THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, April 10, 1996 TAG: 9604100004
SECTION: FRONT PAGE: A12 EDITION: FINAL
TYPE: Another View
SOURCE: By PAUL M. BOYNTON
LENGTH: Medium: 82 lines
Columbia-HCA, the largest for-profit hospital-management enterprise in the United States and not-for-profit Riverside Health System Inc. on the Peninsula are discussing a possible affiliation. Whatever the outcome of these talks, Hampton Roads residents need to know several things:
The Eastern Virginia health-planning region has 22 community hospitals, including all four Riverside hospitals, but none of them are for-profit, though most of them have been quite ``profitable.''
Indeed, in fiscal-year 1993 Riverside Regional Medical Center reported a margin of about $31 million and that was 18.7 percent of net revenue and triple its FY92 profit of about $10.4 million. (All four Riverside hospitals were within the top eight in terms of profits as a percent of net revenues.)
That profit performance made RRMC the most-profitable of the 22 Eastern Virginia hospitals - and, in fact, the most-profitable hospital in Virginia - and that performance also occurred with RRMC having about 63 percent of its inpatient days being Medicaid (15.6 percent) and Medicare (47.2 percent) while overall occupancy was about 55 percent.
Further, Eastern Virginia has three multi-hospital chains (Riverside, Tidewater Health Care, Sentara) and all three of those chains have the virtue of being both regional (serving only Eastern Virginia) and nonprofit. In FY93, Riverside reported consolidated profits of $45 million, almost twice the $23.8 million Sentara reported.
Is it any wonder then that the Riverside system would become a potential target for Columbia-HCA and others? However, what the Peninsula community and the Riverside board need to ask themselves is: ``Given Riverside's economic performance, why should the Peninsula community give up that resource and potentially allow profits made in Virginia to flow to Tennessee to be used for such things as offsetting losses elsewhere in the system; buying new facilities, physician practices and insurance products; and, of course, paying stockholders?'' In other words, what real benefits would accrue to the Peninsula community by a Columbia-HCA affiliation which the Riverside system does not provide to the community now?
Historically, nonprofit, tax-exempt status for community hospitals has been justified by their pursuing the major public-interest goal of delivering high-quality care at the lowest possible price. Nonprofits have not had to pursue a second goal of increasing profits in order to pay stock dividends and increase stock value. Providers of health care do not need such additional pressure, which can readily result in lower staffing levels and reduced patient care, rationing of care to all patients and narrowing access by the poor and uninsured to needed care.
That issue of charity care and maintaining access to care for the uninsured is important since the number of uninsured and Medicaid patients will continue to grow. Riverside has had a good record in that regard, and for FY93 RRMC exceeded both regional and statewide ratios of Medicaid days to total inpatient days. Yet patient dumping must always be of concern, and dumping does occur. Obviously, hospitals not pressured to increase profits to reward stockholders have fewer incentives to dump patients, and hospitals with local community-based boards like Riverside's can potentially be more sensitive and more rapidly responsive to any dumping issues which arise.
Notably, an analysis of 728,477 final inpatient bills for 1994 for community- and investor-owned hospitals in Virginia concluded that: (a) investor-owned hospitals were on average 33 percent more expensive on a charge basis than community-owned hospitals; (b) community-owned hospitals provided higher than expected volumes of inpatient care for Medicaid patients; and (c) community-owned hospitals provided greater than expected shares of high-cost/low-reimbursement essential care, e.g., multiple trauma, burn care and high-risk obstetrics.
Those findings are instructive, especially when it it noted that Virginia's ``Golden Crescent'' runs from Northern Virginia through Richmond to Hampton Roads, and Columbia-HCA already owns or is affiliated with several community hospitals in the Richmond and Northern Virginia areas. All that Columbia-HCA has in Eastern Virginia is one psychiatric hospital, but affiliation with Riverside would give it one rehabilitation and three acute-care hospitals, consistent with the major presence it seeks in every major-medical market in America. The Riverside board faces a fateful choice. MEMO: Paul Boynton is executive director of Eastern Virginia Health Systems
Agency Inc.
by CNB