Anatomy of a hospital: How a small town Oklahoma hospital survived a fatal diagnosis


In 2015, Grady Memorial Hospital, located in Chickasha, began hemorrhaging roughly $300,000 per month from the time the facility’s surgery center had been shut down on Aug. 17 of that year.

  • Grady Memorial Hospital

It was definitely a “Code Blue” situation, which is a term used in some hospitals to indicate a medical emergency. A cash infusion was desperately needed to stop the financial bleeding.

According to a “Save GMH” flyer circulated at the time, there was a good chance the hospital would close if the surgical unit could not be reopened. It had been closed after an audit from the Centers for Medicare and Medicaid Services (CMS) cited four major concerns and gave the hospital administration staff 19 days to correct the grievances. CMS is a government agency that operates within the U.S. Department of Health and Human Services.

“No solution could be met in 19 days,” Grady Memorial Hospital President and Chief Operating Officer Warren Kean Spellman said in a January 2016 interview. The decision was made to close the operating rooms (general surgery).


Major concerns after a CMS survey included the location of a dehumidifier, the ceiling not being monolithic, a missing tile in the roof, and “they didn’t like the wood doors in the operating room,” Spellman said. He expressed frustration in those 2016 interviews because a CMS presurvey team had not found any problems. Also, inspections had been conducted in 2009 and 2012 without these specific concerns being noted. However, in 2015, it was the “interpretation of federal rules that got us in trouble and there was no appeal,” Spellman said.

The hospital CEO also noted that the building, itself, was around 60 years old and the building codes had been grandfathered in, including the type of ceiling. Although government standards and regulations were periodically changed through the years, the ceiling had never been a major citation in past surveys since it existed before the rules were enacted or modified.

Two days after Spellman closed the operating rooms, a press release was posted on the hospital’s website explaining to the public that a CMS survey team had “found increased humidity in one of the hospital’s large air conditioning units.” To stay within government standards, the dehumidifier could not be located in the surgical department CMS told GMH. It had to be located above the ceiling or above the roof.

Spellman said this was an issue that couldn’t be solved without major construction and, further, meeting new building regulations (such as the size of the operating rooms) and modeling under new building codes would be a tremendous financial issue. In addition, Spellman was frustrated that CMS documented that GMH couldn’t manage the potential risk of infection. He said he had the data to show that over the last two years (2013-2015), GMH actually had a low infection rate. The “infection rate at Grady Memorial Hospital is actually half of the state average,” noted an item on the “Save GMH” flyer.


GMH wasn’t the only Oklahoma hospital to find themselves in the CMS crosshairs, dating from about 2013. According to an Aug. 20, 2015, article published by an Oklahoma City daily business and legal newspaper, “Pushmataha Hospital in Antlers and Craig General Hospital in Vinita faced similar problems with Centers for Medicare and Medicaid Services inspections in 2013, which resulted in temporary closures of the certain operations, according to the state Department of Health records.”

The Journal Record went on to report that, “According to CMS records, 20 Oklaho- ma health care centers received notices of termination since the beginning of 2013, although none required a follow-through of the threat because their deficiencies were remedied.” Ironically, it was in November of 2012 that then-Governor Mary Fallin had rejected Medicaid expansion in Oklahoma. Could this be a reason that the CMS citations to GMH in 2015 were significant and had to be rectified in 19 days but the “major issues” had been present in the 2009 and 2012 audits and not mentioned? There is no definitive proof that Oklahoma hospitals may have been targeted; however, the question was raised.


At the time, Spellman came up with two options to present to the community. One, he said, was to remodel and renovate the old operating rooms or, two, build a brand new building that met all the new standards. In the January 2016 interviews, he said the judgment of the hospital authority trustees was that trying to remodel an old building would be disruptive and difficult. Renovation, it was determined, would not be cost-effective. The decision was made to “build for the future.”


In late November of 2015, Spellman went to the Grady County Commissioners with a Hospital Board Resolution in hand and also presented a ballot issue request. He wanted to ask voters if they would approve a 1/4-cent sales tax to be earmarked for GMH, which would help build a new surgery and radiology center and finance other needed renovations. The commissioners said yes, and in a Feb. 9, 2016, special election the voters said yes. Spellman engaged the community to help return profitability to the hospital. In return, the hospital could provide a quality health care facility to the citizens.

In the meantime, hospital administrators had made arrangements with hospitals in Anadarko, Duncan, and Norman to provide surgical services for Grady Memorial patients. A press release on the hospital’s website said most of those patients required non-emergency elective surgeries.


Although the measure passed, it wasn’t necessarily a slam-dunk for Spellman. There was some opposition in the community and there had been questions raised about selling the hospital. In 2016, Grady County had a strong, active political Tea Party group in Chickasha that opposed any measures that would involve higher taxes. One of the members called it the “Grady Memorial Hospital ‘Bailout’ Tax” and pointed out that his math showed a 1/4- cent sales tax for 20 years would work out to be about $40 million dollars of taxpayer money. Despite the opposition, voters approved the tax that runs from July 1, 2016, through June 30, 2036.

On July 1, 2018, a grand opening of the renovated facility was held. Spellman had succeeded, with citizens’ help, to put a “new face on the hospital” and keep it open.