Sunday, December 12, 1999
Could Tristate lose more hospitals?
Experts say yes, but managers say not likely
BY TIM BONFIELD
The Cincinnati Enquirer
When Bethesda Oak Hospital closes in March it will be the second large Tristate hospital to do so in just over two years.
But will that be enough to address long-standing com plaints that Greater Cincinnati has far more hospitals than it needs?
At least five other local hospitals have been named by health executives, health industry critics and others as the next possible targets for closing. Whether any of them should or will be closed anytime soon remains a matter of debate.
At stake in the hospital capacity issue: the overall convenience, quality and costs of health care in Greater Cincinnati; thousands of jobs; and charitable assets worth hundreds of millions of dollars.
Some say hospital groups are wasting millions by propping up half-empty, money-losing institutions that no longer meet the area's medical needs. They say more aggressive consolidation would keep health costs down while improving quality by concentrating high-tech services and skilled staff at fewer, stronger hospitals.
Yet hospital managers say more closings are unlikely anytime soon. Some say hospitals have downsized so much already that questions about capacity shortages have begun to emerge.
Instead, hospitals feel pressure to expand services in growing suburbs, provide the latest medical technology to everyone and maintain historic commitments to older communities. They need to do all this while appeasing employer groups concerned about a new wave of rising health expenses.
While the debate swirls, several hospitals sit on the bubble, their employees, volunteers, patients and community supporters wondering about their fate:
• St. Elizabeth North, Covington. Northern Kentucky's oldest hospital, but now one of four operating in Boone, Kenton, Campbell counties. For years, the hospital has been shrinking while administrators pump money into the newer, more strategically located St. Elizabeth South campus in Edgewood.
• Mercy Hamilton. This was Hamilton's first big hospital but
now is the smaller of two located within several blocks of each other. Much like St. Elizabeth North, administrators have been pumping money into Mercy Fairfield, located in a faster growing part of Butler County. Over the years, Mercy Hamilton has been shrinking and evolving into more of a rehabilitation center than a full-service hospital.
• The former Franciscan hospitals. In early 1999, Mercy Health Partners acquired two west-side hospitals best known by their original names, Providence and St. Francis-St. George. Of the hospitals left in Greater Cincinnati, these two may have the least convenient highway access. After years of operating losses, budget cuts and management re-organizations, hospital watchers have wondered whether one of the two would be closed. That speculation has intensified since the acquisition.
• Deaconess Hospital. For many years, this has been the smallest hospital on Pill Hill and one of the few hospitals in town that isn't part of a bigger hospital group. Many have predicted this hospital would be forced to close because managed care health plans prefer doing business with hospital groups. But Deaconess, with its focus on elderly care, continues to defy such predictions.
Upside of closing
By the time the ax finally fell last month, Bethesda Oak had dwindled to a shadow of its former self.
The daily patient count had dropped to 42 for a hospital that once had more than 375 beds and nearly 60 bassinets for newborns. Operating losses nearly tripled in 10 years to $19 million this year.
If there can be a silver lining to closing a 102-year-old institution, TriHealth officials said the move would stop the red ink, which in turn makes funds available for other health services. The closing also would help relieve a citywide nursing shortage that has forced hospitals to require overtime, hire temps and offer signing bonuses.
Such arguments made a lot of sense to Dale Bradford, a former ChoiceCare executive who is now a partner with the Scheller Bradford Group consulting firm. So much sense that he wonders why other hospitals don't do the same with their money-losers.
“There's no question that more hospitals should close. The real challenge is figuring out who is going to make the decision,” Mr. Bradford said.
Years ago, the big three U.S. automakers — General Motors, Ford and Chrysler — kept too many under-used factories open under the pressure of unions and small towns dependent on the jobs. That changed when they got hit by tough competition from Japanese imports, Mr. Bradford said.
Now, U.S. automakers produce better products. The hospital industry in Cincinnati faces the same sorts of problems, Mr. Bradford said — except that every hospital in town is a nonprofit organization.
