You’ll hear phrases like “economies of scale” and “acquired efficiencies” and the obliquely vague “synergistic benefits.” It might make sense when talking about two small banks or mid-sized manufacturers. When it comes to hospitals and healthcare, it’s a different story.
Take Baptist Hospital. It was founded in 1960 on a vast tract of land covered with rockland pine scrub and palmettos at the corner of Galloway Road and Kendall Drive. There was little in the area. Dadeland Mall wouldn’t open as a small open-air shopping center for another two years.
From Baptist’s humble beginning, it has grown to a 728-bed hospital that serves about 32,000 in-patients and 72,000 emergency out-patients a year. The parent entity, Baptist Health South Florida has acquired hospitals as far north as Boynton Beach and as far south as Marathon in the Keys.
Its website shows that it operates 106 separate medical units and controls the practices of 245 physicians. It has almost 20,000 employees and over 3,000 doctors have privileges. That’s a lot of fingers in a lot of pies.
As a not-for-profit hospital, Baptist is not supposed to be profit-driven. But a look at its most recent audited income statement shows that it had what it terms “Excess of Revenues Over Expenses” of almost $250 million, giving it a bigger “profit” than industrial aluminum giant Alcoa. And that’s just in the past year.
One advantage that Baptist and other non-profits have over other entities is that it pays income taxes only on the money made by a handful of its for-profit subsidiaries. And it pays no ad valorem taxes. Its Kendall campus has an assessed total value of almost $385 million, yet it pays no property taxes, even on the portions of the office towers it rents out to unaffiliated entities. And it pays nothing in property taxes on its other hospitals, either.
Jackson Memorial, owned by the county’s Public Health Trust, doesn’t pay any taxes, either. Mount Sinai on Miami Beach is assessed by the Property Appraiser at $121 million, with $109 million of that exempt. Mercy Hospital, actually owned by HCA, is assessed and taxed at about $144 million of property value.
Healthcare is not price driven. Someone involved in a head-on collision on S. Dixie Highway won’t stop the ambulance until he can do a price comparison of the x-rays, MRIs, room rates, surgery, and pharmacy costs before telling the EMTs which hospital to go to.
The website MissionToCare.org maintains a database with average costs for 50 typical hospital treatments at 197 hospitals throughout the state of Florida. The birth of a child at Baptist averages $21,876. Baptist is able to negotiate a rate of insurance company reimbursement of about 48 percent or $10,575. The cost of childbirth at Jackson Memorial is $16,793, but Jackson only collects $6,432 from insurance companies. The Baptist mother has to come up with $11,301 while the Jackson Memorial mom is expected to pay less: $10,550. Mount Sinai charges about what Baptist does for the birth, but only manages to collect about what JMH gets from the insurance companies. In fact, the findings of several studies show that having a single dominant non-profit hospital in a market actually can raise patient costs between 26 to 40 percent.
How does Baptist do this? It’s in a stronger bargaining position when it comes to negotiating its reimbursement rates with insurers because is controls a much larger percentage of the market than any other non-governmental hospital. A 40- or 100-bed hospital can’t demand the same reimbursement rate that Baptist can.
If medical care were a normal business whose customers shopped on price, then a hospital with Baptist’s market clout might be expected to offer lower prices because of the volume of patients that it treats.
It doesn’t because it doesn’t have to.
Those who study the effect of hospital mergers have been looking for empirical evidence pointing in one direction or another, trying to answer the question of how consolidations affect patient prices. Researchers are finding that the goal of mergers, to generate cost savings and improve the quality of care, are falling short. The data points to the fact that almost all of the consolidations fail to achieve these goals.
Instead, hospital mergers will continue as a way to capture greater and greater market share, expand financing and cash flow options. In all too many cases, mergers are a way to enhance the personal egos of the organizations’ leaders than to enhance health outcomes or lower costs.
The healthcare industry, from doctors to hospitals to pharmacies and drug makers consume about one-fifth of our Gross Domestic Product, the measure economists use to weigh the amount of goods and services produced each year. That’s over $10,000 for every man, woman, and child in this country.
Among the 11 most industrialized countries, the U.S. ranks last for health outcomes, equity, and quality. All that spending has yielded poor health outcomes and a worsening life expectancy when compared with these other countries according to a 2018 report from The Commonwealth Fund.
That makes the advantages that non-profit hospitals all the more egregious. They can generate “profits” which are never taxed, avoid taxes in their properties, accumulate a war chest with which to buy out smaller competitors, and pay for it all by either keeping prices artificially high or even raising them.
So what’s the solution? Prohibiting hospital mergers? Encouraging them? Single payer health system? Going back to the old healthcare system with its gaping holes in the safety net?
What we need is a willingness to put politics aside, and maybe even profits, and to look at our health system with unjaundiced eyes, rather than being blind cheerleaders for local institutions. If the primary goal is to give value to shareholders or to increase market share, then our present system is adequate. But if instead we want our healthcare system to improve the health of everyone at a reasonable cost, to improve the quality of life, and to increase longevity, we need to start over.
/wp-content/uploads/2020/08/florida-medical-space-logo.png00admin/wp-content/uploads/2020/08/florida-medical-space-logo.pngadmin2018-11-26 03:18:032020-12-28 02:51:10Are Non-Profit Hospital Mergers Making Things Better Or Worse?
While Cleveland Clinic Florida is opening a Wellington office, it’s reportedly close to renewing a lease for its fancy medical offices at CityPlace Tower in West Palm Beach.
And the world-class medical provider is wishful about having a hospital presence in Palm Beach County — either through an affiliation with an existing hospital or by building its own facility.
