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BayCare hospital deal under scrutiny

Anxiety has arisen over who's calling the shots and what's in store for the health network.

Bayfront Medical Center and St. Anthony's Hospital, two of the leading health care centers in south Pinellas County, are in a state of financial and political turmoil.

+ The hospitals are losing about $1-million a month.

+ Hundreds of workers, including a former Bayfront Employee of the Year and scores of veteran nurses, have been fired. Another 10 percent of the workforce will be cut, bringing total job cuts to 500 by the end of the year.

+ Some local doctors say patient care may be suffering. In one case, a 92-year-old woman waited 15 hours at Bayfront before receiving prescribed medications.

+ Bayfront, which has linked its fortunes with Catholic hospitals, is now restricting abortions.

Just two years ago, Bayfront and St. Anthony's joined a network of 10 hospitals, called BayCare Health System Inc., hailing the move as the only way independents could survive against for-profit chains.

As the deal has played out, it is proving to be more complicated than many realized. Bayfront, which sits on public property rented for $10 a year, has ceded control to more powerful partners. Now many people question if Bayfront and the community really understood the bargain.

"The whole situation is a mess," said Jeanne Malchon, a former state senator who worked closely with the two hospitals while she was in office for a decade. "The whole idea of BayCare was to provide better service less expensively. Now there's no competition and no one seems to know what's going on. This is certainly not in the public's best interest."

Even Bayfront's chief of staff acknowledges "great uneasiness" among doctors. "There's a great deal of concern about how this is going to impact the patients and the quality of care," said Dr. Luis Botero.

As pressure mounts, Bayfront-St. Anthony's officials are scrambling to visit city and community leaders to answer questions.

"We're looking at the protection and survival of our mission of community service," said Sue Brody, president of Bayfront-St. Anthony's Health System. "It's a tough time in health care everywhere."

+ + +

BayCare was formed in July 1997 by four non-profit organizations controlling 10 hospitals: Morton Plant Mease, Franciscan Sisters of Allegany Health System (which owned St. Joseph's and St. Anthony's), Bayfront and South Florida Baptist.

The idea behind the 50-year pact was to centralize expensive services, such as purchasing, information services and accounting. The hospitals would be clustered geographically and operated by three local boards. That's how Bayfront and St. Anthony's joined forces.

A letter of intent signed by the members assigned ownership in BayCare according to each participant's earnings. That made Morton Plant Mease and the Catholic hospitals the big players.

Proof of their financial clout: In 1998, only St. Joseph's and Morton Plant Mease hospitals made money, with the rest of BayCare's hospitals operating at a loss. Morton Plant Hospital in Clearwater posted $41.8-million earnings, a sum envied by even its for-profit competitors.

Each member retained its assets and liabilities. But under terms of the agreement, the hospitals agreed to share their combined cash flow.

One important exemption: Hospital foundations were kept out of the pot. That's no small item. Morton Plant Mease has $66.5-million in its foundation and handed out $7.4-million to hospital programs last year. Bayfront's foundation, meanwhile, totals just $2.7-million.

Under BayCare, Morton Plant Mease and the Catholics were each given eight seats on the regional board. Bayfront got four; South Baptist, a 147-bed hospital in Plant City, got just two.

The letter of intent made it clear who had ultimate authority: the BayCare board. Frank V. Murphy, who had run Morton Plant Mease hospitals in north Pinellas County, was elected unanimously as BayCare president.

A 52-year-old father of seven children, Murphy once studied for the priesthood. As the owners culled through top managers, he was the only one who didn't have to interview for his job.

Murphy then nominated the presidents of the three geographic hospital groups, which were approved by the three hospital boards. They are Brody in south Pinellas, Phil Beauchamp at Morton Plant Mease, and Isaac Mallah at St. Joseph's/Baptist.

Here's how the BayCare letter of intent spelled out the division of power: Local boards have sole authority over medical staff credentials and doctor privileges. The local boards also prepare budgets, plans and policies, but those require BayCare's approval. In the network's first two years, Brody said, the BayCare board has not changed or rejected Bayfront-St. Anthony's budget.

Few of the details of the BayCare agreement were available to the public when the network was formed two years ago and many still are not known. BayCare officials refuse to release a copy of the joint operating agreement, saying it is a private document. Only the letter of intent, which preceded the final agreement, has become public.

Indeed, a BayCare spokeswoman won't even disclose who sits on the BayCare board, citing a policy to protect their privacy. Board members are reconsidering that policy.

State records list the following BayCare officers: chairman George Catonis, owner of Acme Sponge & Chamois Co. in Tarpon Springs; vice chairman George Rahdert, a St. Petersburg lawyer who represents the Times on First Amendment issues; treasurer Alan Bomstein, owner of Creative Contractors in Clearwater. Murphy is president.

Murphy was on vacation last week and was not available for comment. Rahdert referred questions about other board members to Catonis, who did not return a phone call. Bomstein could not be reached.

