The St. Petersburg City Council is expected to decide within weeks whether to approve a new lease that allows the nonprofit Bayfront Medical Center to partner with the for-profit hospital chain Health Management Associates. Before they vote, council members should review other deals between nonprofit and profit-making hospitals that have gone sour. Those experiences should raise more red flags and skepticism about what is on the table in St. Petersburg.
Bayfront says it cannot continue to operate much longer as a stand-alone hospital in a health care environment where hospitals have to band together to reap economies of scale. The hospital says it operates at razor-thin margins. But is the deal offered by Naples-based HMA the best one for Bayfront and the community that relies on it for high-quality care for the poor? That's not at all clear.
Before making a decision that gives up a public asset for 50 years, council members should examine disputes that have erupted between another large for-profit hospital chain, HCA, and communities where it took over nonprofit hospitals. In Kansas City, Mo., a judge recently ordered HCA to pay $162 million after determining that it failed to fulfill its agreement to invest hundreds of millions of dollars in capital improvements in a group of community hospitals it acquired in 2003. The judge also expressed doubts about HCA's charity care expenditures and ordered a forensic accountant to examine the books. Reports indicated a drop in charity care at the system's large inner-city hospital.
In another case from 2011, HCA beat back an attempt by community leaders in New Hampshire to regain control of Portsmouth Regional Hospital after a judge ruled in favor of the for-profit hospital chain. A former hospital official testified that he had trouble getting HCA to pay for critical equipment and facility upgrades.
HCA called these cases rare exceptions, but they provide a glimpse into what can go wrong when a private business seeking to maximize profits is asked to fill a public service role.
City Council members should keep in mind that compared with Bayfront, most of HMA's Florida hospitals provide low levels of charity care. HMA justifies this by taking credit for treating patients covered by Medicaid. But Medicaid patients, while poor, have government health insurance. They are not charity cases, and the fact that HMA wants to get some kind of credit for treating this population is troubling.
This comes on top of HMA's other issues, including a federal investigation into the medical necessity of emergency room tests and patient admissions, and a 60 Minutes expose that featured former employees alleging that doctors at hospitals outside Florida were pressured to admit patients to increase revenues, which HMA denies. Wall Street analyst Sheryl Skolnick has a "sell" rating on HMA stock because its hospitals have a disproportionately high rate of short-stay admissions for its Medicare population.
The City Council is expected to discuss the deal in a coming workshop, and a vote on a new lease would come soon after that. Bayfront officials are eager to get this done, but the timetable feels rushed. Details of the arrangement are still too vague and opaque, and the questions surrounding the way HMA does business remain concerning.