Looking back, 2012 can be referred to as a transition year for McCullough-Hyde Memorial Hospital, said hospital Chief Executive Officer Bryan Hehemann.

“We were more in a ‘sizing up the future’ and more internal analysis mode than major action mode. We were still studying and reflecting on the question of whether to get serious about analyzing a future affiliation, which we definitely decided we wanted to do. We were studying the reforms and how to best address these long term,” Hehemann said. “We’re still rightsizing, still taking time to look internally at the way we staff.”

During last year, an orthopedic surgeon practicing at the Oxford hospital temporarily left, affecting the number of surgeries performed. The surgeon came back this year. Another orthopedic surgeon starts in August 2013, the first Fellowship trained surgeon in sports medicine and one of the first doctors to be employed by the hospital, officials said.

McCullough-Hyde announced plans last October to look into affiliation with a larger health system, not saying yet for sure if it would definitely form a relationship with a larger system or remain as Butler County’s only independent hospital. The hospital is studying the issue.

Growth in bad debt — unpaid patient bills — is slowing down, Hehemann said. Bad debt rose from about $3.5 million in 2009 to $7.9 million in 2012 and is budgeted for $8.5 million this year, he said. The debt is driven by driven by high deductible insurance health plans and more people who are uninsured, making it harder for people to pay for services, he said.

In 2012, McCullough-Hyde also opened its fifth off-site location in Camden in Preble County, an outpatient facility with X-ray, laboratory and ultrasound services.

Efforts in recent months have focused on finding efficiencies and improving communication.

McCullough-Hyde is ramping up wellness programs for Miami University, offering services such as phlebotomy, biometrics and health screenings. The hospital increased the wellness services it offers to help the county’s largest employer raise participation in wellness activities, and sees future opportunities in employer wellness programs.

But the major decision at hand is the hospital’s future independence. Hehemann expects a decision by the end of the year, while executives weigh the pros and cons in the meantime.

Major changes under health care reform start happening in 2014 including possibly Ohio’s Medicaid expansion to cover more uninsured people and new exchanges for people to buy insurance.

“From an affiliation standpoint we’re a little concerned that given our size and given our market that we wouldn’t be able to do a lot of things with Medicaid on our own. We just don’t have the scale and so that’s why we’re studying affiliation,” Hehemann said.

The question is whether it’s better for the community to be involved with a bigger system to deal with the changes coming down.

“The tradeoff is the more you’re affiliated, the less control you might have for decision making,” he said. However, “55 percent of our revenues come from Medicare and Medicaid and we’re not able to deal with all the changes…and if we can’t build and create an ACO on our own, an accountable care organization on our own, we need to associate with somebody who has the infrastructure. The infrastructure for that is a lot of IT (information technology) and a lot of care management software.”

That involves getting data, processing the data so doctors understand, and following chronic care illnesses across a continuum of care. The way it is now, hospitals bill per episode with no incentive to follow a patient from hospital to nursing home, for example.

The wave of the future shifts from health care providers being paid by fees for services to instead being paid for quality outcomes.

To stay independent, “We’d have to learn how to do everything I just said and the question is do we have time to learn it all, do we have the resources to learn it all and after we’ve learned it all, are we big enough to really make it work because a certain degree of this is taking on risk. And you know from actuarial insurance kind of perspectives, the bigger the pool, the spread of risk is better,” he said.