32 million (FY22) to a projected $4 million (FY24).
- Revenue Cycle Improvements: Strengthened denials management, insurance reimbursement, and patient collections.
- First Consecutive break-even months in years, achieving sustainable financial performance gains.
Service Line & Operational Enhancements
- Primary & Specialty Care Expansion: Developed a long-term growth plan to meet community demand.
- Optimized inpatient utilization by reducing unnecessary transfers to external facilities.
- 340B Drug Pricing Program Activation: HRHS is now maximizing its eligibility and is in the process of unlocking an estimated $5 million in annual savings.
These results signal more than a financial recovery: a shift in the hospital’s long-term trajectory.
Impact
Stroudwater Associates approaches rural healthcare transformation with a fundamentally different mindset that transcends cost-cutting, emphasizing abundance and strategic growth. Rather than seeing rural hospitals as organizations that must shrink to survive, Stroudwater partners with leadership teams to find new ways to expand services, optimize operations, and drive financial sustainability.
This approach resonated deeply with CEO Anderson. He leads with an abundance mindset—believing that rural hospitals are not doomed to decline but can, with the right strategy, build a sustainable future. With Stroudwater as a trusted partner, HRHS now has both the financial and operational roadmap and the critical shift in thinking for rural healthcare to thrive.
As Anderson put it: “Working with Stroudwater sets the foundation for transforming a health system. They aren’t just about the numbers—they bring financial and operational expertise together with the shift in mindset that rural hospitals need to survive. They understand that you can get to efficiency through growth. I know I can count on them, not just for strategy, but for a way of thinking that ensures long-term financial sustainability.”
With a clear strategic plan, an engaged leadership team, and a commitment to expansion, HRHS is no longer simply working to maintain operations—it is building a stronger, more resilient healthcare system for the future.
