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Westworld Sows Seeds of Success in the Country

June 16, 1985|JANE APPLEGATE | Times Staff Writer

CUSTER, S.D. — About 20 miles southwest of Mt. Rushmore National Monument, barber Mickie Nelson charges $4 for a trim and nothing for an earful of local news.

While Nelson may not have any problems filling the one chair in his tiny shop, the nearby Harney Theatre, named after South Dakota's tallest peak, is closed for lack of business in this Black Hills town with a population of just 2,000.

But even if townsfolk have to drive 40 miles to Rapid City or Hot Springs for a movie, they don't have to go farther than Custer Community Hospital for state-of-the-art medical care. Custer's cozy, brick, 16-bed hospital has a new $130,000, computerized sonography machine.

The "Acuson" ultrasound machine is a symbol of the tremendous improvement in local health care that city officials attribute to Westworld Community Healthcare, a fast-growing, aggressive Orange County company that operates 32 rural medical-care facilities in 12 states.

Westworld's approach to bringing high-quality health care to rural communities has been a prescription for success. Unlike larger companies that operate both large and small hospitals, Westworld's sole mission is to serve rural America.

It targets communities served by one small, usually ailing hospital where residents have abandoned the local facility because of what they perceived to be second-rate care. The company attempts to form a close partnership with local government as a means of ensuring community support.

Typically, Westworld asks residents to determine exactly what kind of health-care services they need and whether Westworld should be granted the local monopoly it seeks.

If the community says yes, Westworld makes a long-term financial commitment to buy necessary equipment and recruit professionals best suited for a rural life style.

When Westworld assumed the management of Custer Community Hospital in September, 1982, the city-owned facility was losing about $200,000 a year and residents were going elsewhere because they were unhappy with the quality of services. All too often doctors would stay just a few months, frustrated with the slow pace and modest income.

Today, with new staff and up-to-date surgical and lab equipment, Custer's newly modernized hospital is profitable, has an alcoholism treatment program, three full-time family practitioners, a radiologist, a psychiatrist, a psychologist and a physical therapist. The doctors also serve three nearby satellite clinics.

Has Air Ambulances

To transport patients who need more specialized services, Westworld recently built a hangar in Custer to house planes owned by its Medical Air Rescue Co. (MARC) subsidiary. Based in Rapid City, MARC's air ambulances fly patients to and from hospitals in Denver, Rochester, Minn., and elsewhere when they cannot be flown commercially. MARC also ferries Westworld doctors, therapists and executives from town to town.

"Mike Dunn (Westworld's chairman and chief executive) has done everything he said he was going to do to improve health care," said Gordon Dretsch, a retired bank president, city councilman and hospital board member who has lived in Custer since 1946.

Dunn, 40, sticks with a simple strategy. He has developed a list of 2,465 communities with 15,000 or fewer residents served by one small hospital. Working from that list, or prompted by calls from local officials, Dunn and his management team decide where to move next. After meeting with local officials, Westworld asks a community group such as the chamber of commerce to sponsor a town meeting. There, the community and company look each other over. "We don't want to come into a hostile environment," Dunn said. "We would drown in red ink."

If a community wants Westworld to provide services, the company generally signs a long-term lease, typically for 30 years, to upgrade and manage existing health-care facilities. Westworld has purchased only four of its 32 facilities, preferring to lease them from the communities they serve because it allows the community to retain control over its health-care services, Dunn said.

Psychological Benefits

He said the benefits of leasing are more psychological than financial because "in some cases, we could have bought the building for a dollar."

Dunn, a stocky, gray-haired man with a crew cut, says Westworld's goal is to add at least eight or nine facilities a year. So far this year, Westworld has added eight and expects to add four more by year-end.

The success of Dunn's strategy is evident. In calendar 1984, Westworld's profits jumped to $1.8 million from $279,000 the prior year, and revenues nearly tripled to $50.5 million from $17.3 million.

For the first quarter ended March 31, net income jumped 145% to $892,000 from $364,000 in 1984's first quarter. Revenues climbed 138% to $23.6 million from $9.9 million a year earlier.

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