Monday, January 11, 2010

How Hospitals Survive: Making Dust

If they don't make dust, they fade (subscription):
UIC has spent four years drafting plans for a $450-million patient tower as the centerpiece of a $650-million, five-year-long overhaul of its Near West Side campus. But an inability to finance the project has forced longtime CEO John DeNardo to ice those plans for now.

He's settling for a $40-million repair job on the 500-bed hospital, which lost heat two days last month when the campus steam plant gave out.

The capital crunch poses a threat to UIC, where the hospital serves as a training ground for the nation's largest medical school — more than 15% of the state's physicians cut their teeth at the place. Rival university hospitals are pouring money into new buildings, including Rush University Medical Center's $1-billion makeover next door. The wider that gap grows, the harder UIC will have to work to attract talented physicians and researchers — or the well-insured patients it needs to improve its bottom line.
Part of the problem is the patient mix UIC sees, but the other larger part of the problem is the abysmal state of Medicaid funding:
The medical center has never been a financial powerhouse, partly because it treats a high percentage of low-income patients. Roughly one-third of its revenue in recent years has come from the state's Medicaid program for the poor. Still, its 500-physician medical staff has built some nationally prominent programs, including in eye care, organ transplants and robotic surgery.

Mr. DeNardo acknowledges the challenges but says the modest building overhaul will be enough to stay competitive and continue to provide a training center for medical students and residents.

Joseph Flaherty, dean of U of I's medical school, says the hospital's deteriorating condition — especially in light of its competitors' gleaming new facilities — already has hurt its ability to recruit and keep top faculty. "If we don't start making some dust soon, people will feel that this is a sinking ship," Dr. Flaherty says.
It's survival of the financially fittest right now - even for hospitals.

One wonders how UIC's next door neighbors (Rush and Stroger) will fare should they close and their Medicaid patients are shunted their way. Given the mandate that Medicaid is being expanded and the burden falls squarely on the budgets of states after 2017, unless the government addresses these underfunded entitlement programs directly, it all seems like a colossal house of cards - even with "reform."



Keith said...

Your last statement is most telling. What if UIC did close and who would take care of those patients?

I wonderd a few years back why the hospital CEO's of Rush, Northwestern, and other area hospitals were so supportive of building a new county hospital. Now the reasons are obvious; they need a place to send the uninsured and lower paying underinsured population. Without these public institutions, they might be easily overwhelmed by these patients, so supporting the public financing of these public entities is a good buisiness plan for those "non-profit hospitals".

I prsonally think that what should happen is a tax on those overbuilt medical systems that could be used to update public facilities that are in need of replacement. That way these "non profit" institutions could fulfill their missions by contributing to the care of the indigent that they have so adeptly avoided over a number of years.

DrWes said...


"I prsonally think that what should happen is a tax on those overbuilt medical systems that could be used to update public facilities that are in need of replacement."

Such a tax already exists, but it's not called a "sick tax" here in Illinois. It's called a "hospital assessment."

Now, where is all that money going?

CriticalCareRN said...

Yes, Keith, and while the county hospital gets flooded with the government insured, and uninsured - we can watch it head toward bankruptcy - much like the six hospitals in Massachusetts are facing today.

Interesting, though, how avoiding government insured and uninsured patients (ie., those that cost a hospital money to care for; not to mention the added legal risks) in order to preserve the viability and quality of a hospital is somehow an avaricious endeavor. Taking the unfortunate, and sadly necessary, steps to avoid bankruptcy is truly a sign of an uncaring facility - huh?

Incidentally, Rush was my employer for many years (for the majority of my career as a critical care nurse thus far). Our unit was no stranger to illegal immigrants from the area, often staying with us for many weeks at a time.