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Bayfront deal brings up questions of hospital charity care

ST. PETERSBURG — In its century-long history, Bayfront Medical Center has earned a reputation for welcoming the poor and uninsured. Will that change with last week's announcement that it plans to get into the for-profit health care business?

No, according to the public vows of hospital officials and their partners at Health Management Associates, a Naples-based company traded on the New York Stock Exchange.

Only time will offer proof, but experts agree that when it comes to community service, the lines between not-for-profit and for-profit hospitals are blurring.

"Without question, there was a prejudice between not-for-profits and for-profits," said Tim Goldfarb, CEO of Shands HealthCare, the not-for-profit medical center at the University of Florida.

But the schism has been closing. "It's not your tax status that is a litmus test to your commitment to patients and the values of the community," Goldfarb said. "It's what you do."

The relationship between Shands and HMA would once have been unimaginable in academic medicine. Now HMA owns a controlling interest in three rural hospitals jointly operated by Shands — a deal similar to what's proposed for Bayfront. Those ties now bring Shands to Bayfront as a clinical affiliate.

Leaders at the University of South Florida — who have cried foul over the Bayfront deal, arguing that they should be its academic partner — nonetheless agree that patient care trumps tax status. USF runs a statewide network of trauma centers for HCA, the nation's largest for-profit hospital chain.

• • •

In fact, many have asked for years whether not-for-profit hospitals actually provide enough charity care to justify their tax-exempt status. In California and Illinois, for instance, legislators are considering stricter requirements to stay off the tax rolls.

In terms of quality of care, studies have not turned up significant differences in the operations of for-profit versus not-for-profit hospitals, said Alwyn Cassil, spokeswoman for the nonpartisan Center for Studying Health System Change.

Federal law prohibits hospitals from refusing to treat patients who show up at the emergency room, regardless of their ability to pay.

But there are philosophical differences, said Steve Mason, president and CEO of BayCare Health System, a regional network of not-for-profit hospitals including St. Anthony's in St. Petersburg, St. Joseph's in Tampa and the Morton Plant Mease system in mid-Pinellas.

"When you are looking at a for-profit organization, their real mission at the end of the day is shareholder value," he said. "The not-for-profit mission at the end of the day, at least for us, is improving the health of the community."

Not-for-profits can be lucrative — or not. St. Anthony's, for example, boasted a 10 percent operating margin last year. Nearby Bayfront claimed less than a 1 percent margin.

Executives at both types of organizations can rake in millions. Mason earned more than $2.5 million in compensation to run his regional hospital network, according to 2010 tax filings, the most recent available online. Gary Newsome, president and CEO of HMA, which operates hospitals in 15 states, received $7.1 million in compensation in 2011, according to corporate filings. Bayfront CEO Sue Brody made a relatively modest $712,357, according to 2010 filings.

• • •

Bayfront officials say maintaining their charity care policies is in their letter of intent with HMA. It's an issue likely to see scrutiny as the deal is vetted by the City Council of St. Petersburg, which owns the land the hospital sits on and must approve the ownership change.

HMA leaders point to their No. 1 ranking in social responsibility among health care facility companies by Fortune magazine. This is based on surveys of executives, directors and analysts.

"We accept the charity care policies of the organization as they currently exist," Newsome said. "I can tell you we promise as much, if not more, charity care."

Newsome also said HMA does not turn down Medicaid patients in non-emergency situations. "We take the patients doctors refer to us," he said.

The extent to which HMA hospitals serve the poor and uninsured varies by community, said Alan Levine, its Florida group president. In wealthy Naples, for instance, less than 1 percent of its business is charity or Medicaid, he said.

At Brooksville Regional, nearly a quarter of patients are on Medicaid or are classified as "charity" cases, according to HMA.

Such patients are nearly 30 percent of Bayfront's clientele.

Then how will Bayfront become profitable? As part of a large group, it should realize economies of scale in buying supplies, and greater clout with insurers. It would draw referrals from other HMA hospitals and bolster lucrative services as well.

Plus, the sale should remove Bayfront's debt burden.

"Bayfront has no aversion to being profitable now. A margin is required to perpetuate our vision," said Kanika Tomalin, Bayfront's vice president of strategic planning.

"We will not change our commitment to the community."

Times researcher Natalie Watson contributed to this report. Letitia Stein can be reached at lstein@tampabay.com. Jodie Tillman can be reached at jtillman@tampabay.com.

Bayfront deal brings up questions of hospital charity care 10/27/12 [Last modified: Sunday, October 28, 2012 10:13pm]
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