Tenet Healthcare Corp. --- known for buying ailing hospitals and turning them around --- acquired South Fulton Medical last year and has begun $30 million worth of repairs and improvements. In the process, the nation's second largest hospital management company is expanding its presence in metro Atlanta, where job growth is spurring a competitive market for health care companies.

South Fulton Medical, located in East Point, serves thousands of patients and continues to play a vital role in caring for a growing area. It is the only hospital in the lower half of Fulton County, where population jumped to 816,006 in 2000, a 25 percent increase from 1990, according to census figures.

The hospital serves Hapeville, College Park and East Point, three small but growing cities just a few miles south of downtown Atlanta. All three are undergoing urban renewal and are also home to Hartsfield International Airport, Delta Air Lines and the Ford manufacturing plant.

Now that the hospital is no longer tax-exempt, it has become a new source of income for East Point.

"We welcome South Fulton and Tenet," said City Manager Mike Miller. "Any time a corporation becomes public we get to tax their property."

For now, the bleeding has stopped at South Fulton, thanks to privatization --- the CPR that brought back the hospital from the brink of death.

"We are not here to take money from the hospital. We're here to give back," said Dr. Andrew Agwunobi, the new chief executive officer.

From radiology to gastroenterology, medical departments are getting new equipment. Capital improvements costing $1.5 million or $2 million are taking place in many corners. Ceilings are being replaced and walls repainted. Carpets bound together by duct tape are gone. Tile floors are in.

Though company executives declined to release sales figures, the South Fulton facility has already begun turning profit, said Gregory Burfitt, vice president for operations for the southern states region for Santa Barbara, Calif.-based Tenet.

"What we really saw there was a quality medical staff and a hospital with a strong history of success and a strong employee group that wanted to do well but unfortunately they had not been given resources or tools to do that," said Burfitt.

Job explosion in metro Atlanta during the last decade has attracted managed care companies like Tenet that revel at private insurance more than Medicaid or Medicare, said Kenneth Thorpe, professor of health policy at Emory University.

"They have been Wall Street's darlings. Their revenues are way up," Thorpe said.

Tenet, which claims a $11.4 billion operating revenue and has 110 hospitals nationwide, including heavy presence in Florida, New Orleans and Southern California.

Tenet already owns North Fulton Regional Hospital, Atlanta Medical Center and Spalding Regional Hospital in Griffin while planning to build a hospital in south DeKalb County. It invests in suburban markets, where return is almost guaranteed, say analysts.

"They're committing a great deal of capital to the Atlanta market in improving services and facilities overall to make them more appealing," said Darren Lehrich, analyst with SunTrust Robinson Humphrey.

For a South Fulton patient like 49-year-old Emma Gene Quarles, the change is waiting time. Six years ago, she remembers waiting in the emergency room from 10 a.m. to 4 p.m. with her daughter, who had fainted at work.

"They didn't have enough chairs. People were standing outside. It wasn't a very good place," said Quarles from her bed in the hospital, where she was getting treated for congestive heart failure.

Now, the hospital plans to spend $10 million to expand the emergency room.

For doctors and nurses, the most notable difference is the morale. Staffers now have an option to participate in the 401(k) retirement plan. The new management has begun focusing on nurse recruitment and retention, an essential factor that physicians say they need to be successful.

"I think the main challenge [for Tenet] is that you have to create trust. You have to say that we're here for a long run and we're here to turn this place around, getting back top quality care," said Dr. Fernando Duralde, an urologist who joined the hospital in 1990 and is president of the 225-member staff.

In 1963, College Park, East Point and Hapeville pooled money to establish a hospital to serve their residents and created the Tri-City Hospital Authority to oversee operation.

However, customers began going elsewhere as its services dwindled. For example, the operating room used to have 500 surgeries a month but gradually declined to 350.

Longtime employees remember that things started to go down a few years after the hospital changed its ownership in 1993.

To take financial pressure off the cities, the authority sold it to the Georgia International Health Alliance, which continued to manage the hospital as a nonprofit.

Lack of oversight from the community only helped deterioration, they say.

By the time the hospital filed for Chapter 11 bankruptcy in April 2000, it had already been bleeding deep. It made $6 million in profit during fiscal year 1998 but was followed by a net loss of $16.5 million in 1999 and $8.2 million the year after. By 2001, it owed $71.6 million to creditors.

Administrators tried to stop the bleeding. It fired 138 people --- many of them nurses --- in two rounds of layoffs while shutting down its cardiac rehab service and other services. Morale suffered, employees remembered.

A series of missteps speeded the demise, according to auditors. For example, the administration spent $6.1 million in 1999 to replace the entire billing and collection system for Y2K, according to a case-study report filed by Cain Brothers, an investment banking firm that focuses on medical service industry. The system failed, and bills weren't printed for three months.

"In hindsight, this move was the quintessential straw that broke the camel's back," the report said.

Neil Copelan, former CEO of the hospital, said bankruptcy was the result of a combination of coincidental factors, such as computer failure and the Balanced Budget Act of 1995, which he says drastically slashed Medicare and Medicaid payments to hospitals.

"It literally took our money away," said Copelan, who is now retired. "We were doing everything and anything that we could to continue our operation."

In the meantime, community leaders are keeping their eyes on South Fulton Medical.

"I see some [changes], but I think they have a long way to go because they got rid of a number of staff people," said East Point Mayor Patsy Jo Hilliard, whose mother has been using the facility for years. "The bottom line is how it takes care of our citizens, and that's what I look at."

Hoover's

-- Anonymous, February 12, 2002