I am very troubled with the way this vaguely defined proposal has been revealed to the public. \u00a0I cannot avoid the impression that important elements of the deal have been intentionally hidden. \u00a0There is a lot to cover and these initial thoughts just scratch the surface. \u00a0If I had an opportunity to ask clarifying questions, I would start with these. \u00a0I ask them from my perspective as a life-long medical educator, physician to both the rich and poor, and a lobbyist for higher education. \u00a0What do you think?<\/p>\n
Nature of the Proposed Arrangement: University Hospital has been managed by at least 5 outside corporate chains or partnerships of hospitals in the last 25 years.\u00a0 All failed.\u00a0 Other existing or contemplated partnerships, programs, or mergers with Louisville Hospitals have also failed. \u00a0 What were the reasons for those failures?\u00a0 What plans have been made to ensure a better outcome?\u00a0 Where can we see those plans?\u00a0 Why not?<\/p>\n Public Access to Planning Documents: Teaching Hospital Status: Will more medical residents and students be placed at Jewish Hospital or St. Mary’s Hospital?\u00a0 Will there be true teaching services at those hospitals with interns and residents having true responsibility for a group of patients comparable to a true teaching hospitals like University Hospital, Children’s Hospital, or the Veterans Hospital?<\/p>\n Having Teaching Hospital status opens a candy store of additional payments and supplements from Medicare, Medicaid, and the Commonwealth of Kentucky.\u00a0 It is estimated nationally that the presence of each medical resident brings in an additional $100,000 to their hospital employer. Recently, $9.5 Billion was distributed as “educational” supplements to 1047 hospitals that were classified as teaching hospitals. \u00a0That is an average of $8.7 million for each teaching hospital from Medicare alone. \u00a0However, since the great majority of hospitals have only a handful of residents, the major teaching hospitals receive many<\/span> times more. \u00a0Some hospital mergers are driven by the desire to extract better Graduate Medical Education payments. \u00a0It is well recognized that the present system has produced bizarre or unjustifiable results and warped our system of medical education.<\/p>\n Each teaching hospital receives a fixed, hospital-specific DGME payment to pay for resident salaries and for some faculty salaries [which I have never seen budgeted that way].\u00a0 The IME system pays by a different mechanism.\u00a0 For every Medicare patient discharge, a teaching hospital receives a percentage supplement derived on the Resident-to-Bed Ratio described above.\u00a0 This is not chump-change.\u00a0 Currently, University Hospital receives a 28% boost,\u00a0 Jewish Hospital & St. Mary’s\u00a0 2%,\u00a0 Norton Hospitals 6%, and Baptist East 0%.\u00a0 In a world where profit margins on Medicare patients comes in small single digits, such bonuses give a tremendous competitive advantage to the hospitals receiving them.\u00a0 Cheap labor, extra money, status, branding & market share, recruiting advantages, another lobbying group to work for them, and other benefits give teaching hospitals a competitive advantage in the marketplace.\u00a0 In more recent years, teaching institutions have added commercial research to their list of advantages:\u00a0 University Hospital and Jewish Hospital are involved in such research.<\/p>\n The proposed merger offers an opportunity to juggle or redistribute\u00a0 these bonuses among a larger number of hospitals and beds.\u00a0 What financial predictions have you assumed for existing or new Direct Graduate Medical Education Payments (DGME), Indirect Medical Education Payments (IME), or State Medicaid supplements for medical education?\u00a0 How will any increased payments be spent?\u00a0 Will they be used for medical care for the indigent, for commercial research by the University and Hospitals, for medical education, or simply disappear into general revenues where its specific budgeted uses can no longer be traced?<\/p>\n These special benefits are the fruit of extraordinary lobbying by the hospital industry and medical school lobbies. [Disclaimer:\u00a0 As a former lobbyist, I helped do it.] \u00a0 It is well recognized that the amounts of these special payments are more than double the actual added costs of medical education for hospitals.\u00a0 For these and other reasons of fairness and equity, the special payments are on the chopping block in all major plans for health care reform.\u00a0 What effect will such cuts have on your proposed business plan?\u00a0 For that matter, what is your business plan?<\/p>\n Funding for Indigent Care Medicare provides\u00a0 supplemental payments to hospitals depending on their indigent patient population as quantified by their Disproportionate Share Ratio (DSH Ratio). The measurement is a largely based on the number of Medicaid patients and serves as a proxy for total indigent care.\u00a0 As with the education supplements, the total payment for any individual Medicare patient discharge is multiplied by a DSH supplemental amount.\u00a0 For example, University Hospital has a DSH ratio of 0.50, ranks 344 out of all 3503 Acute-care hospitals in the nation, and gets a 30.5% supplement for each Medicare patient discharged.\u00a0 In comparison, Jewish -St. Mary’s has a ratio of 0.44, rank of 467, and bonus of 25.7%.\u00a0 The Norton Hospitals havea ratio of 0.41, a rank of 594, and supplement of 22.8%.\u00a0 Baptist Hospital East has a ratio of 0.07, a rank of 3200, and for this gets supplement of 1.6%.