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Could PG hospital problems spread?

The Baltimore Sun

The plight of the public charity hospital is a familiar one around the country - struggling to care for the uninsured, surviving with hefty subsidies from local governments.

So there was a familiarity to the announcement this week that Prince George's Hospital Center and other facilities in the Dimensions Healthcare System might shut down in 60 days because of a financial squeeze blamed on care for the uninsured.

What's different, however, is that Maryland was supposed to have beaten the charity hospital problem, through a unique-in-the-country system that lets all hospitals bump up their rates to pay for uncompensated care.

Financially troubled Dimensions said Tuesday that it plans to shut down its two hospitals, outpatient center and nursing home after the Prince George's County Council failed to agree to a rescue plan before the General Assembly adjourned. While expressing hope a deal could be reconstructed, state officials began yesterday to plan for the closing in a conference call with hospitals.

Beyond the immediate contingency planning to shift patients and find work for Dimensions' 2,300-person work force, the situation raises the question of whether other hospitals caring for large numbers of uninsured - including several in Baltimore - might face similar problems.

The Dimensions problem is not an indication that Maryland's system has failed, said Harold A. Cohen, the original director of the state's rate-setting system. Cohen is now a consultant to insurers.

"Other hospitals are able to do it," Cohen said, but "Dimensions wasn't well-run." For example, Cohen said, state-set rates gave Dimensions enough money to meet pension obligations, but the system deferred some contributions.

Dimensions is facing a $4.7 million pension payment due next week, according to Moody's Investors Service, contributing to the current crisis.

"It was a cascading series of events," said John M. Colmers, the state health secretary, "some beyond the control of management, some within the control of management." He said he was referring to management over an extended time, not to the current team, which has been in place about two years.

"There was some mismanagement," said Suzanne C. Almalel, Dimensions spokeswoman. "But I can't say I blame all our woes on mismanagement."

The state rate system, for instance, doesn't pay doctors' fees. While Dimensions paid the 100 doctors on its payroll $12.2 million in the first eight months of the current fiscal year, it collected only $7.4 million in fees, accounting for about half of the $11.1 million operating loss Dimensions booked over that period, filings with the Health Services Cost Review Commission show.

Also, the closing in 2000 of D.C. General Hospital, a charity hospital in Washington, increased the number of uninsured at Prince George's Hospital, Almalel said. The system's financial health was clearly deteriorating then. Tight finances caused Dimensions to defer improvements, which could have made its hospitals attractive to insured patients, she said.

Reducing spending can hurt a financially troubled hospital more than help it, said William Ward, who teaches health-care finance and management at the Johns Hopkins Bloomberg School of Public Health.

"If you come in and try to cost-cut, you wind up becoming dysfunctional," he said. For example, he said, eliminating a low-cost patient transport worker could put an operating room behind schedule, leading to canceled cases and lost revenue.

Ward served as chief operating officer when Hopkins took over the deficit-ridden Baltimore City Hospitals, the last true municipal charity hospital in Maryland, in 1982. The hospital, now Johns Hopkins Bayview Medical Center, continued to care for the uninsured, he said, but worked its way back to solvency by attracting more insured patients. Also, he said, it's important to work with rate regulators to assure adequate payments for what he called "no-cross, no-shield patients."

Bruce Gordon, a Moody's analyst who follows Maryland hospitals, said he didn't believe others are in a financial hole that compares with that of Dimensions'.

Others say the system doesn't do enough to protect hospitals with high rates of uncompensated care. "It's not a secure safety net," said Gerard F. Anderson, director of the Center for Hospital Finance and Management in the Johns Hopkins public health school. While hospitals can charge more to pay for the uninsured, those higher charges can make a hospital unattractive.

"If you're a not-premier hospital, and if you have to charge dramatically more, you're going to start losing customers," he said.

If Dimensions closes, it will mean the loss of the largest health system in Prince George's County. The system operates Prince George's Hospital Center in Cheverly, with 268 beds, and Laurel Regional Hospital, with 96 beds; as well as Bowie Health Center, offering emergency treatment and other outpatient services, and the Gladys Spellman Specialty Hospital and Nursing Center.

Colmers said the closing would likely be phased - with Dimensions, over time, not admitting new patients to specific services.

It won't be easy to absorb the patients, said Martin L. Doordan, chief executive of Anne Arundel Medical Center - which has a building plan under way to handle the patients it already has.

"On a short-term basis, we can all pitch in," he said. "In the long term, there are staffing issues and physician issues. ... If you get into adding capacity, you get into construction, and that's two or three years at a minimum."

Sun reporter Jennifer Skalka contributed to this article.

Double-digit uninsured

Hospitals in Maryland where more than 10 percent of the care is uncompensated (members of Dimensions system are bolded):

Prince George's Hospital 14.6%

Bon Secours 13.4%

Johns Hopkins Bayview 11.3%

Maryland General 11.2%

U. of Md. Medical Center 10.5%

Laurel Regional 10.1%

Statewide average 7.5%

[Source: Health Services Cost Review Commission]

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