LEXIS-NEXIS® Academic Universe-Document

Search Terms: graduate , medical, education

Document 121 of 286.

View Related Topics

February 20,2000, Sunday

SECTION: BUSINESS, Pg. 1G

LENGTH: 1112 words

HEADLINE: HOSPITALS STRUGGLE TO STAY AFLOAT

BYLINE: Phil Porter, Dispatch Business Reporter

BODY:

Ohio State University hospitals are far from the only hospitals in Ohio and Franklin County suffering from financial difficulties.

Statewide, two hospitals have closed in the past two weeks hemorrhaging red ink -- Mount Sinai Medical Center in Cleveland and Bethesda Oak in Cincinnati. Near Columbus, numerous smaller hospitals, such as Grady Memorial Hospital in Delaware, Ohio, that have resisted merging with their larger rivals, are exploring partnerships as a means of survival.

The hospital industry blames the problems on declining Medicare payments since the Balanced Budget Act of 1997 and pressure from the insurance industry to cut costs. Experts says to expect more hospitals to get into financial difficulty.

Early last week, OSU officials said the four hospitals that comprise the OSU system face a $ 35 million deficit for the year ending June 30. They vowed to get the system back in the black within 18 months.

Mount Carmel Health System, the second-largest hospital chain in Columbus, is not facing a deficit like OSU's, but it, too, has assembled a management task force to look for ways to trim costs, said Joseph T. Calvaruso, the system's chief executive.

"All hospitals have their financial struggles,'' said Mary Yost, a spokeswoman for the Ohio Hospital Association. "How close they are to the red is a moving target. We are increasingly hearing that more and more institutions that have been used to a positive bottom line are operating much closer if not into the red.''

There are no figures available showing how many Ohio hospitals are struggling financially. But the American Hospital Association estimates that 60 percent of the nation's

hospitals will be in the red by 2003.

Teaching hospitals especially are struggling, OSU officials say, because of their additional academic and research missions.

But they are not alone.

"No one is immune,'' said Beth Traini, senior vice president at Mount Carmel. "Everybody across the board has been hit by these cuts.''

Mount Carmel, a nonprofit system including Mount Carmel East, Mount Carmel Medical Center and Mount Carmel St. Ann's, is projected to post net operating income of $ 4 million for the year ending May 31, $ 7 million less than last year, Calvaruso said.

In contrast, OhioHealth's Riverside and Grant Medical Center lost $ 39.4 million on operations last year and are expected to break even this year, said Bill Wilkins, the chief executive of Columbus' largest hospital chain.

Both systems have instituted cost-cutting programs.

Spurred by worsening results, Mount Carmel has formed a management committee to recommend ways to trim costs from all aspects of operations by mid-March, Traini said.

"We are looking at a broad range of initiatives, including reducing supply costs and expenses for medical equipment and new drugs,'' Calvaruso said. The goal is to avoid layoffs.

All three hospital groups in Columbus, including OSU, complain about the growing number of procedures and drugs that fail to receive full reimbursement from insurance companies and Medicare.

For example, a new drug used to treat patients in the midst of a heart attack, ReoPro, costs $ 1,500 a dose and has been on the market for two years. It won't be reimbursable from Medicare until October, Traini said.

Faced with demand from patients to provide the latest state-of-the art care, hospitals often absorb many costs not reimbursable, Wilkins said.

Much of Grant and Riverside's loss in 1999 was attributable to contracts with insurance companies that limited payments for drugs and equipment new to the market, Wilkins said. Both companies plan to negotiate more flexibility in future contracts.

OhioHealth also has a standing committee to make recommendations on cost cutting. The committee is focusing on the high cost of pharmaceuticals and supplies, Wilkins said. Overall, OhioHealth, which owns 10 hospitals in Ohio, expects to earn $ 5 million on operations this year. Earnings are expected to be less for its Columbus hospitals, because reimbursement rates here are worse than other parts of the state, Wilkins said.

Statewide, hospitals will see a $ 4.4 billion decline in Medicare reimbursement between 1998 and 2004, according to the Ohio Hospital Association. The Balanced Budget Act cut hospital reimbursements in 1997, and last year a revised act gave 10 percent back.

Still, the Medicare cuts are cumulative, increasing from 5.3 percent in 1998 to 11.2 percent in 2004. And they target roughly half of the average hospital's income, Yost said. Medicare cuts have hit all of Ohio's 180 hospitals, except children's hospitals.

Ohio hospitals are asking federal lawmakers for additional relief on Medicare reimbursements, Yost said. And she cited the recent closures of Mount Sinai and Bethesda Oak as warning signs.

"We may be at the beginning of a trend of more closures being tied to financial distress,'' Yost said.

Mount Sinai had been operating since March while attempting to reorganize under federal bankruptcy protection from creditors; Bethesda Oak lost $ 19 million in 1999.

Another indicator of financial stress is the increasing number of rural hospitals, such as Grady Memorial and Berger Hospital in Circleville, Ohio, looking to affiliate with larger hospitals, she said.

"Collectively, these are survival moves,'' Yost said.

Gretchen McBeath, a partner with the Columbus law firm of Bricker & Eckler, said teaching and rural hospitals are suffering the most. In addition to Medicare cuts, teaching hospitals saw the government's gradual reduction of the money it will pay for a graduate medical education.

Another factor exacerbating the financial crunch is the demise a few years ago of Ohio's certificate of need law, which required review of proposed new or expanded medical facilities, she said.

Without regulation, free-standing centers offering outpatient surgery, dialysis and tests such as X-rays and magnetic resonance imaging have siphoned money from the profit centers of traditional hospitals.

Jim Robbins, managing partner with the Columbus office of PricewaterhouseCoopers accounting firm, said hospitals' financial headaches can be traced to the attempt to curb health-care inflation in the late 1980s and early 1990s. Managed care and lower Medicare reimbursements helped for awhile. But now both hospitals and insurers complain of tight finances while health-care inflation rages anew.

"What will turn the tide is an outcry from the consumers of America, that they are not getting the level of care they deserve,'' Robbins said. "When that happens, things will turn around again.''

LOAD-DATE: February 21, 2000

Document 121 of 286.


Search Terms: graduate , medical, education
To narrow your search, please enter a word or phrase: