Friday, June 01, 2001
Alliance chief says care will cost more
Looks for business, taxpayer support
By Tim Bonfield
The Cincinnati Enquirer
If Greater Cincinnati residents expect high-quality health care, then the business community and taxpayers should expect to pay more to support it.
So says Ken Hanover, new president and chief executive of Health Alliance of Greater Cincinnati. He spoke to the news media Thursday for the first time since taking his post May 1.
Health Alliance, which includes University, Christ, Jewish, St. Luke and Fort Hamilton hospitals, is one of Cincinnati's largest employers, with annual revenue of $1.2 billion and more than 10,000 local employees.
Area hospitals, faced with a shortage of nurses and other health workers, need more money to attract and keep the workers, Mr. Hanover said. They also must keep up with new technology and cope with pressures caused by three hospital closings since 1997, he added.
That means that Hamilton County voters in November will have to pass an increased indigent-care tax levy to help pay for health care for the poor in general, he said.
If this community is going to continue to have the same level of service it has historically benefited from, it has to step up to the plate to ensure adequate funds to pay for that. Private managed-care insurers will have to realize that the hospital group can no longer afford to sign long-term contracts that don't allow hospitals to pass on higher costs, he added.
Mr. Hanover's comments met with lukewarm response from some in the business community.
Some health insurers have already agreed to pay more to hospitals, detractors said, and they, in turn, have begun passing those costs on to employers, who often are passing those costs on to employees. It is not clear how much further employers are willing to go, especially in slower economic times.
We want hospitals to be financially stable, said Sharron DiMario, executive director of Employer Health Care Alliance.
Costs went up this year and appear to be going up next year. I'm not hearing employers say the increases are so onerous they're giving up (on providing benefits). But I think there is still some concern that hospitals haven't reached the levels of efficiency we hoped they would.
Dale Bradford, a health-care consultant with Scheller Bradford Group, said he agrees that hospitals will have to pay more for nurses and other things, but if hospitals choose to make strategic decisions that become significant money losers, then hospitals should bear the brunt of that.
Mr. Hanover, formerly CEO of Main Line Health System in Philadelphia, said Health Alliance is examining its strategic plans.
This fiscal year, which ends June 30, the nonprofit Health Alliance expects to report a surplus of about $1 million over operating expenses, Mr. Hanover said.
Next year, it hopes to report a surplus of about $10 million, still less than 2 percent of its annual revenue.
To continue providing quality care, Mr. Hanover said, Health Alliance needs to sustain a 3 to 4 percent surplus, or about $30 million to $40 million a year.
That would be used to keep up with inflation and new technology, he said.
Health Alliance also has begun a review of operations and this summer will start rewriting its 3-year-old strategic plan. That could involve a combination of cutting spending and expanding money-making services, as well as seeking revenue increases, he said.
But rising labor costs loom. Health Alliance and many hospitals nationwide are struggling to recruit and retain nurses.
The alliance also has trouble hiring X-ray technicians, pharmacists and other specialty workers, Mr. Hanover said. Nurses and the other professionals have more career options available than in the past, he said.
Hospitals are likely to give them raises in years to come, but that may not be enough to address the long-term labor supply problems. Beyond money, hospitals will need more flexibility to compensate for these labor shortages, he said. They will need changes in state licensing laws, so hospitals can use nonlicensed health workers for more hospital-based services, Mr. Hanover said.
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