This was a predictable scenario even before the St. Petersburg City Council approved the 2013 sale of the nonprofit Bayfront Medical Center to a for-profit hospital chain: City approves sale of hospital and accepts promises of continued charity care without specifics. Three years and another sale to a larger hospital chain later, Bayfront's profits are up and its charity care is down. Surprise, surprise.
There is a reason for-profit hospital chains are called for-profit. Their first priority is to make money and please their shareholders. That's why the for-profit hospital chain that bought Bayfront in 2013, Health Management Associates, was gobbled up by the larger Community Health Systems within a year of the hospital's sale. And that's why the renamed Bayfront Health's operating margins have improved from a loss of more than 6 percent as a nonprofit in 2012 to a profit of more than 10 percent in 2014. The goal is to make money, and it's no wonder profits went up as charity care went down.
As Tampa Bay Times staff writer Kathleen McGrory reported Sunday, Bayfront's charity care dropped from $63 million in 2012 — its last year as a nonprofit hospital — to $51 million in 2014. Or described as a percentage of the hospital's business, charity care dropped from 5.1 percent to 3.2 percent in the same time period. That was not the trend line St. Petersburg residents or city officials wanted when the hospital was sold three years ago, and City Hall should be asking some hard questions.
Bayfront was a beloved community asset with a long history as a locally owned nonprofit hospital and a strong commitment to charity care. To be sure, it faced tough headwinds as the last independent hospital in Pinellas County and did not have the financial resources to reinvest in the facility. Now its debt has been retired and a nonprofit with a 20 percent stake in the hospital is starting to award millions in grants to community groups to improve wellness. As a for-profit, some $60 million has been invested in significant upgrades — and that sounds on pace for the $100 million in capital investment over five years that was promised in 2013. The hospital also benefits from being the hub of a seven-hospital system and from economies of scale.
But all of this has come with a significant reduction in charity care that does not reflect the spirit of the agreement blessed by the City Council. The council had to approve the sale because the hospital is partially on city-owned land, and in the new lease HMA agreed to keep treating all patients with incomes below 200 percent of the federal poverty level. But the lease did not include a specific minimum amount of charity care, a shortcoming that was pointed out at the time. Now that oversight is being exploited and undermining a commitment that was key to giving up on fighting to preserve a locally owned, nonprofit hospital.
The experience at Bayfront Health is a cautionary tale for the region and the state. Tampa General, a bigger locally owned nonprofit, faces its own financial pressures and is often eyed by for-profit suitors that do not make charity care a top priority. Gov. Rick Scott, who made millions as the CEO of the nation's largest hospital chain, is no fan of public hospitals. He has been meddling with the North Broward Hospital District, which has a budget of more than $1.5 billion and collects property taxes to run a system of public hospitals. The governor's commission on hospitals just happened to ask pointed financial questions as the nonprofit hospitals unsuccessfully campaigned for the state to accept federal Medicaid expansion money.
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For-profit owners have brought significant improvements in facilities and substantial profits to Bayfront. But those changes have come at a significant cost to the hospital's historical mission, and the demand for charity care in St. Petersburg has not gone away. The burden of caring for those who cannot afford to pay has just been redistributed.