+ + +

When Brody discussed the BayCare proposal with the St. Petersburg City Council in 1997, she presented a bleak picture of Bayfront's future if the deal didn't go through.

Local, non-profit hospitals were under siege. Medicare cuts were looming. For-profit chains like Columbia were snatching up hospitals.

"We could see the handwriting on the wall," said John Welch, a Bayfront-St. Anthony's board member. "Reimbursement was getting less, managed care and HMO organizations were going to dominate. We thought, "Before it gets to the point where it sinks all of us individually . . . we are going to hang together as dadgum best we can, as long as we can.' "

Unlike other Florida counties, Pinellas does not designate tax money to subsidize hospitals for charity care. Bayfront, surrounded by poor neighborhoods, treats thousands of uninsured patients.

City leaders did raise some concerns about maintaining access to a hospital subsidized by St. Petersburg with its $10 lease.

The city has helped fund hospitals at the Bayfront site since the early 1900s. In 1968, city-owned Mound Park Hospital was turned over to a private board. But the city kept the right to okay any charter changes.

When BayCare was proposed, the City Council insisted that Bayfront amend its lease to reaffirm its commitment to indigent care and a doctors' residency program.

City leaders did not realize that, two years later, BayCare would bring serious changes to Bayfront, including staff cuts and restricted abortions.

Now Brody stresses that very few women have been affected by Bayfront's policy change because most abortions take place elsewhere. But she has not allayed fears that Catholic doctrine has begun to permeate a public institution.

During the formation of BayCare, the Catholic hospitals insisted that no hospital in the network violate two of the church's core beliefs _ no euthanasia and no "elective" abortions.

Bayfront didn't challenge that, said Dr. Beth Benson, then head of Bayfront's Department of Obstetrics and Gynecology. Bayfront didn't help people die, nor did Bayfront representatives think they were performing any "elective" abortions.

"To us, elective abortion is not a chromosome abnormality," Benson said. Elective meant "someone under 12 weeks who didn't want to be pregnant," and those types of abortions typically take place in a clinic or doctor's office.

About six months after the BayCare deal was signed, however, guidelines came down from Sister Pat Shirley, a nun associated with St. Anthony's and St. Joseph's hospitals who became BayCare's vice president for ethics.

The guidelines allowed "medically necessary" abortions, generally defined as situations where a mother's life was in danger or a defective fetus that would not live long after birth. A special review committee, headed by Sister Pat, would decide on a case-by-case basis which patients qualified for "medically necessary" abortions.

Doctors were told not to abort fetuses with Down's syndrome, a genetic defect that causes retardation and medical complications, Benson said. The condition is rare, but more common with older mothers.

Women typically discover the condition about 16 weeks or so into the pregnancy. One common method of ending the pregnancy requires hospitalization.

In the past, about 5 to 10 women a year had Down's syndrome abortions in Bayfront, without consulting anyone but their doctor, Benson said. Now, those women are told to go to another hospital or clinic. In some cases, they also have to switch doctors because their caregiver only practices at Bayfront.

Some obstetricians were upset to discover that the "elective abortion" restriction would apply to Down's patients, Benson said. But by then, the BayCare deal had already been signed.

Bayfront officials gave assurances that patients sent elsewhere would not lose their insurance coverage. But doctors were still galled by the idea that patient care is governed by religious doctrine.

If the hospital portrays itself as a full-service facility, Benson said "then you take care of women."

The Catholic hospitals did not push for other policy changes, Murphy said in an interview in July. For example, Catholic hospitals do not perform sterilizations, but they did not request Bayfront to halt tubal ligations or vasectomies.

+ + +

Bayfront and St. Anthony's cutbacks are making the hospitals more efficient, Brody said. When the obstetrics unit at St. Anthony's was closed, for example, many of those nurses shifted to Bayfront to fill vacancies. Other employees will get new jobs within the network.

Still, the cuts have been deepas the hospitals try to stop losses of $1-million a month. Bayfront's chief operating officer was fired. About 240 jobs have been eliminated in the past year and another 240 will be gone by January. The board has even discussed whether south Pinellas County can support two non-profit hospitals.

"If Bayfront were not part of BayCare, the situation would be far more difficult than it is today," said board member Rahdert. "BayCare has resulted in extremely significant cost savings for all its members. The problem is, we haven't been able to save costs as rapidly as revenues have been declining."

Bottom-line data offers dramatic evidence that the BayCare concept is financially successful for the whole network. Revenues at the hospitals are dropping, reflecting lower reimbursements and fewer patients, but the net income is growing.

In 1998, the first full year of BayCare, revenues dropped to $887.2-million, from $1.1-billion. But the collective surplus rose to $42.7-million, up from $25-million in 1997.

+ + +

Local leaders still worry that they don't have a clear picture of what's going on at BayCare.

