BREWSTER — Three Rivers Hospital’s chief executive officer has resigned, effective at the end of April.

O.E. “Bud” Hufnagel gave hospital district commissioners his letter of resignation after Monday’s special board meeting.

Hufnagel said his resignation isn’t related to the recent contentious board meetings, including another heated discussion about cutting services Monday, or a request from seven area doctors that he step down.

He said he was hired to help turn around the hospital’s financial troubles and reduce its warrants with Okanogan County, which at last report were around $2.6 million. Hufnagel, 66, said it didn’t appear the hospital was going in that direction any longer.

“I’m good with that if that’s the path the board and the organization wants to go down, I support that. But that being the case, they don’t need me in the mix and I saw no reason for me to continue to try to wage that battle,” he said.

The board of commissioners’ newest chairwoman said she wasn’t surprised to get the letter.

“No, I knew it was coming,” Commissioner Vicki Orford said. “We knew a couple of weeks ago that he was getting ready to write it and be done. It was time, and we definitely are going to miss him.”

The administrative staff has been under fire since late November, when they presented several options to cut costs. Initially, all but one of the options would have eliminated labor and delivery.

The area’s remaining physicians, the most vocal being Dr. Keith Hanson and Dr. James Lamberton, argued that getting rid of obstetrics could not only chase away the rest of the doctors, it might deter others from wanting to practice there.

Hufnagel said he had “no ax to grind” by putting forth the option to cut labor and delivery.

“It’s a financial decision that has to be made because you can’t keep making the same decisions and expect different results. That’s insanity,” he said. “I’m a lot of things, but I’m not crazy.”

The board eventually approved a budget plan that would keep obstetrics and declare it a cornerstone of the hospital’s services. It would, however, cut 16 positions, discontinue Healthbeat Fitness Center and Advantage Durable Medical Equipment and reduce hours for respiratory therapy and the surgery department.

Negotiations are pending for Advantage Manager Bennie Polvos to purchase Healthbeat and Advantage to keep both services running in the community.

Hours for respiratory therapy and the surgery department have been reduced to Monday through Friday, with no emergency procedures besides Cesarean sections.

Hufnagel plans to assist with the transition into new leadership.

The commissioners will discuss the next steps to finding a new CEO at their next meeting, scheduled for noon Jan. 27 at the Hillcrest administration building, 415 Hospital Way.

“We do like his style of running and doing the CEO position, so if he can find somebody that’s got a strong personality and works with everybody in the community, that would be great,” Orford said.

Chief Nursing Officer Gretchen Aguilar pointed out during Monday’s meeting that few layoffs will need to be made because several employees have resigned, and the employees for Healthbeat and Advantage may keep their jobs but will no longer be paid by the hospital.

Cardiopulmonary rehabilitation was also discontinued as of Wednesday, partly because it reportedly has been losing money. Commissioner Tracy Shrable said that, according to Controller Jennifer Munson, participation would need to double to make the program solvent.

The other reason is the hospital currently can’t comply with a law that requires an on-site physician supervising at all times.

“I really feel that that decision was taken out of our hands,” Orford said. “It’s just one of the areas that nobody wants to close, but with the ruling that came down from the government that we have to have a doctor standing there, it’s going to affect a lot of rural hospitals. It’s not just us… it’s all across the nation.”

Hufnagel said he hopes to meet with the physicians soon to come up with a way to continue offering cardiac rehab, and he plans to continue talks with Wenatchee-based Confluence Health to possibly take over management of the program.

“It’s a great program,” he said. “It has worked very well and we’ve been able to do a lot of good things for people, but the problem is that we’ve simply not had enough patients there in the program over recent years to be able to generate the revenue to make that work. But you know, we’re going to try to give it one more shot and if we’re able to do that, great.”

Hanson objected to Confluence Health’s possible involvement.

“This program, as you know, is the only program south of the Canadian border until you get to Wenatchee,” he said Monday. “So there are a lot of people that will need cardiac rehab services, and it makes sense for it to be here so patients aren’t going to travel all the way to Wenatchee. If it is rightly advertised and promoted, there is no reason why it should not be making money.”

Hufnagel was initially hired in September 2011 to help turn around the hospital’s finances. In July 2013, his contract was renewed by the board at a salary of $175,000 per year.

His initial contract was for two years at $150,000 per year, to be renewed in two-year increments unless he or the board determined that he was no longer needed, according to spokeswoman Rebecca Meadows.

Since his hire, Three Rivers has rebranded itself with a new name, ended a $125,000-per-year contract with the Quorum Health Resources management firm, closed Mansfield Clinic, sold the Sleep Clinic and began taking in an extra $700,000 per year in property taxes due to a voter-approved levy lid lift, among other cost-cutting measures.

However, the hospital has continued to be reliant on interest-bearing warrants with the Okanogan County Treasurer’s Office.

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