Many of the faithful readers of this column may remember that I wrote last summer about Parkland Health System in Dallas, which was asking voters in Dallas County to agree to a tax increase to fund a $747 million portion of the construction of a $1.3 billion replacement hospital.
Talk about bad timing.
The economy was horrible in July. I'm not telling you anything you don't already know, but it's much worse now. Back in July, I was skeptical to a degree whether taxpayers would agree to increase their tax bill to fund a hospital that many of them will never need—even if much of the current facility was built in 1954. It seemed like a tough sell to say the least to ask taxpayers who are feeling the economic pinch to agree to raise their property taxes gradually from $254 per $100,000 of assessed value to $289 by 2014.
Hospitals are hurting in today's economy. The most recent economic outlook by Moody's Investors Service on the financial health of hospitals generally is depressing, cutting the outlook for the nonprofit hospital industry from stable to negative in November.
"The not-for-profit hospital industry operates under a challenging business model characterized by fierce competition and third-party reimbursements designed to control cost inflation while also maintaining market efficiencies," says Moody's senior vice president Lisa Goldstein.
"While most hospitals showed resiliency when initial economic weakening began in late 2007, we have begun to see in recent months greater-than-anticipated erosion in performance and liquidity."
She says even some of the larger hospital systems with economies of scale to absorb most challenges are reporting a downturn in financial performance brought on by the weakening economy with increasing charity care and bad debt levels.
"Volumes are softening, particularly in surgical cases, also contributing to financial performance declines," Goldstein says. "Likewise, the ongoing credit crisis, culminating in limited access to the capital markets in recent weeks, is also a factor. The tax-exempt debt market is a primary source of funding for not-for-profit hospitals."
But in terms of Parkland's sales effort on the voters of Dallas County, it turns out I couldn't have been more wrong. The measure passed overwhelmingly. More than 80% of voters approved it. I can't think of any politician in recent memory who's won by such a wide margin.
I took a trip to Dallas in September to visit with Parkland's senior leadership team for a story in HealthLeaders magazine that we're planning for next year on public hospitals. I found out that they clearly expected the measure to pass, but that was rooted not in cockiness but in a connection with and understanding of the community. The aim, according to CEO Ron Anderson, MD, was to make the cramped, old, and crowded 675-bed Parkland a modern 862-bed hospital of choice rather than a hospital of last resort. I don't know if the new facility will achieve that goal, but if the dedication of the employees is any indicator, I wouldn't bet against them.
Truth is, voters aren't stupid. They saw how well that hospital has been run over the past 60 years or so. They saw a dedicated CEO who's been working for less than he could have elsewhere for the past 30 years or so. They saw a board of directors that developed a comprehensive capital campaign that solicited roughly the other half of the construction cost from wealthy donors who pledged their portion based on successful passage of the bond election.
"Very few health systems truly know what their community thinks of them," Anderson said following the election. "With the vote in November, we know that we are overwhelmingly valued by the Dallas community."
Finally, voters saw a hospital system that instead of bleeding red ink for the past umpteen years like so many other public hospitals across the country was making it work financially despite the current facility's shortcomings. Parkland hadn't asked locals for money for construction in 28 years. If they are asking, voters must've said to themselves, they must really need the money.
They do. The hallways are crowded, many of the rooms are not private—a quality-of-care issue, not a luxury—and the mechanicals are old. There's no room for modern technology, and workarounds were costing a lot of money, too.
"The voters not only affirmed Parkland's history, they committed to invest in our future," Anderson adds. "What a powerful statement of regard and trust."
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 finance issues facing healthcare leaders.
Nearly 19% or 797,000 children in Florida do not have health insurance, and experts expect the number to rise as more parents are laid off, according to a report released by Families USA. The number may also rise as employers increase insurance costs, the report said. The study was conducted between 2005 and 2007 and does not reflect this year's financial woes. Families USA estimates the actual number of uninsured children in the country right now is far greater than the 8.6 million reported in 2007.
Free medication samples, which at first glance look like a win-win-win situation for manufacturers, doctors, and patients, can have hidden costs. Doctors might pick a sub-optimal drug simply because they have a sample. Plus, only makers of expensive brand-name drugs are doling out samples, and leaving pharmacists out of the equation might raise the risk of errors. Recognizing that, health systems around the country are beginning to curtail the practice, a major marketing tool. In January, a study in the journal PLoS Medicine estimated that in 2004, drugmakers handed out free samples to U.S. doctors with a retail value of nearly $16 billion, equal to more than a quarter of their marketing budgets that year.
Thousands of seniors nationwide are not yet eligible for Medicare but fall in the costliest age range for medical care. Some are facing the reality that fewer employers are keeping early retirees on their insurance rolls until they qualify for Medicare at age 65. Others have lost employer-based coverage after their spouse died or went on Medicare, and many others aren't able to get individual health insurance because of pre-existing conditions. Or they have decided to go without insurance because of how much it costs to get coverage.
About one in 10 doctors who vaccinate privately insured children might drop that service largely because they are losing money when they do it, according to a survey. A second survey revealed startling differences between what doctors pay for vaccines and what private health insurers reimburse: For example, one in 10 doctors lost money on one recommended infant vaccine, but others made almost $40 per dose on the same shot.
For years, foreign healthcare providers have moved cautiously in China, mainly offering Western-style medicine to expatriates and rich Chinese. But now some Taiwan companies are taking a radically different tack and selling low-cost quality healthcare to China's masses. The move is risky because China's healthcare market is fragmented and largely insulated from criticism because the state runs most of it. But the companies have an interesting edge because they are Taiwan manufacturing giants that have been running low-cost factories in China for years.
Too young to qualify for Medicare and rarely covered by employers, healthy early retirees can face healthcare premiums that are triple or more what they paid while working. Others, who suffer from middle-age ailments like arthritis or back pain, wind up paying far more, if they aren't simply rejected. Researchers at the Commonwealth Fund found that in 2007 about 35% of people between the ages of 50 and 64 were uninsured or underinsured, up from 26% five years ago.
The European Union has accused drug companies of adding billions of dollars to healthcare costs by delaying or blocking the sale of less expensive generic medicines. Patients and healthcare systems in Europe would have saved at least 3 billion euros, or $3.8 billion, from 2000 to 2007—or shaved 5% off the medical bills—if companies had let generics into the market sooner, said Neelie Kroes, the European competition commissioner.
For years, scientists hoped that the rapidly evolving field of genetics could transform medical diagnosis and treatment. But the vision of individualized treatment based on a patient's genetic makeup and other biological markers has yet to materialize. Now, however, the pursuit of "personalized medicine" is expected to get a major push from the incoming administration of President-elect Barack Obama.
Twenty-seven Iraqi medical doctors spent the past month learning about healthcare in the United States. Their time in the U.S. was devoted to observing patient care and attending lectures. The Iraqi doctors were spread out throughout the country. Some went to Johns Hopkins Medical Center in Baltimore, some to Children's National Medical Center in Washington, while others went to community health centers and Indian Health Service hospitals.
