The Steuben County city of Corning and Auburn have much in common. The greater Corning area has about 26,000 people compared with Auburn's 28,000 residents. Both cities are former manufacturing hubs stumbling down from economic peaks. And both cities have had financially flailing hospitals that hired the same Chicago health care troubleshooting firm, Wellspring Partners Ltd., to perform a turnaround of their operations.

The Corning Hospital lost $12.3 million in 2003 after losing about $2 million in both 2001 and 2002. But then Wellspring came on board at Corning for several months in 2004. By the end of its 2004-2005 fiscal year, the 99-bed hospital celebrated a $1.1 million profit after laying off about 100 employees, mostly through attrition, consolidating a handful of hospital units and strengthening management practices.

Auburn Memorial Hospital recently began a turnaround implementation period with Wellspring after posting an $8.2 million loss over the last two years. But with the hopes that a turnaround is underway comes apprehension about what exactly will happen, and what kind of presence Wellspring will have in the hospital.

Based on the experience at Corning, hospital officials there said, AMH staff should feel confident with Wellspring.

Mark Stensager, the president and chief executive officer of

Corning Hospital's parent, Guthrie Healthcare System, says Wellspring was strategic and flexible in providing its help for the 600-employee hospital. Corning Hospital has been in a partnership with Guthrie since 1999 and fully joined the system of five long-term care facilities and two other Pennsylvania hospitals, Robert Packer Hospital in Sayre and Troy Community Hospital, at the end of 2004.

Wellspring's staff have worked with so many other health care systems that they have extensive information on how to cut costs and increase revenue on a number of fronts, Stensager said. Particularly helpful, he said, is Wellspring's expert use of the Solucient benchmarking database and other data that health care institutions use to compare themselves in terms of efficiency and quality indicators.

Wellspring sent a large number of expert staff to work with Corning, and these outsiders worked well with Corning's team, Stensager said.

“They had a host of people to assist with process improvements to properly size the staff,” Stensager said. “Just doing arbitrary layoffs without understanding processes and workflow is not helpful. They were committed to working very cooperatively with the existing management team. They seemed to be quietly collaborative in their approach.”

Auburn Memorial Hospital administrator Brendan McGrath said the adaptiveness of Wellspring's approach is why the hospital hired this firm instead of the other firms it considered during 2005. He calls Wellspring an implementation firm rather than a traditional consulting firm.

The result will be significant changes in how AMH runs rather than a study that can be put in a drawer and ignored, he said.

“There are a lot of good companies,” McGrath said. “Nobody has an approach quite like Wellspring.”

Stephen L. Furry, the Wellspring principal working closest with AMH, said it's a joy to watch the firm work.

“The beauty of the Wellspring formula is it's a very collaborative approach,” Furry said. “It's not an approach where we're trying to come in, replace and show up the organization. Our job is come in, identify opportunities, train the organization to fix those opportunities and show them how to measure their success ... (Otherwise) our clients wouldn't talk about us the way they do. I think Wellspring has found the secret (to changing organizations).”

Robert Bergan, president of AMH's board and a board member of three years, said the hospital initially hired PricewaterhouseCoopers in 2005 to conduct a review of its operations.

But that firm's assessment did not provide the tools to turn the hospital around, he said. It was not as likely to help AMH renovate its operations as if the hospital could avoid demolition and freshly and gently rebuild its walls brick by brick. AMH finalized hiring Wellspring for a 10-week assessment at the beginning of the year.

But Wellspring's organic approach also is expensive. AMH officials said they could not reveal how much they will pay Wellspring because of the contract with the company, but published reports have put the price tag at $3.9 million.

The hospital has received $700,000 in community donations to fund the project, including $250,000 from Cayuga County, $250,000 from the Fred L. Emerson, $100,00 from the Allyn Foundation of Skaneateles and $100,000 accumulated from other sources.

