GOLD BEACH andndash; The Curry Hospital District board of directors emerged from a two-hour executive session Tuesday and voted unanimously to cancel the five-year contract of the consulting company that advised them to cut more than 20 jobs at the hospital last winter.

Board Chairman Dugie Freeman said the board could not comment on the reasons they were canceling the contract with Quorum Health Resources of Brentwood, Tenn., because the matter was under litigation.

The district entered the contract with QHR last September.

The health district was told by its auditors last October that it had lost a substantial amount of money during the past two fiscal years, which could endanger the district's ability to stay in business.

The audit showed that the hospital district reported an operating loss of $1,132,000 in the last fiscal year, although CFO Mark Sayler noted that with the property tax collected by the district, that is reduced to $936,000. The loss in Fiscal Year 2010 was $552,000.

The district, which operates Curry General Hospital in Gold Beach, Curry Medical Center in Brookings and Curry Family Medical in Port Orford, had operating income of $466,000 in fiscal year 2009.

The district said that much of the problem is the economy and decreased payments from government health plans.

The board hired Quorum as consultants to help it pull its way out of the losses.

QHR prepared a staffing assessment of the hospital which was presented to the board of directors.

The report said that the hospital has had challenges implementing tools for managing labor and was unsure if current staffing levels were appropriate.

"Hospital leadership and the management team generally agree there are areas of the hospital that have opportunity for staffing efficiencies," the report said.

It said the hospital should implement recommended productivity targets and use a biweekly monitoring tool to manage labor productivity.

QHR said that the hospital did not track productivity on a routine basis and that hiring decisions are often made based on the amount of staff departments have maintained in the past.

It made several other recommendations, including some that would reduce overtime.

The health district expected to save more than $1 million annually as the result of cutting back staff in December at the recommendation of its consultants.

Former CEO Bill McMillan said the district eliminated 23 positions in December. At the time, he said those cutbacks would save $928,000 in direct salary or $1.1 million counting benefits.

But the board learned it had not saved nearly as much as expected because most of the staff reduction was lower wage employees.

The board then let McMillan go in June, putting him on administrative leave for two months and hiring Tom Troy as operations manager. He became interim CEO following McMillan's leaving.

Troy is charged with recruiting a replacement for McMillan.

The board brought in Troy five years ago as interim CEO before McMillan was hired.

Troy said he made it clear to the board and staff that he would only be an interim employee.

Troy will serve until a new permanent CEO is hired.

"He was our interim CEO before Bill," Freeman said.

Quorum had made a pitch to the district board to take over management of Curry General Hospital and the health district, providing its own CEO, but that was rejected by the board.

Quorum manages critical care hospitals throughout the United States.