“There are many areas that are growing out to the west that are underrepresented, from a hospital perspective,” said Dr. Wael Barsoum, president of Cleveland Clinic Florida, based in Weston. “So I do think there will be an opportunity to consider putting inpatient beds in that area — and in the northern area of the county.”
Cleveland Clinic isn’t planning to build a Palm Beach County hospital right now, though, especially since the regulatory hurdles are so high.
Instead, it’s focused on a plan to open medical offices in Wellington.
Nonetheless, the medical provider’s expansion isn’t exactly appreciated by Palm Beach County hospitals that have worked to boost the quality and sophistication of patient care.
During the past five years, Robbin Lee, chief executive of Wellington Regional Medical Center, said, Wellington’s care has become so strong, patients no longer need to travel to Miami — or the airport — for their health care needs.
They also shouldn’t be directed to the Cleveland Clinic’s Weston hospital by Cleveland Clinic doctors poaching patients, said Lee, a former ER nurse.
“For (Cleveland Clinic) to come in and say they are going to take patients down to Broward is disrespectful to our physicians,” Lee said of Cleveland Clinic. “It implies all their hard work is not valued. It’s disruption.”
And so it goes in the battle to win the hearts and wallets of Palm Beach County patients.
For the past decade, the county has become popular with out-of-area medical providers eager to gain a toehold in the market.
With Palm Beach County’s aging, wealthy and insured Baby Boomer population, plus the trend toward bringing medical care closer to patients, local and out-of-state medical centers are expanding their presence.
Some are opening up clinic offices, while others are forming partnerships with county-based hospitals that want the cachet and capital of larger players.
Two New York-based providers, Mount Sinai of New York and NYU Langone, are establishing medical offices in West Palm Beach, conveniently across the bridge from wealthy Palm Beach patients.
(Mount Sinai has a partnership with Jupiter Medical Center, a relationship that’s expanding through the soon-to-open West Palm Beach office.)
South Florida players are teaming up, too.
Baptist Health South Florida of Miami-Dade County signed an agreement to merge with Bethesda Health, which has two hospitals in Boynton Beach. The merger, first announced in 2015, is set to be completed on Sept. 30.
Meanwhile, Boca Raton Boca Raton Regional Hospital announced it has embarked on a process of finding a “strategic partnership” with another health care provider.
Cleveland Clinic’s Barsoum said an affiliation with Boca Raton Regional “could be complementary,” but he said there aren’t any talks going on.
Right now, Cleveland Clinic Florida just wants more of the Palm Beach County patient market population. Cleveland Clinic treats patients at medical offices throughout the county, and it handles their in-patient hospitalizations at the mother ship, the Weston hospital.
In 2007, Cleveland Clinic Florida was the first out-of-area medical provider to establish offices in Palm Beach County, opening offices in downtown West Palm Beach. Through the years, it has expanded services and treated a growing roster of patients.
It’s also reaped financial contributions from grateful patients, especially those living in Palm Beach.
Today, Cleveland Clinic has offices at CityPlace Tower and Palm Beach Lakes Boulevard in West Palm Beach, in Palm Beach Gardens and soon, in Wellington.
The Wellington office, in the works for a year, will be in the Village Green Center, at the corner of Stribling Way and State Road 7. The office will feature primary care, gastroenterology, cardiology and other services.
The Cleveland Clinic office is an affront to Lee, who said Palm Beach County hospitals work closely with each other to provide quality patient care.
“They want to put cardiologists and GI doctors here? There’s no need,” Lee said.”There are three GI groups that have been here for years and they are well-respected.”
Lee knows that Wellington Regional is sitting in the catbird seat, east of communities where thousands of homes will be built during the coming decade. Thus, she doesn’t even think of Wellington as western Palm Beach County.
“Wellington sits in central Palm Beach County now,” she said.
During her nearly five years at the medical center, Lee has worked to boost the quality and complexity of services. The hospital has a comprehensive stroke center, lung program, chest resuscitation center and neurointerventional lab, among other services.
The hospital also has an entire program created to treat the polo players who flock to Wellington annually. Player injuries require the services of orthopedic surgeons and other surgeons, plus concussion management, she said.
The hospital is adding more intensive care beds and considering additional growth, including building two more floors on a wing of the hospital, Lee said.
But Cleveland Clinic’s Barsoum still sees potential need in the area.
With the trend in medicine toward convenience, patients at Cleveland Clinic’s Palm Beach County medical offices probably wouldn’t mind having a close-by hospital for some inpatient services.
Barsoum said a “micro-hospital” could fill a need for inpatient care that isn’t complex. Micro-hospitals, featuring from 25 to 50 beds, are for patients who need hospitalization for less severe matters.
This type of hospital differs from hospitals such as Cleveland Clinic’s Weston facility, which sees complex cases. In fact, Weston is adding more critical care beds to meet demand, which means it often treats the sickest patients in the region. For them there are organ transplants, cardiac surgery, cancer treatment and neurosurgical care, among other specialties.
Barsoum said Cleveland Clinic hasn’t done enough research to consider what type of hospital could be suitable for Palm Beach County, if it decided it was interested in building one.
But Barsoum isn’t shy about touting Cleveland Clinic, which he said is enough of a draw that yes, Palm Beach County patients do travel to Weston, where the entire experience is informed by the Ohio headquarter’s renowned reputation.
“(Patients) expect a level of care that is extremely high,” Barsoum said, invoking the Ritz-Carlton hotel brand as an example of stellar service. “It shouldn’t be any different in health care.”
