County-owned hospital MetroHealth System revealed plans this morning for a new hospital campus along West 25th and promised it would not need an annual taxpayer subsidy to support services to the uninsured. ideastream health reporter Sarah Jane Tribble explains why hospital leaders are asking for a new hospital campus and what that means to Cuyahoga County taxpayers.
MetroHealth's leaders first publicly mentioned plans to tear down their iconic twin towers that rise over Interstate 71 during a county meeting more than two years ago.
The buildings, they said, are deteriorating and in need of more than $400 million in immediate repairs.
Flash forward to January 2014. Northeast Ohio was hit with a record-breaking polar vortex and MetroHealth's President and Chief Executive Dr. Akram Boutros was shocked by the weather's toll on the campus.
"I didn’t know how vulnerable these buildings were," said Boutros, who was hired in May 2013.
“For four days, we had to deal with flooding in 200 rooms, entire administrative and research buildings and twice, I had to make the decision whether we were going to completely evacuate the hospital,” Boutros said.
The hospital was not evacuated and no patients were hurt during the system's emergency. But the crisis revealed an urgent need to upgrade the buildings, says Boutros.
And Boutros – along with others in the community – says the system is more financial secure than it was two years ago, when MetroHealth's leaders faced public scrutiny over its finances and leadership.
County Councilman Mike Gallagher, who was once critical over severance packages the taxpayer-supported hospital paid out, said the difference between now and then is “night a day.”
A profitable system
MetroHealth reported a nearly $19 million net income for 2013. And while the system expected to lose money in the first three months of 2014, it, instead, made a $4 million profit. Boutros credited an efficient staff and two other significant financial strategy changes for increasing financial stability:
First, the system renegotiated payments from private insurance companies, which Boutros said were much lower than what was paid to other health systems in the Cleveland market.
"It was done very quietly but it was a substantial change in what we used to get paid. We were paid significantly under market for many, many years," he told ideastream during an interview before today's announcement. "That seemed highly unfair to me and we took very bold measures to renegotiate the contracts...the money doesn't have to come from taxpayers anymore, we are getting paid appropriately by taxpayers."
Second, Boutros said the expansion of Medicaid under the Affordable Care Act means the health system is now being paid to provide care to thousands of patients who were previously not paying. MetroHealth used a special waiver to expand Medicaid coverage to the poor in 2013 -- a year before the state expanded under federal reform. One sign that that is paying off can be found the financial charts provided to the board: MetroHealth spent more than $130 million in uncompensated care in 2012 as compared with just over $80 million in 2013, according to the charts.
There are other signs of success as well. The health system reported more than 1 million outpatient visits across the system last year, up 16 percent above the previous year. Driving that increase were more patients going to established community health centers like those in the Buckeye and Broadway neighborhoods of Cleveland. But the increase is, in part, also because of a strategy to build new community clinics like the one that opened in Middleburg Heights last year.
In addition, Boutros said the health system is still hiring after adding 200 employees in 2013, bringing the staff to nearly 6,400.
And, finally, the health system's cash reserves -- a key operational savings account that other public hospitals have built up before asking taxpayers for money -- is at $370 million.
Subsidy free by 2016
Boutros said the hospital's financial operations are so sound that by 2016, it will no longer need the county’s annual $36 million subsidy to pay for patient care. And on Friday, Boutros said MetroHealth's goal is to build the new campus "without asking for additional tax dollars."
“We are committed to being subsidy free from operations by 2016," Boutros said. "We will no longer require the subsidy from the county for us to care for patients. Now we would love for them to be able to participate in helping us build the new facility but we’re going to be operationally sound and self-sustaining by 2016.”
Boutros says the hospital will forgo the annual taxpayer subsidy after 2016 "irrespective of what happens" with the capital funding for the new campus.
"We know that funding will require monies from kind of our own steam...we know we need civic, philanthropic and business organizations to participate with us and we know that we'll probably have some public support," Boutros said. "How much that is and what the percentages are and how much money we need, we frankly don't even know what the total costs of the project will be because we don't know what the total project will be."
A new hospital campus has been estimated to cost up to $500 million. MetroHealth’s Board Chair Tom McDonald said the costs would be "a little bit bigger."
"We know that asking the taxpayers to do more is a stretch," McDonald said. "We believe that we are a tremendous asset for this community and for the county. And there’s no question that we’re going to need help in getting this done. But we’re going to do it in the most palatable way possible and remembering that we have to be good citizens.”
Leaders hope to have a cost estimate and blue-prints available late this year or early next.
A hospital "for the people"
The proposed plan for a new hospital is still vague, said Boutros. He presented a general sketch to the public Friday morning with pictures of community-friendly places on hospitals campuses across the country. The idea, he said, is to tear down the walls of the hospital and create a campus that is part of a bigger West 25th Street neighborhood where people gather in the park to do yoga, take their kids to a playground or walk to get lunch at nearby restaurants.
"We have a kind of a possible vision," said Boutros talking about the sketch. "We actually call this "What’s possible." And we’ve taken things from Ohio City, real pictures from Ohio City from New York City from Florida from all things, all different places. And put them together."
Boutros said the residents of Northeast Ohio will be asked to comment on plans through social media platforms as well as meeting. The idea, he said, is to ignite a conversation that will help develop a final blue print within months.
"This is about designing a project that's going to be a health care system that is for the people, designed by the people of Cuyahoga County," Boutros said.