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The Journal Gazette

Tuesday, September 26, 2017 1:00 am

Building trust

CHS relationship with employees worth more than new construction

Drs. William Cast, Matthew Sprunger and J. Philip Tyndall

Drs. William Cast, Matthew Sprunger and J. Philip Tyndall are the founders of Northeast Indiana Citizens for Healthcare Excellence.

There's a memorable scene from the movie “Airplane” in which Leslie Nielsen's character, Dr. Rumack, says, “We've got to get him to the hospital right away!”

The cabin attendant asks, “What is it, doctor?”

Nielsen replies: “It's a big building with patients, but that's not important now.”

Actually, this question is important right now for Fort Wayne. St. Joseph Hospital is a big building with patients – capacity for 191, to be exact – but it also provides a continuum of quality health services, including emergency care, an intensive care unit, surgery, a burn center, sophisticated diagnostic imaging, a cardiac catheterization laboratory and rehabilitation. So, when Community Health Systems – the parent company of Lutheran Health Network, which includes St. Joe – issues a news release about a new downtown hospital, what are we to assume? That it will be a true and complete replacement, or merely a downtown outpost –  a glorified standalone emergency room designed to transfer patients to Lutheran Hospital? Both are big buildings with patients. But the services available at those different types of facilities vary greatly.

Medicare determines what is and is not a hospital, through Centers for Medicare and Medicaid Services Certification Numbers. Hospitals are paid differently depending on their status. An ambulatory surgical center, for example, will likely receive half the dollars from a surgical room charge or outpatient and inpatient imaging compared to a hospital, even when the procedures are otherwise identical. In fact, one factor driving the trend toward “micro-hospitals” is higher reimbursement from Medicare.

CHS has correctly stated that new construction is less expensive than refurbishing an old building, but the value of such a facility – different, of course, from its cost – depends on how it is built and run. We and others in the health care community have heard discussion of CHS making its new facility a micro-hospital with limited features and only 25 to 50 beds. This contradicts CHS' latest claims of building a “multi-story” facility with “100 beds,” to be paid for “out of the previously announced $500 million budgeted for all of LHN over the next six years.” Despite providing no location, no dedicated budget and no renderings of a facility, these promises are worthy of discussion.

“Micro-hospital” is an ill-defined term allowing for more than 50 beds, but CHS' mention of “supporting facilities and parking” suggests that the complex will include ambulatory clinics and physicians' offices, the cost of which would also be deducted from the $100 million CHS budget.

We've commented previously that the stated $500 million is a number far less impressive than it seems, given that:

• It would be reduced by $100 million for the overdue electronic medical record replacement, leaving $400 million – or less if there are electronic health costs for the new location.

• That amount must be further reduced by $50 million a year (conservatively) to cover depreciation, and

• Doesn't include the $142 million cost to make targeted nursing ratio increases during those same six years, or

• Other facility upgrades across the Lutheran network: Peru, Kosciusko, Bluffton, Dupont and the Rehabilitation Hospital.

In short, the true cost is far more likely to be $800 million. To be clear, it is not credible to claim CHS is making a “$500 million investment”; such an investment would be far from adequate. The commonly stated cost to build an academic medical center hospital is about $1.5 million per bed. Obviously, it can be done for less. For a bare-bones hospital, a commonly stated range is $800,000 to $1.2 million per bed. The proposed $100 million sum must cover the hospital, clinics, offices, imaging, special instrumentation and parking, plus land development/infrastructure.

As St. Joe board member Jerry Henry has said, “For the life of me, I don't know where they get the money.” And CHS spokeswoman Toni Galin's remark regarding CHS' “strong positive cash flow” from operations seems like wishful thinking when one realizes that CHS has lowered guidance for earnings from $2.4 billion to a low side of $1.8 billion – and half of that money, perhaps more, would go toward interest payments. According to a recent Bloomberg article, CHS is “debt-sickened.” The article quotes Joshua Nemzoff of Nemzoff & Co., who advises hospitals on sale transactions, as saying, “At some point you reach a dead end, and you can't cut the expenses anymore.”

This should be of deep concern locally. Lutheran Network physicians have said they are unable to recruit, in part because CHS is slow to respond and seems intent on maintaining hiring freezes and reducing employee full-time equivalents. Recent departures of plastic surgeons at St. Joe – who were replaced by generalists – are not encouraging, especially if it foretells staffing at the new facility. There will be a need to hire new physicians and, right now, LHN is failing at recruitment, lagging local competition in bringing primary-care physicians on board and experiencing a continued departure of specialists.

Ultimately, a hospital is best judged not by its number of rooms but by who is on the staff. CHS and Lutheran have admitted to having eroded trust, and these doubts leave CHS in a poor position to rebuild quality and to hire the best and brightest. It appears they must first regain the trust of their physicians, who continue to resign their posts and even depart from the Lutheran Health Network.

That's what's truly important right now, not mere promises of a new “big building with patients.”

Drs. William Cast, Matthew Sprunger and J. Philip Tyndall are the founders of Northeast Indiana Citizens for Healthcare Excellence.