Two years ago, the Detroit Medical Center was forced to confront its own mortality.

Life-threatening conditions are a fact of life at the DMC -- a St. Elsewhere-like operation that epitomizes big-city institutional medicine, a place where the demand for care constantly threatens to exceed the supply. Occupying a cluster of high-rise buildings just north of downtown Detroit, its main campus sits in a neighborhood that turns forbidding after dusk. It houses an emergency room that's busy enough to tax the collective cool of the cast of ER. This ER, in fact, handles 80,000 patients a year, and staffers there see as many as a dozen gunshot wounds a night. The Detroit Police Department even maintains a small station nearby.

The DMC is not without resources. It is the largest private employer in the city and one of the largest employers in southeast Michigan, with more than 13,000 employees in seven hospitals, two nursing centers, and more than 100 outpatient clinics. It is home to one of the world's top intensive-care units and to the highly regarded Barbara Ann Karmanos Cancer Institute. The downtown facility, which is affiliated with Wayne State University, is the largest single-campus medical school in the United States. All told, the DMC takes in about $1.6 billion in revenue annually.

But in the late 1990s, the DMC's financial health took a turn for the worse. A nonprofit entity created in 1985 to help a group of downtown hospitals share resources, the DMC began generating modest deficits in the mid-1990s. Then, in 1998, losses soared to $100 million. The hospital lost another $100 million in 1999.

"We had no problem attracting people who had been shot," says Dr. Don Ragan, 56, a professor of radiation oncology who is now chief information officer at the DMC. "We had a corner on the Medicaid market in Detroit." More than 8% of the DMC's gross revenue was uncollectible: It represented services delivered to poor, uninsured patients or to patients for whom the DMC did not have adequate insurance information. Skyrocketing costs only made matters worse.

The DMC's board of directors got nervous and called in turnaround consultants from the Hunter Group, who advised the board to dismiss most of the organization's top executives. A new regime was installed, with Ragan serving as CIO and Dr. Arthur Porter, a radiation oncologist, serving as chief executive. The new team received a simple but daunting mission: to find millions of dollars in operating efficiencies without sacrificing quality of care. The result (which DMC employees call, simply, "the turnaround") entailed closing one of the dmc's hospitals and cutting 3,500 jobs across the organization.

Yet one area where Porter and Ragan did not cut back was information technology. Indeed, they decided to expand the role that new technologies play at the hospital. "At a time when money is so short, how can we afford to invest so much in all this fancy, newfangled technology?" Ragan asks, before answering his own question: "How can we afford not to? If we continue to deliver medical care as it was delivered 10 years ago, we're going to go broke."