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Code Red: The Grim State of Urban Hospitals

July 10, 2019
By Joseph P. Williams

Like most of its big-city brethren, Hahnemann University Hospital in downtown Philadelphia has a mandate that's rarely advertised but widely understood, especially in poor neighborhoods: Treat everyone who walks through its doors, the indigent as well as the insured.

That egalitarian mission led to some 150 patients treated in its emergency room per day – including many who don't have a medical emergency, but lack insurance and can't afford a primary care doctor. It also led to a financial balance sheet featuring $3 million a month in losses – brutal numbers that would make any executive reach for the antacids.

So it wasn't a big surprise when Hahnemann's corporate parent, American Academic Health System, announced this spring that the hospital would close for good in August, adding it to a growing list of urban medical centers that sank in a sea of red ink.

A Philadelphia judge on Wednesday hit the pause button on part of that plan, granting the city’s request for a preliminary injunction, according to news reports. The ruling by Judge Nina Padilla stops AAHS from ”closing, ceasing operations, or in any way further reducing or disrupting services" at the hospital's emergency room until the city’s health commissioner signs off on a closure plan, according to KYW Newsradio. AAHS says it plans to continue scaling back operations this week.

Joel Freedman, American Academic Health System's CEO, insists he "relentlessly pursued numerous strategic options" to keep the hospital open, but it "cannot continue to lose millions of dollars each month and remain in business."

But others – including a Pennsylvania nurses' union, civil-rights and anti-poverty advocates and Democratic presidential candidate Sen. Bernie Sanders – sounded the alarm. They called Hahnemann's closure a public health emergency, alleging it was triggered by corporate greed and a dysfunctional, profit-driven health care system.

If the 178-year-old hospital disappeared, they say, African Americans and Latinos would lose a critical health care safety net; elderly and chronic-disease patients would be forced to cope with a "healthcare desert;" and already crowded emergency departments in hospitals across the city would see a surge of indigent patients, increasing wait times and putting patients hurt in a car crash or suffering from a stroke at greater risk of dying.

The Pennsylvania Association of Staff Nurses and Allied Professionals, is fighting to keep Hahnemann open; it accuses Freedman of "plundering" the hospital and ignoring the community it has served since before the Civil War.

"Patients in Philadelphia need our leaders to take an additional step before we see disastrous results for patient care,"Maureen May, a registered nurse and PASNAP president, said in a statement Tuesday, urging state and city leaders to keep the hospital open. "Nurses understand that other Philadelphia hospitals simply cannot absorb Hahnemann's patients without deaths. Philadelphia's nurses say: keep this hospital open."

Sanders, a Vermont independent senator whose campaign cornerstone is universal healthcare, didn't pull punches when he spoke to the nurses' union in April.

"In a city with one of the highest poverty rates in the country, a major hospital serving low-income communities is on the verge of laying off 2,500 people, abandoning 500 medical residents, and closing its operations, thanks to an investment firm looking to make as much money as possible in a corporate fire sale."

Bonnie Castillo, a registered nurse and executive director of National Nurses United, a national nurses' union, agrees: "When hospitals do close down, people end up going without care, or they further delay care, causing them to get sicker and they do die," she says.

"We have seen again and again that hospital corporations and national and global health care entities – including those that profess to be nonprofit – make decisions not based on patient needs, but rather in the interest of their own bottom line and target profit margins," she says.

Hospital closures "have a disproportionate impact on certain patient populations. urban hospital closures are more apt to happen in racially segregated communities and especially in African American neighborhoods," she says. "The effects on these communities is devastating, as research shows that nationally urban African Americans receive their primary and other care at a hospital, compared to one in six for whites."

Yet the closure of Hahnemann, while alarming to some Philadelphians, is not an aberration.

Robert Bonar, a professor at the George Washington University, says it's a symptom of a larger, more complex problem in the healthcare industry. He says technological advances in medicine have created more cost-effective options for patients as well as caregivers, including outpatient treatment for conditions that had once been inpatient-only -- knee replacement surgery, for example.

That, along with the rise of suburban surgical centers and mergers of health care companies, has led to shorter hospital stays, fewer patients, lower insurance reimbursements, especially for patients covered by Medicare and Medicaid – and a thinner bottom line, especially for urban nonprofits.

"In most cases the era of the free-standing hospital, unaffiliated with any other health care organization, is likely drawing to a close," says Bonar, professor of health care administration at the university's Milken Institute School of Public Health.

