A Times Editorial

Editorial: More answers on Bayfront deal needed

A for-profit hospital chain says it will invest hundreds of millions of dollars in St. Petersburg’s Bayfront Medical Center in exchange for 80 percent ownership while maintaining local control.

Melissa Lyttle | Times (2011)

A for-profit hospital chain says it will invest hundreds of millions of dollars in St. Petersburg’s Bayfront Medical Center in exchange for 80 percent ownership while maintaining local control.

Bayfront Medical Center in St. Petersburg is a treasured community asset with a rich history as a locally owned nonprofit hospital and a strong commitment to charity care. But in the fast-changing health care economy, the last independent hospital in Pinellas County may not remain financially viable much longer. The for-profit hospital chain Health Management Associates says it will invest hundreds of millions of dollars in the facility in exchange for 80 percent ownership while maintaining local control. That sounds attractive, but the St. Petersburg City Council needs more specifics in writing before it can make an informed decision today about agreeing to a new lease on the city-owned land where Bayfront sits.

Many aspects of the deal between Bayfront and HMA are enticing, including paying off Bayfront's debt and creating a new nonprofit foundation with perhaps $150 million. But the lack of specifics in publicly available documents is concerning. Of the two contracts that detail the terms of the arrangement, only the proposed new lease between Bayfront and the city is public. Hospital officials will not release the contractual agreement between Bayfront and HMA. That means the City Council and St. Petersburg residents would have to take the word of the principals about how the partnership will operate, its governance structure and the details of the promised investment of $100 million for capital improvements in the hospital over the next five years. That money sweetens the deal and comes on top of the $202 million purchase price.

Bayfront president and CEO Sue Brody and HMA senior vice president Alan Levine told the Times editorial board this week that the $100 million capital investment will be added to the lease with the city, which is an excellent first step. Levine says the contractual agreement cannot be made public because it contains proprietary information that would hurt HMA's competitiveness if publicly released. But there are other options, including releasing relevant portions of that agreement, adding more details to the lease, or drafting an addition to the lease.

Governance

The proposed lease with the city says 60 percent of the hospital's Board of Trustees will be St. Petersburg residents. The idea is to retain community involvement. But above the local trustee board are multiple layers of boards representing both Bayfront and HMA. Levine and Brody have explained the organizational structure, but the details are contained in the contractual agreement that is not publicly available. So is the manner by which the local trustees are to be appointed.

The City Council is asked to redo a lease for a nonprofit hospital chartered to provide charitable and social services that will become a for-profit hospital whose majority owner will be a for-profit hospital chain whose chief legal obligation is to make money for its stockholders. Why should City Council members bless this shotgun marriage without having all of the promises spelled out in the lease or at least seeing the relevant provisions of the contractual agreement?

Charity care

The lease does not adequately ensure that St. Petersburg's safety net hospital will maintain at least current levels of charity care. Compared with Bayfront, most of HMA's Florida hospitals appear to provide lower levels of charity care. Levine insists that's not true and says HMA's hospitals provide charity care that isn't counted in government filings. His verbal promises of HMA's generosity would be more reassuring if they were in writing with similar certainty.

The lease incorporates Bayfront's current charity care policy to define who qualifies: people whose incomes are under 200 percent of the federal poverty line and who don't qualify for other government medical programs like Medicaid. Bayfront and HMA officials say that is a strong commitment, but without set minimums the policy could be difficult to enforce. The issue is one of trust: Will HMA, a for-profit hospital chain in the business of increasing profit margins, be as charitable as a locally run nonprofit hospital over the long term?

Council member Steve Kornell is right when he says he won't support the lease without specific charity care protections included. Last year Bayfront spent $8.9 million on charity care to the uninsured, according to Bob Thornton, Bayfront's executive vice president and CFO. The lease or some additional written agreement should at least use that as a minimum and index it to medical inflation.

Trauma center

The commitment to maintain Bayfront's Level II trauma center, an essential feature of its service to the community, is another concern. The proposed lease leaves it to the hospital to use "all reasonable efforts" to maintain that trauma center, and Bayfront officials are comfortable with that language. But the wording could be more specific to better commit the hospital to at least the same level of trauma center it has now, even if terminology and trauma center designations change in the future.

Federal inquiry

There also remains a cloud over HMA that has not been lifted. The company is under federal investigation for the medical necessity of patient admissions, an allegation that HMA rejects. But a 60 Minutes report featured former employees of its hospitals outside Florida who said there was pressure to admit patients to increase revenues. This is the company that wants a lease with the city for 50 years with two 10-year renewals. Levine strongly defends HMA, and Bayfront officials say they have vetted the corporation and satisfied their concerns. But there is more of a leap of faith here than is comfortable for such a long-term relationship.

It appears clear that Bayfront Medical Center needs more money to remain competitive. The HMA deal would make Bayfront the hub of a regional network of hospitals, presumably bringing more patients and revenue. But City Council members should not be rushed into a decision that could have a profound effect on the quality and availability of health care in St. Petersburg and the area for decades. The publicly available written guarantees of this transformation into a for-profit hospital should be just as strong as the verbal reassurances by Bayfront and HMA officials who negotiated the sale. Now is the time to fully understand and see in writing all of the details of this arrangement to ensure Bayfront's legacy and commitment to the community is as secure as possible.

After the City Council approves the lease, it will be too late.

Editorial: More answers on Bayfront deal needed 02/20/13 [Last modified: Wednesday, February 20, 2013 6:12pm]

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