Finance
e-Newsletter
Intelligence Unit Special Reports Special Events Subscribe Sponsored Departments Follow Us

Twitter Facebook LinkedIn RSS

Memo to Voters: Go Tax Yourself

Philip Betbeze, for HealthLeaders Media, July 28, 2008

In a way, Dallas's Parkland Hospital is running out of time. But it doesn't have to be that way. Its day of reckoning is coming now that the hospital's leadership won approval from its board of managers to ask the county commission to allow a bond election this fall. The election, which commissioners are expected to approve, will ask Dallas County voters to tax themselves to the tune of up to $747 million—60% of the estimated cost of building a $1.3 billion replacement hospital.

Yikes. Good luck with that.

Despite voters' usual disinterest in raising their own taxes, however, this particular measure would likely be a good investment. In many ways, Parkland is a model of best practices in how to run a public hospital in an admittedly thin—and rapidly thinning—field of compatriots. It was the first Level I trauma center in north Texas. It's the second-largest regional burn center and the busiest maternity hospital in the U.S. And it provided $409 million in uncompensated care in the past fiscal year and logs about 140,000 ED visits each year.

And here's the important thing for voters: Parkland makes a margin—at least on operations. Operating revenues increased 14.2% from 2004 to 2005 and 18.7% from 2005 to 2006, while operating expenses increased 8.1% from 2004 to 2005 and 5.1% from 2005 to 2006. Despite its huge uncompensated care load, the hospital takes its finances seriously. After discovering that hundreds—if not thousands—of well-off patients living outside Dallas County were pleading poverty (and fraudulently claiming county residence) to take advantage of the hospital's generous charity care policy, Parkland went after them aggressively in the courts and won judgments more often than not.

That's remarkable compared with Parkland's brethren. Public hospitals are closing at a far faster rate than hospitals in general because running a public hospital without losing millions each year is darn hard. Some might argue with me, but as a group, they are generally less well-managed than other hospitals for a lot of reasons—chief among them being political interference. Because of their charitable mission, they are dependent on philanthropy and tax revenue for their support. And they can't simply pack up and move to the suburbs where the paying patients are to supplement their bottom line. Many of them are used as jobs programs by local politicians who often also are heavily involved in the hospital's governance. That's what makes Parkland a shining example of what's right with the model.

But the current Parkland is old and decrepit.

Its longtime CEO, Ronald Anderson, MD, has run the hospital since 1982, when he was named CEO at age 35. Still, the hospital he works in is almost as old as he is. Built in 1954, the 862-bed hospital is serving twice as many patients each year as it was designed for.

The hospital is already gearing up the likely bond referendum PR effort on its Web site. In the "who we are" section, the story is headed by the phrase, "we live in a house that yesterday built." It's a tribute to those of the past who built the institution but also a subtle hint that the hospital is too run-down, too small, and too old. Still, convincing taxpayers—many of whom feel they are already overtaxed—to add to their burden is a monumental undertaking.

But look at it this way, Dallas voters. The new Parkland's price tag is only a couple hundred thousand more than the new Cowboys stadium going up in nearby Arlington, which, by the way, is kicking in $325 million of tax money for that gleaming monument to excess. Despite all that, the team is still going to be called the Dallas Cowboys. So Arlington's paying the freight on your football team. That Jerry Jones must be a heckuva salesman.

Maybe Ronald Anderson should give him a call.


Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.
Note: You can sign up to receive HealthLeaders Media Finance, a free weekly e-newsletter that reports on the top quality issues facing healthcare leaders.

Comments are moderated. Please be patient.