Wellspring is promising to garner AMH $7 million per year in cost-savings or new revenues by next year. Wellspring “consistently produce gains of up to 20% in financial performance for our clients,” according to its listing among more than 60 other health care consultants on the Healthcare Financial Management Association's web site.

The price tag of Wellspring's services will be worthwhile, AMH officials said, if AMH's flailing finances can be righted by a grounds-up, grassroots culture change guided by knowledgeable outsiders.

There is optimism brimming at AMH that Wellspring is the golden key to stemming and turning the tide of AMH's financial losses, said Beverly Miller, AMH's director of community relations and the hospital's foundation, which manages all gifts given to AMH.

She felt that way after her first Wellspring-related meeting.

“You walk out of there feeling like you've saved the hospital,” Miller said.

Wellspring conducted a 10-week intimate review of AMH's practices beginning in February. Following that review, they presented AMH officials with what they called “opportunities” and what board president Bergan says ruefully are truly problems.

After a lengthy consideration process, AMH officials decided to hire Wellspring to implement its review findings. At the beginning of June, the implementation period of seven months began. It may stretch longer depending upon the rate at which AMH finances turn around to meet the goals of the Wellspring plan.

As part of its contract, Wellspring will stay involved in AMH until the hospital gets to a range it has set out of the implementation goal-posts.

“Our goal is to leave the Auburn community with a stable, high-performing, high-quality organization that attracts new patients to it, not only from its own market but surrounding markets' patients to it,” Furry said.

Wellspring has eight top principals, or part-owners, including Furry, who is intimately involved in the hospital's turnaround effort, and Dennis J. Patterson, who serves an observant outsider. Wellspring has a cadre of consultants with specialized expertise. Some are almost staying full-time in a local hotel during a compact Monday to Thursday workweek with long hours. Some come to the hospital for shorter stints.

Wellspring staffers are working alongside AMH employees in most departments of the hospital to review operational practices and find cost-saving possibilities.

There are several general task forces in charge of areas Wellspring found in need of improvement. Each task force has several goals for improvement, and there are smaller subcommittees within each of task force with their own goals. Both AMH and Wellspring staffers sit on the committees.

AMH's finance department will be more involved in later weeks to ensure the proposed cost-savings measures are actually effective and worthwhile to continue.

Nursing supervisor Barbara Perkins is one of seven AMH and two Wellspring members on a medical surgical supply subcommittee. This committee has met four times so far to examine 10 opportunities to “make sure we get the best dollar value,” Perkins said.

The 31-year AMH nursing veteran said her subcommittee is looking at things as basic as how it handles its linen supply, which the hospital currently hires an outside company to provide.

Wellspring's expertise is helping AMH employees figure out what is the best practice and the right pricing, Perkins said.

AMH staff have been somewhat nervous about embarking on a new process, but the Wellspring staff she has interacted with have been helpful and cordial, Perkins said.

“They've been willing to listen when we've said we need to look at something,” Perkins said. “They want to make sure everyone is on the same page. They make sure everyone knows what we're going to do, why we're going to do it and how we're going to do it.”

Jim Egan, AMH's director of pharmacy, said the pharmacy subcommittee he leads has been tasked to find $100,000 to $200,000 in cost-savings. After six weeks of meetings, the group have identified seven initiatives worth $280,000 in potential cost savings.

One of those initiatives involves substituting a cheaper antibiotic that is therapeutically equivalent to a more expensive antibiotic. Potential savings over one year: $7,000.

Another initiative involves sending the exact amount of Lantus insulin needed by a patient instead of making up a $60-vial. In the current practice, most of the insulin usually gets thrown away. Potential savings over one year: $15,000.

All of the cost-savings involve little things that add up to strong savings: drug substitutions or making doses of drugs more precise. The initiatives are still in the process of being implemented, but it's a heartening development, Egan said. His group includes two Wellspring staff, two physicians and three other AMH staff.

Another hospital system in Pennsylvania just began its implementation period with Wellspring in February. This hospital was considered to be a comparable institution to AMH by Wellspring with its employee base of more than 800 and an estimated 170 patient beds. Bergan's conversation with this hospital's officials was one of the reasons he decided to support Wellspring.