“Charities are formed to do things a free market will not do,” Mr. Bradford said. “Yet we have competing charities. Think about the absurdity of that.”
Myth of bed capacity
Closing more hospitals sounds logical, but only if hospital capacity is really as excessive as critics think. And that's not the case, said Lynn Olman, president of the Greater Cincinnati Health Council.
In the past 15 years, hospitals have gradually eliminated about 40 percent of their licensed bed capacity. Entire wings and floors of rooms with patient beds have been replaced by diagnostic areas, rehabilitation departments, labs, offices and so on. Rooms designed years ago to be double-occupancy are mostly private now, which most patients and families have always preferred.
The reductions reflect responses to years of cost-cutting pressure and to changing technology that has converted many inpatient treatments into outpatient ones. In addition, many services have shifted to suburbs where they are in high demand.
Statistics show that patient stays are getting shorter, but the patients still need around-the-clock, hospital-level care. With all the demand for outpatient services, many executives say their hospitals are too busy to even think about closing entire campuses.
Since closing Jewish Hospital in Avondale in 1997, the Health Alliance of Greater Cincinnati has continued to lose money on operations and has faced questions about whether it can close even more hospitals.
“I don't have another hospital to close. Can all of them be tinkered with around the edges? Absolutely. But our institutions are very busy,” Jack Cook, chief executive of the Health Alliance of Greater Cincinnati.
Instead of worrying about what to do with empty hospitals, Tristate hospitals have scrambled in recent flu seasons to deal with big patient back-ups. As intensive-care wards filled and emergency departments backed up last winter, several hospitals — especially Bethesda North in Montgomery and Jewish Hospital in Kenwood — had to divert patients to other hospitals.
The Alliance's proposed solution for that problem came this fall, when it closed its weak maternity service to convert the space into more general-purpose, medical-surgical beds.
"Bubble' hospitals
St. Elizabeth Medical Center has been moving medical services to its newer, south campus in Edgewood since the mid-1980s, starting with maternity and pediatrics and more recently with its behavioral health and open-heart surgery services.
In Covington, St. Elizabeth has replaced much of its traditional hospital care with offices and hospice, dialysis and skilled-nursing services. It recently formed a task force to look at closing the north unit, which concluded that it should stay open.
“There is still a strong demand at the North unit for emergency care and outpatient services,” said Joe Gross, chief executive. “St. Elizabeth is committed to serving the health care needs of our community and this will require a strong presence in the Covington area.”
Deaconess executives, who rarely discuss anything about their hospital in public, have shown no signs of closing their facility. Most recently, the hospital joined a plan to split its open-heart surgery services with Mercy Fairfield.
Deaconess, more than most local hospitals, depends heavily on Medicare reimbursement. But according to Medicare filings, the hospital is making money — $5.1 million in 1997, the most recent year's data available.
In addition, the hospital is a small part of the bigger Deaconess Associations, which has a wide variety of health care interests, mostly outside Ohio.
Mercy Health Partners controls the fate of three of the five most-likely-to-close hospitals in town. Even though all three lost money on operations in 1998, its executives say none will be closed.
Instead, they plan for all three to break even on operations in 2000.
“The Mercy Health Partners hospitals are in stronger financial position than they've ever been. As a group, we are making money on operations,” said Julie Hanser, Mercy's chief executive.
Mercy's suburban hospitals face a different market picture than Bethesda Oak and other Pill Hill hospitals.
“The population around the Pill Hill hospitals has dwindled. The population around our facilities has grown,” Mrs. Hanser said. “The overcapacity in my view is on Pill Hill, not out in the neighborhoods.”
Mercy Hamilton has lost money for years, but is losing less now than it did five years ago. Meanwhile, the system still sees a need to serve the indigent in the Hamilton area.
“We're not going to abandon that community,” Mrs. Hanser said.
The former Franciscan hospitals also have lost millions over the years. But the new owners are cutting overhead, reworking managed care contracts and purchasing deals, and studying which services should go where.
“We do not need to close either of the Franciscan hospitals,” Mrs. Hanser said.
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