Growing up with MedStar

The Baltimore Sun

Kenneth A. Samet and MedStar Health more or less grew up together.

When Samet was a graduate student in hospital administration in 1982, part of his training was to work with John P. McDaniel, who was then running Washington Hospital Center in the District of Columbia.

As Washington Hospital Center grew into seven-hospital MedStar and the region's largest health system with McDaniel as chief executive officer, Samet moved into positions of increasing authority. He was chief operating officer for the past 10 years and president for five.

Samet became MedStar's new CEO this month after McDaniel retired.

"He basically was being groomed to take over the position," said Kenneth W. Rodgers, a hospital analyst for Standard & Poor's who follows MedStar. "They've been giving him exposure, over time enhancing his responsibility. So, in effect, there was really no transition."

But Samet's career-long tie to MedStar doesn't mean he'll keep things the same.

"I'm proud of building the MedStar of today," Samet said, "but any time you have new leadership you get an opportunity to bring new focus."

Samet and others believe he is taking over at a time when health systems - hospitals combined with physician groups, outpatient centers, rehabilitation facilities and other ways of delivering care - will be growing again, in size and in importance. Several systems such as MedStar lost money during recent years because hospital rates were squeezed and some of the physician groups operated in the red.

MedStar was formed a decade ago, when some were predicting that three or four large systems would come to dominate the region, offering HMOs the one-stop shopping for care that they would want.

Three large systems formed - Johns Hopkins, University of Maryland and MedStar. Based in Columbia, MedStar accounts for 18.6 percent of the regional market, compared with 10.2 percent for Hopkins, according to a report last year by Rodgers for Standard & Poor's.

The MedStar system includes 53 primary care doctors at 18 offices through the region. It has a home health agency that makes 200,000 care visits a year, two nursing homes, two senior living centers, a Medicaid HMO, pharmacies, ambulatory surgery centers and an adult health center.

The growth of the big systems, however, came to a halt about 2000, when MedStar added its seventh hospital, Georgetown University Hospital. The HMO market didn't develop as expected. Some large hospital-owned physician groups, including the one owned by MedStar, lost money, and cut back in size or folded. Several hospitals decided they could thrive on their own. MedStar had financial challenges, posting losses as recently as 2003.

But big hospital systems may be making a comeback.

"We're at the heart of how our field is continuing to evolve," Samet said.

Chester Burrell, new CEO of CareFirst BlueCross BlueShield, has said he is looking for new forms of payment that will let large systems such as MedStar, Hopkins and University of Maryland manage the care, with less review by CareFirst.

Samet thinks MedStar's home care unit and outpatient facilities will be crucial - and are likely to expand - as changes such as this develop.

At the same time, more doctors, stressed by squeezes in reimbursements and rising costs for liability coverage, are looking to leave private practice and be employed by hospitals. The hospitals, in turn, are looking for more capital so they can take over physician practices and update their facilities.

Those were factors when Montgomery General Hospital, in Olney, decided recently to end 87 years of independent operation and become MedStar's eighth hospital, said CEO Peter W. Monge. On Feb. 1, when it is slated to join MedStar, Montgomery General will also break ground on a $30 million renovation. Monge said the hospital, although solid financially, didn't think it could generate enough capital on its own without joining a bigger system.

Besides MedStar's acquisition of Montgomery General, the other two big systems have resumed growth as well. The two-hospital Shore Health System merged into the University of Maryland system in 2006. And last year Anne Arundel Medical Center joined Hopkins, although through a collaboration agreement, rather than a merger in which Hopkins would assume ownership.

MedStar is back in the black, with revenue exceeding expenses by $196.3 million in the fiscal year that ended June 30 - 75 percent more than in the previous fiscal year. Rodgers, who upgraded MedStar's outlook from stable to positive last year, said: "I fully expect we will raise their rating soon in light of their continued strong performance."

Beyond growth, Samet expects changes in development of electronic medical records, secure but accessible to different doctors trying to coordinate care for a patient. In November, MedStar announced it was becoming a test site for Microsoft Corp.'s HealthVault data system.

Records from patients getting heart care at Union Memorial Hospital in Baltimore or Washington Hospital Center will be available to staff at MedStar Health Visiting Nurse Association or National Rehabilitation Hospital who are responsible for follow-up care.

As a nonprofit, MedStar must stay true to its public service goals, including operation of money-losing, but needed, services. "There is no business reason we run a burn center," Samet said. "There is a mission reason."

Samet seems to have been preparing most of his life to lead MedStar, but says it didn't exactly happen that way. Initially, growing up as a Baltimore Colts fan in Virginia Beach, Va., he said he dreamed of joining Johnny Unitas, but "the Colts never called."

Samet went to college as a pre-med student. He started a business to work his way through Old Dominion University in Norfolk, Va., eventually employing 20 to 30 other students selling T-shirts and other items at sports events.

bill.salganik@baltsun.com

MedStar at a glance

MedStar Health is the largest health system in the region. Here are its components:

Headquarters: Columbia

Baltimore-area hospitals: Franklin Square Hospital Center; Good Samaritan Hospital; Harbor Hospital; Union Memorial Hospital.

Washington hospitals: Washington Hospital Center, Georgetown University Hospital, National Rehabilitation Hospital.

Hospital scheduled to join Feb. 1:Montgomery General Hospital in Olney.

Other facilities and programs: A home health agency, two nursing homes, two senior living complexes, about 50 outpatient sites, a Medicaid HMO, pharmacies, ambulatory surgery centers and an adult day health center.

Employees: 23,000

Physicians: 4,600 affiliated, including 1,145 employed directly by MedStar. Most of the latter are hospital-based, including the 440 members of the Georgetown medical faculty, but 53 primary-care doctors and 13 specialists employed by MedStar practice in community offices.

Annual revenue: $3.1 billion.

Annual hospital admissions: 147,000

Annual outpatient visits: 1,022,000

[ Source: MedStar Health]

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