CHIPLEY — After nearly a decade of historic growth and improvements for Northwest Florida Community Hospital, an era is coming to a close.
On Dec. 15, NFCH CEO/President Pat Schlenker will sell his majority stock holdings in Northwest Florida Healthcare Inc. to Signature HealthCARE Systems.
Signature owns Washington Rehabilitation and Nursing Center in Chipley.
“This is not an asset sell, NFHI will remain its own corporation,” Schlenker said on Friday. “We will remain two separate organizations.”
“This is really an exciting time for us,” said Bret Brown, administrator of WRNC. “This will allow us to work together and combine to be a model for rural health care.”
To continue to grow, NFCH needs to formally partner with a larger healthcare system.
Schlenker said the necessity for NFCH to align itself with a bigger organization became evident more than a year ago, when The Patient Protection and Affordable Care Act, also known as Obama Care, still loomed on the horizon. “Now that it is unlikely Obamacare will be overturned, it is even more of a necessity,” he said.
“With all the changes coming, it became evident that we would need a bigger organization to bundle with,” he said. Bundling with a larger organization will make the reimbursement process more efficient.
Partnering with a larger system will also help the hospital meet its growing need for cost containment, Schlenker said. “If NFCH is going to continue to thrive in the coming years, I am convinced it needs the economies of scale that a larger organization can provide,” he wrote in a letter to the Washington County Board of County Commissioners, from whom NFHI leased the hospital back in 2004.
Signature HealthCARE is a leading provider of long-term care services in the Eastern and Southeastern United States, operating 73 communities in seven states with more than 12,000 employees, according to the company’s website.
“Additionally, Signature and its affiliated organizations own and/or manage more than 20 Critical Access Hospitals in the eastern United States,” Schlenker said. “In addition to everything else, Signature’s local facilities will be a tremendous source for referrals to the hospital and our physicians. I am convinced this will take NFCH to the next level in volume and quality of services provided.”
Signature HealthCARE re-located its corporate offices from Palm Beach Gardens, to Louisville, Ky., in 2010. Signature is growing rapidly, acquiring new facilities and developing innovations and businesses to better serve the aging population.
Besides WRNC, Signature has 24 facilities in Florida, according to its website, with three of those being local — Defuniak Springs, Marianna and Graceville.
In March of 2004, Schlenker’s corporation Northwest Florida Healthcare Inc. leased the Northwest Florida Community Hospital from Washington County for 40 years. At the time, the hospital was in big trouble — it was millions of dollars in the hole and showed no signs of improving, Schlenker said.
As a representative of the Sacred Heart Health Systems, Schlenker had investigated the Chipley hospital as a possible investment for that company, but the sale didn’t happen. Schlenker, after having done due diligence, saw something that made him want to come to the Washington County facility’s rescue.
“I just fell in love with the community, and with the people,” Schlenker said. He resigned from Sacred Heart and started his own company to run the hospital, but he could find no willing investors. NFCH had lost almost $5 million in the four years prior to 2004, with $1.9 million of that being lost the year prior to the lease.
The Schlenkers had to personally sign for a $1.5 million small business loan to help get NFCH back on track. “That loan is almost paid off now,” Schlenker said. “That was a scary time, but I couldn’t find any investors.”
In Schlenker’s office hangs a dry-erase board with the message: “Mr. Schlenker, thank you for believing in us. Good luck!” The board is signed by employees and it was created in 2004 when NFHI took over the hospital. Eight years later, Schlenker still believes.
Prayer was also part of Schlenker’s secret for success. “I used to pray all the way over here from Milton, sometimes I had to pray that we would make payroll,” he said. “There was no money in the hospital at all.” Schlenker also took a 75 percent salary decrease in his new role as CEO/President of NFCH.
Of course, Northwest Florida Community Hospital is tremendously successful. “We were successful in turning the hospital around in approximately 42 months,” Schlenker said.
Last year NFCH was recognized by the Florida Hospital Association as the most improved hospital in the state of Florida for hospitals of 150 beds or less. There are about 150 hospitals of that size in the state.
The hospital was also honored last year by being named the Washington County Chamber of Commerce Business of the Year.
Most recently, the hospital was listed in Inc. Magazine’s “5,000 fastest growing business” list, which includes all of the United States.
“When you think about how small the chances are of being on that list, it’s incredible,” Schlenker said. “Something like .001 percent chance. There are five million registered businesses in the U.S., and there were 650,000 that were considered for the list.”
Brown said the potential of NFCH and WRNC working together to improve lives, especially in elder care, will be greatly enhanced with the merger. “There are models of elder care that can only be done in a rural setting, and Signature is a trendsetter in the industry,” he said. “This is really exciting for both of us.”
Schlenker said after he turns over his stock to Signature on Dec. 15, that doesn’t mean he will be going anywhere. “I will stay on as CEO and president for another year, then I will move to hospital governance and advisory boards for another three years,”
The change will be absolutely transparent and does not involve the leases, Schlenker said. Employee benefits will not be affected as the hospital is not being sold. NFHI which holds the leases will continue to exist as an active Florida corporation.
“The new partnership between NFCH and Signature HealthCARE will allow the hospital to continue its reputation for excellence under new management and allow me to retire in a year,” Schlenker told the county commissioners.
The best part, Schlenker said, is that after retirement as CEO/president, he will be able to continue to associate as a board member with the organization, community and associates he has grown to respect and love.
“I’m 71 years old and I will be closer to 73 by the time the first year ends. I can’t do this forever,” he said. “It will also give me a chance to wean myself,” Schlenker said. “I care about the staff and the doctors here, I don’t think I could just leave all at once.”