"The challenge for health care leaders moving forward is if a local hospital or an urban hospital has to be closed, or converted into another facility, how do we go about it? And what type of facility should it be turned into?" Bonar says. "We're going to have to explore and develop additional care platforms other than the traditional inpatient hospital."

One solution could be emerging in Chicago's Southside, where a partnership among a trio of emergency medical physicians has led to creation of an urgent-care clinic in Hyde Park -- a section of the city that lacks a major municipal hospital.

"A lot of these (urban) hospitals are closing because of funding issues," says Dr. Airron Richardson, who co-founded Premier Urgent Care with Drs. Michael McGee and Reuben Rutland, his colleagues at Methodist Hospital of Chicago.

Community hospitals "already are taking care of vulnerable populations, and some of the more affluent hospitals might not be invested" in treating them, Richardson says. "We're trying to create a model that can be replicated. As an urgent -care clinic, we are filling a definite need for the neighborhood."

There's little doubt, however, the news for urban community hospitals is grim.

Last year, Bloomberg News reported that out of roughly 6,000 public and private hospitals nationwide, 8% are at risk of closing, "with another 10% considered 'weak.'" Shutdowns in both urban and rural communities, the website reported, are likely to continue for the foreseeable future, at a rate of 30 per month.

Besides Hahnemann, several hospitals in major urban areas have shut down recently, including Milwaukee, metropolitan Chicago and the San Francisco Bay area. In most cases, the hospital's corporate parent argued the facility's chronic financial losses were impossible to sustain, but Castillo argues that the balance sheets don't tell the whole story.

Exhibit A, she says: The decision to close Providence Hospital in Washington, "a facility that served a largely poor, elderly and African American population." While owner Ascension Health said the 158-year-old facility struggled for years to stay afloat, Castillo says, its owners "posted $2.3 billion dollars in net income in 2018, (and) Ascension CEO Anthony Tersigni earned nearly $14 million according to 2015 tax records."

When Providence shut down this spring, "it shuttered an emergency room that had seen nearly a 26% jump in use from 2014 through 2016 and had more than 49,000 visits in fiscal year 2017," Castillo says.

Forcing emergency departments at other Philadelphia hospitals to absorb Hahnemann's non-critical patients, she says, not only forces them to travel further for care but also would add to ED response time for patients whose lives depend on fast treatment, such as gunshot or car-crash victims, or someone suffering from a heart attack.

At the time it closed, Ascension officials said in a statement that they were working on "re-investing and redeploying its resources from hospital-based care to primary, and community-based services with a continued commitment" to city residents.

"Hospital corporations are moving away from acute care settings and into outpatient models that cater to more affluent patients or stand-alone emergency rooms or acute care clinics, again based on profit motives and not patient needs," Castillo says.

But the impact of a shuttered hospital goes beyond providing primary care for uninsured residents.

Late last year, the University of California—Berkeley Institute of Urban and Regional Development studied what might happen if owners followed through on a plan to close Alta Bates Summit Medical Center, a financially troubled hospital in Oakland.

Shutting down the facility would harm the health of "all populations in the East Bay" but particularly residents of suburban Richmond and Contra Costa County, "and those already vulnerable, such as the elderly, homeless and uninsured populations," Jason Corburn, director of the Institute and the study's lead author, said in a statement accompanying the report.

Seniors, pregnant women and the chronically ill all would have to travel further for care, a requirement that can be arduous for those with mobility issues or without reliable transportation, according to the report. Moreover, the study warned, closing Alta Bates Summit would hamper the ability of the entire East Bay region – home to 1.2 million people – to respond in a catastrophic emergency, such as an earthquake or terror attack.

Alan Sager, a health law, management and policy professor at Boston University School of Public Health, says he's studied hospital closings for five decades and has noticed a clear pattern: Smaller hospitals and those located in African American neighborhoods have been much likelier to close, while larger teaching hospitals – and those in predominantly white communities – generally survive.

"My evidence in the 52 years where I've tracked closings really shows (it)," he says. Economics is just one factor, he says, adding that the American health care system is "anarchic."

"That word describes the forces at play: 'Save some hospitals, close others,'" he says, noting that high-volume urban hospitals that are urgently needed but operate in the red are at risk. But suburban hospitals that don't necessarily operate efficiently, either – but stay in the black through insurance payments and capital acquired over the years – have the means to keep the doors open.

"It's not survival of the fittest," he says. "It's survival of the fattest."

This article was originally published in U.S. News.

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