"It's obvious the facilities were not candid, especially with the city of St. Petersburg," said Mary Brennan, who served on several health-care committees during her eight years as state representative. "We knew in BayCare that everybody would be giving something up. We just didn't think it had to be at the expense of the rights of women."

City Council members have ordered St. Petersburg's attorney to see if Bayfront's lease with the city has been violated. And on Friday, Mayor David Fischer told Brody that religious doctrine must not play a role in medical decisions at Bayfront. Brody and Murphy are scheduled to attend an Aug. 24 City Council meeting.

Gordon Campbell, Mercantile Bank chairman and a former Bayfront board member, said he worries that the south Pinellas hospitals will be penalized in any network because they carry the burden of charity care and, as a result, may lose money.

"A hospital should be judged by the patient care it gives, not the profit it makes."

Campbell believes that BayCare is a good idea, if it allows the stronger to help the weaker hospitals survive. "St. Petersburg's hospitals are never going to be as profitable if you measure them on the same terms as Mease, St. Joe's and Morton Plant," he said.

Brody declines to say whether BayCare is underwriting the less profitable hospitals, but insists care is not being compromised by cuts at Bayfront and St. Anthony's.

The hospitals measure cost and staffing per case. By those measures, Brody said, "We are not going below what other hospitals in our system provide."

Dr. Gigi LeFebvre disagrees. As a local family practice doctor who trained at Bayfront, she said that in May _ before this round of cuts _ she filed formal complaints with the hospital about the care given to two elderly patients who didn't receive timely treatment.

In one case, a woman admitted for shortness of breath did not get a chest X-ray until 27 hours after it was ordered. In the second, a 92-year-old woman who was admitted at 2 a.m. did not receive ordered medications until 5 p.m., LeFebvre said.

Brody said she couldn't comment because she did not know the details of individual cases. Feedback from "patient satisfaction scores" shows continued improvement, she said.

But LeFebvre said understaffing is a problem.

"That day there were two nurses on the unit with 24 patients," LeFebvre said. "That gives each nurse about five minutes per patient. It's horrible."

_ Times staff writer Kelly Ryan contributed to this report.



What it is: Network of eight local hospitals

Headquarters: Clearwater

President and chief executive: Frank Murphy

Employees: 16,000

Beds: 3,170

Physicians: 3,500


1998: $887.2-million

1997: $1.1-billion


1998: $42.7-million

1997: $25.0-million

BayCare Health System structure

BayCare Health System Inc.

Frank Murphy, president and chief executive officer.

1997 base salary: $554,144

Bayfront/St. Anthony's Health Care

Sue Brody, president.

1997 base salary: $323,281

Morton Plant Mease Health Care

Phil Beauchamp, president.

1997 base salary: $393,164

St. Joseph's/Baptist Health System

Isaac Mallah, president.

1997 base salary: $304,270

Source: BayCare Health Systems Inc.

Members of BayCare Health Systems Inc.

Total revenues and surpluses at BayCare member hospitals, preliminary 1998 figures. Surpluses include investment earnings.

Bayfront Medical Center

Total revenue: $144.5-million

Surplus (Deficit): ($5.2-million)

St. Anthony's Hospital

Total revenue: $78.6-million

Surplus (Deficit): ($10-million)+

Mease hospitals:

- Mease Dunedin

- Mease Countryside

Total revenue: $116.4-million

Surplus (Deficit): ($16.6-million)

Morton Plant Hospital

Total revenue: $198.3-million

Surplus (Deficit): ($41.8-million)

North Bay Medical Center

Total revenue: $18.4-million

Surplus (Deficit): ($3.9-million)

St. Joseph's hospitals

- St. Joseph's hospitals

- St. Joseph's Women's Hospital

- Tampa Children's Hospital)

Total revenue: $295.4-million

Surplus (Deficit): ($3.8-million)++

South Florida Baptist Hospital

Total revenue: $35.6-million

Surplus Deficit: ($410,070)

+ Includes extraordinary loss of $5.9-million due to refinancing of debt.

++ Includes $20.8-million in one-time charge for bond refinancing.

Source: Florida Agency for Health Care Administration

Members of BayCare Health System Inc.

Bayfront Medical Center

701 Sixth St. S., St. Petersburg

502 beds

St. Anthony's Hospital

1200 Seventh Ave. N., St. Petersburg

421 beds

Mease hospitals

- Mease Dunedin

601 Main St., Dunedin

234 beds

- Mease Countryside

3231 McMullen-Booth Road, Safety Harbor

144 beds

Morton Plant Hospital

323 Jeffords St., Clearwater

717 beds

North Bay Medical Center

660 Madison St., New Port Richey

122 beds

St. Joseph's hospitals

883 beds

- St. Joseph's Hospital

3001 W Martin Luther King Blvd., Tampa

- St. Joseph's Women's

3030 W Martin Luther King Blvd., Tampa

- Tampa Children's

3001 W Martin Luther King Blvd., Tampa

South Florida Baptist Hospital

301 N Alexander St., Plant City

147 beds