It is now acknowledged that Johns Hopkins Hospital made a financial blunder in selling its health maintenance organization to Prudential Insurance Co. in 1989 under terms that will cost it millions every year of this decade. It is also acknowledged that Hopkins compounded this mistake by filing a $50 million bad-faith conflict-of-interest suit against Prudential that it had to retract under humiliating circumstances.
This unhappy development, however, does not alter the fact that the Johns Hopkins Health System and the Johns Hopkins Medical School remain this city's premier institutions, with a global reputation for excellence and leadership. Their medical breakthroughs have been making headlines for a century, and continue to do so. They are the region's largest employer, with teams of specialists who attract patients from all over the world. In research grant ranking, the Hopkins institutions are consistently No. 1.
Financial acumen, nevertheless, has not been a Hopkins asset. Selling off the insurance portion of its HMO just as this type of organization was sweeping the country left Hopkins far behind the curve in the health care revolution.
Only now is it picking up some of the pieces by forming networks under the new Johns Hopkins HealthCare plan to assist primary care physicians as they seek to maintain a certain degree of independence in the new HMO world. Hopkins' great education and research missions cannot flourish unless the institution attracts sufficient numbers of patients to meet its clinical care objectives. But the HealthCare innovation, plus attempts to repair raw relations with Prudential, improve information management and coordinate managed care initiatives under the Hopkins Medical Services Corp., will not compensate for the very substantial sums lost in the Prudential contract.
The hospital is counting on its overall strength, which goes way beyond HMO factors, to weather rough seas. And by paying closer attention to business under a board of trustees that has become exquisitely sensitive to financial operations, the hospital is running a 3 percent profit margin that at least puts it in the black.
Like most major research and education institutions located in inner cities, however, Hopkins feels it is not competing on a level playing field with "beltway hospitals" unburdened by the costs of indigent patients and vast medical research. It would like to see the state do more to pool funds to address these needs.
Operational adjustments on the margin and state assistance are not enough to repair the damage to the Hopkins reputation as a result of the Prudential imbroglio. Much more is required in improving personal and institutional relationships within the Hopkins community and without. It is of vital importance to Maryland that this new chapter in Hopkins medical history turn out a lot better than the last one.