There's been good news coming out of Blue Mountain Health System, with its two hospitals, a nursing home and other health care facilities in southeastern Pennsylvania, said Conrad Biege, chairman of BMHS' board.

Financials have improved every month as Wellspring successfully finds opportunities for cost-savings, Biege said.

Biege said he can't deal with incompetence, and he's highly pleased with what is Wellspring doing for BMHS.

“They don't do it and walk away,” Biege said. “Basically what they're doing is mentoring staff so when they leave, staff can operate as they've done for the past eight, 10 months. It's more of a mentoring, a helping along.”

The mentoring on better business practices and cost-savings measures is needed because Wellspring has the specialized expertise that community hospital staff don't, Bergan and McGrath said.

“People who do well in community hospitals, who should be working in community hospitals, are generalists in their area of expertise,” McGrath said.

Hospitals like AMH have run into trouble because the health care industry has not been well-equipped to predict and manage their expenses, Furry said. Wellspring is helpful because it is able to aid hospitals in cost control, he said.

Part of its high success rate comes from the experience of the firm's subcontracting consultants and its staff, he said. The other part is the organization's datamining capabilities from a hospital's own computer systems, its database of past hospital projects, public data and health care subscriber-based databases like Solucient.

All of this data helped Wellspring prepare an assessment of AMH that includes a prediction of how the hospital needs to shape itself to meet the needs of the community several years from now.

AMH has begun to tighten its financial belt well before hiring Wellspring, McGrath said, including cutting close to 100 positions in the last year.

The fruit was when AMH posted a tiny profit of $23,000 in May - including a one-time $27,000 Wellspring fee - the first profit after 14 months of losses.

The prior layoffs mean that there is not much more labor fat to be cut from AMH's workforce of 728. Some staffing cuts are likely, but it will be at a drip and drab of the prior pace, McGrath said.

Wellspring's Furry was comfortable predicting that there will not be any fresh layoffs. He thinks AMH's labor will be made more efficient through restructuring. He thinks AMH will even be hiring because of shortages in some areas.

Wellspring will leave behind a score card after the implementation period that will help AMH officials measure their progress. Wellspring will also come back on a quarterly basis for one year after the implementation to measure how successful AMH is and make any needed recommendations.

The biggest issue for AMH's future may be recruiting physicians in several areas. The hospital had to hire an outside company to staff anesthesia services after an Auburn-based anesthesia practice disbanded last year. The hospital does not have ear-nose-throat specialist that takes calls. Only two obstetricians currently deliver babies at the hospital. The hospital needs more orthopedists.

“Wellspring has told us that. The board believes that,” Bergan said. “Our job is to work through it and reach a solution.”

Some of Wellspring's work includes direct meetings with physicians who have decided to no longer refer patients to the hospital and assure them the hospital's culture is changing.

Furry said recruiting of physicians is typically something that happens later in the implementation period, but work on recruiting is beginning now because of the seriousness of AMH's situation.

A possible solution in some medical areas, Furry said, might be to pair with neighboring health systems to hire a physician to work part-time at AMH if AMH's patient level can't support an entire practice.

The hospital also must invest in better technology to make the hospital a place physicians would desire to be recruited to, he said.

Bergan said stabilizing the hospital, especially recruiting more physicians, is essential or hospital's stakeholders - its lenders, the foundations who donate money, the employees, the county government and the community at large - will walk away.

“The community needs to be well-served by the hospital both from a clinical point of view and a point of view of fiscal stability,” McGrath said. “We can't provide clinical services if we don't have a financially stable base to draw from.”

Many other AMH employees are ready to join in the Wellspring enthusiasm.

“We want to continue to provide the care we provide,” nursing supervisor Perkins, of Union Springs, said. “We want to still be here.”

Staff writer Amaris Elliott-Engel can be reached at 253-5311 ext. 282 or at amaris.elliot-engel@lee.net