When David Rice became the new CEO at Haywood Regional Medical Center in 1993, loose tiles on the floor of the operating room were held down with duct tape and five-gallon buckets caught drips in the ceiling in Intensive Care Unit. The hospital was losing money, suffered from public perception problems and faced a staff of mostly disgruntled doctors unhappy with the previous CEO.

“It was financially in trouble,” Rice said.

It was a hard sell, but Rice convinced the hospital board they had to spend money to make money. The hospital plunged itself further into debt to modernize the building with an arsenal of high-tech equipment.

Rice’s plan worked. With a better facility, new doctors became easier to recruit. More doctors equals more patients, which equals more revenue.

“The key was getting the physicians in here that would provide the services. As we brought in new physicians, they brought in additional revenue that didn’t exist,” Rice said. Patients began staying in the county for services they previously sought in Asheville. As revenue increased, the non-profit hospital invested in more new equipment, again drawing in more doctors.

“It spun off, and we grew very rapidly,” Rice said.

The pace of growth has continued exponentially since the mid-1990s. In just the past five years, gross revenue at Haywood Regional Medical Center has grown by 40 percent to $129 million.

The success story is impressive given the hospital’s awkward location less than 30 minutes from the much larger Asheville hospital, Mission St. Joseph, and from the comparably-sized Sylva hospital, Harris Regional. Hemmed in by competition, the 200-bed hospital has a finite core market.

Haywood Regional’s growth shows it has largely overcome long-standing perception that a small town hospital is somehow inferior.

“I really believe that over the past five to eight years we are seeing a huge turn and change in that perception,” said Eileen Lipham, vice president of professional services at Haywood Regional. “I would go head to head with Mission any day.”

Glen White, a retired financial management specialist who has been on the hospital board for five years, said Haywood Regional’s finances are incredible for a hospital of its size.

“We are way above where a lot of hospitals are. They are going out of business. They’re in the red,” White said.

White largely credits smart management for Haywood Regional’s success.

“I think the administration has done a good job managing the internal mechanism of the hospital to save on cost. The other thing is we have moved in the direction of more-expensive, high-dollar procedures,” White said. “There are still a lot of things that we can’t do and have to send them downstream, but we are moving more and more in that direction,” said White.

The hospital has gone to great lengths to retain a spine specialist and intends to open a regional spine center, for example.

Like other Western North Carolina communities, Haywood County’s growing population weighted toward aging retirees has also helped bring revenue to the hospital.

Many doctors credit the medical community itself for the hospital’s success. Since 2000, the number of doctors in the county has increased by 25 percent. The rapport between the doctors and their patients is what drives them to stay at Haywood Regional for their procedures, the doctors say.

In November, the hospital opened a new $4.7 million emergency room, with more than half the funds being raised from private donors in the community. It’s not the first time the hospital has appealed to the community for fund raising. While uncommon for hospitals, it has proven a regular and successful financial strategy employed by Rice and the HRMC board.

Early in Rice’s tenure as CEO at Haywood Regional, he developed a three-legged stool image he still uses today when he discusses the hospital. The legs are the hospital board, the hospital administration and the medical staff. The seat of the stool is the community.

Before launching his aggressive plan to modernize the hospital in the mid-1990s, Rice initiated a series of community focus groups. To accurately mimic a cross-section of the county, some participants were chosen at random from various socio-economic groups and given $25 to show up and participate.

“The bottom line with every focus group was they wanted the hospital to succeed and said ‘we will come to the county hospital if the services are there and the quality and choice of physicians are there,’” Rice said.

Thirteen physicians across seven specialties interviewed about the hospital — none of whom wanted their name used — said that Rice was well received in the medical community when he arrived. Most credit his vision, at least in part, for the hospital’s financial turnaround.

But some of those doctors, especially those whose medical field works in close quarters with the hospital, noted what they perceived as a shift in management style in the past three years: getting too obsessed with the bottom line. Others accused the hospital administration of being penny-wise but pound-foolish.

Some doctors and nurses in the emergency room have questioned why the hospital administration chose a more costly architectural design featuring a curved interior wall but meanwhile cut corners on software for electronic patient charts. Electronic charts in the emergency room have still not been implemented due to glitches in the cheaper computer system chosen by the hospital against the recommendations of emergency room doctors who researched the software options.

Some doctors have questioned the hospital’s endless investment in high-tech equipment, like a recent $1.8 million purchase for a new MRI magnet, when other needs have gone unmet. One source of contention for the anesthesiologists was the lack of an MRI-compatible anesthesia machine. The $60,000 piece of equipment allows the anesthesiologist to better monitor the patient’s dose of narcotics while out of sight in the MRI tunnel. The anesthesiologists constantly requested the machine. One anesthesiologist finally refused to anesthetise a 4-month-old child for an MRI this fall given the lack of the equipment.