How a hospital had to heal itself: though rated one of the state's best, a rural medical center goes on life support after a fatal mishap chokes off funding.

• Author: Martin, Edward
• Position: FEATURE

It's early, but the hospital parking lot in tiny Clyde is full. People stroll in. While another waits in line behind it, a nursing-home van stops under the portico and the driver opens its side door. A nurse parks a wheelchair next to it and extracts a white-haired woman, wispy and fragile as a dandelion. She rolls her inside past a glass vending case with cut flowers. Up the stairs and down the hall, a door stands ajar. Inside, a stained-glass panel greets visitors to the chapel. The lights are already on.

It was on a morning like this that a desperate struggle raged inside Dawn Reece's body. For a week, bacteria had coursed through her veins, overwhelming the antibiotics they gave her. Sepsis, the doctors called her condition, but her family used its more common name--blood poisoning. They expected her to pull through. The mother of two was outdoorsy, strong and only 37. But one by one, her organs shut down until, a little before noon on a November day in 2007, she died. Whispers spread through the hospital. Tipped by a doctor, investigators would determine that she had been given Xigris, an anticoagulant critical in the treatment of sepsis, for only 12 hours, not the prescribed four days. Probing deeper, they found drug-administration errors with other patients.

Dawn Reece's death and its aftermath would jolt Haywood Regional Medical Center, the 170 bed hospital where 160,000 patients a year come for care from hills and valleys at the gateway to the Great Smoky Mountains. In the days that followed, as state and federal investigators pored over records, it was the hospital that would be fighting for its life. In February 2008, the government agencies that provide 68% of its revenue--Medicare and Medicaid--revoked its certification. Commercial insurers and others quickly followed, and for five months, Haywood Regional would exist on the life support of its dwindling reserves.

"We got the death penalty," says Mike Poore, the CEO who began work in October, eight months after the cutoff. "How many organizations, hospital or otherwise, can go 150 days with no cash coming in?" Medicare spokeswoman Lee Millman in Atlanta answers the question. Three of about 6,700 hospitals nationwide lost certification in 2008. Only Haywood, after a wrenching struggle that bled it of its top management and forced it to revamp patient-safety and management procedures, is open, again fully certified and accredited. Its collapse and rebirth--and now, its looming affiliation with one of the state's mega health-care systems--is a lesson in care quality, administration and crisis control in small, rural hospitals.

Above all, Haywood Regional demonstrates the stunning speed with which a hospital's fortunes can change. It is ranked as one of the state's top 10 hospitals in critical care and one of three chosen for overall clinical excellence in this year's BUSINESS NORTH CAROLINA hospital ratings. The ratings, explains a spokeswoman for Golden, Colo.-based Health Grades Inc., which compiled them, were based on Medicare data for the three most recent years available 2005, 2006 and 2007. The clock stopped just before the tragedy of Dawn Reece came to light, underscoring the thin line between excellence and extinction for a small, rural hospital.

Snow drifts down on a winter day, obscuring the mountains across the valley from the hillside in Clyde, population about 1,400, where the county built Haywood Regional in 1979. Its dramatic architecture--dark brick, curves and rectangles, windows deeply recessed--hints at its relative youth. "Most rural hospitals," Poore notes, "were built in the '40s under the Hill-Burton Act," when the federal government pumped huge amounts of money into hospital construction.

The hospital's impact here is as dramatic as its architecture. Its 790 employees--it had 900 prior to the Medicare cutoff--make it...