\u00a0 It is clear that the first three of these Louisville Hospitals can be proud of the roughly comparable indigent care they provide, at least as measured by this federal program.\u00a0 What then is the justification for the proposed major realignment?\u00a0 What specific changes will be made to provide more care to the underserved?\u00a0 Both hospitals currently have an occupancy rate less than 75%.\u00a0 Is a redistribution of licensed beds planned?\u00a0 If so, how will this increase indigent care?\u00a0 How will we know if more indigent care is being provided?<\/p>\n Having a high-enough DSH Ratio permits hospitals to take advantage of a special federal drug purchasing program, the 340B program, that was originally set up to benefit hospitals and selected outpatient clinics that take care of unusually large numbers of indigent patients. The law was changed a few years ago to permit many more hospitals and entities to participate. \u00a0The savings are staggering but do not necessarily have to be passed on to patients or insurers. \u00a0Applying for and managing a 340b hospital program is now a big business. \u00a0University Hospital benefits as a high-DSH hospital. \u00a0Will its status be compromised in the proposed business entity? \u00a0Does the business plan include a new application by Jewish and St. Mary’s , or the creation of a new stand-alone cancer hospital which might also be eligible.<\/p>\n What communication or assurances from the Commonwealth or Louisville Mayor’s Office have been made with respect to state spending for medical education and indigent care?\u00a0 In the vulnerable recent election months, the Governor’s office has been silent, although his Attorney General and Auditor General have made it clear they have some major problems with the proposed arrangements that have been revealed, or rather not revealed.\u00a0 Will the Governor and Mayor wait for the reports from these two major elected Commonwealth officers, or make their recommendations and decisions based on the old fashioned politics of influence?\u00a0 What do the hospitals receive now from state and local governments, and what are your projections.\u00a0 What will happen to the remnants of the old city-county-state agreement that was put in place in the old Humana days?\u00a0 University Hospital has received millions of dollars annually from the state and Metro governments for indigent care.\u00a0 What have those governments signaled with respect to those sources of indigent care funding?\u00a0 Will they be lost?\u00a0 University will lose its special status in the state as an independent entity.\u00a0 Can state and local government even make such payments to the new religious organization?<\/p>\n
\n<\/strong>Is a true merger of hospitals planned, or simply an acquisition by another hospital chain?\u00a0 For example, will the new entity have a single Medicare Provider number?\u00a0 If a true full merger is not planned, why not?\u00a0 Which, if any, hospitals will be truly merged, or is University Hospital just being put in play once again by another hospital chain?\u00a0 What will be new?\u00a0 For what is the University of Louisville, its Hospital, and the Commonwealth of Kentucky giving up precious independence and control?<\/p>\n
\n<\/strong>Why has the University of Louisville not released its planning documents to the public for their examination and comment the way they have internally?\u00a0 What is there that you do not want the rest of us to see?\u00a0 Why should the proposed business arrangement not be put on hold until you resolve your legal dispute with the Commonwealth and Jefferson County courts over whether your records should be made public?\u00a0 Given the rash of major misappropriations of public money by the University and its employees (such as the Passport and Education Department scandals, why should we simply trust you?\u00a0 Is not “Trust but Verify” a better public policy? \u00a0 I will write separately why I think the University feels compelled to continue to hide its clinical operations from public view.\u00a0 Can anyone provide the KHPI any relevant\u00a0 documents or internal presentations?\u00a0 As a member of the Executive Faculty, I deserve some access anyway.\u00a0 Contact me confidentially if you wish using the link on the Home Page<\/a>.<\/p>\n
\n<\/strong>Will you create a new Teaching Hospital Entity?\u00a0 How will you manage the existing ones?\u00a0 When Jewish Hospital & St. Mary’s Health Care merged a few years ago it took a single Medicare Provider number (180040) and is currently classified as a minor teaching hospital with 3.3 residents per 100 beds.\u00a0 By resident-to-bed ratio, it ranks 788 out of the 1047 teaching hospitals nationally in its teaching intensity.\u00a0 In contrast, University Hospital has 60 residents per 100 beds and ranks 96th; and Norton Hospitals, Inc. has 11 residents per 100 beds and ranks 482d.\u00a0 Baptist Hospital East is not a teaching hospital.<\/p>\n
\n<\/strong>Providing\u00a0 funding for medical care of the indigent and medically underserved is claimed by daily full-page ads to be a major justification for the proposed business arrangement.\u00a0 How specifically is that going to happen?\u00a0 Where is that money going to come from?\u00a0 What are your financial projections?\u00a0 Will Catholic Hospital Initiatives put actual new money into University Hospital, or is the success of the enterprise dependent on University generating more revenue through increased clinical services, or supplemental federal and state supplements for medical education and indigent care [such as discussed above and elsewhere]?<\/p>\n