Saving D.C. General Hospital Part 3

V. RENEWING D.C. GENERAL HOSPITAL IS THE ONLY SAFE CHOICE, DESPITE THE DIFFICULTIES IN DOING SO Three choices are before us are to: • • • close D.C. General Hospital convert D.C. General Hospital into a Community Access Hospital renew D.C. General Hospital As shown in Section II, closing D.C. General Hospital is not safe. As shown in Section IV, the Community Access Hospital scheme is not feasible and constitutes a reckless experiment. When the impossible choices are eliminated, the choice that remains is what must be done, however difficult it may appear. And whatever obstacles now stand in the way of renewing the hospital must be overcome through a combination of tough negotiation, intelligent program design, adequate transitional financing, and good hospital management. The alternative to renewing D.C. General Hospital, in my judgment, will be a forced closing that will threaten health care for many District residents who depend on D.C. General Hospital and who are vulnerable to deprivation of needed services. The closing would affect hospital care throughout the District—for all residents of the District. To avert this potential public health disaster, all stakeholders must commit themselves to renewing the hospital and then work together to accomplish that renewal. Otherwise, patients in need of care will suffer substantial harm. Political dangers would accompany the health care dangers. If D.C. General were to close early in 2001, it would embarrass the District’s government. It will present a difficult political problem to the new president. This embarrassment and this political problem will not be masked by finger pointing, or by contending that the hospital was too far gone to be saved. Prompt action now can and will renew D.C. General Hospital. - 25 - VI. A STRATEGIC PLAN TO RENEW AND REFORM D.C. GENERAL HOSPITAL To begin, eight over-arching strategic steps should be taken to renew and reform D.C. General Hospital. 1. Immediately abandon speculative, unproven, or imaginary solutions, such as a Community Access Hospital, which have not been demonstrated to work effectively or efficiently in cities. 2. Treat the threat to the hospital’s survival as the public health emergency it is. Secure all stakeholders’ commitment that D.C. General Hospital should, can, and will be renewed as a first-class hospital for first-class patients. Secure their commitment that everything necessary to attain that goal will be done. Appreciate that as much as three years will be needed. 3. Go the distance. Return to the course originally charted in the first and second Cambio reports to the PBC. Those reports, which rested on the current management team’s detailed analysis of the problems of the D.C. General Hospital, described eight sets of recommendations for renewing and reforming the hospital. While the job of validating or invalidating any specific recommendation offered by Cambio is beyond the scope of this report, they do appear reasonable, taken together. If some parties disagree with some aspects of the report, the sources of those disagreements need to be candidly addressed and an agreement struck. 4. Avoid playing a numbers game. The number of beds that D.C. General Hospital will set up and staff next month, next year, and next decade will depend on patients need for care and their willingness to seek care at D.C. General. This, in turn, will depend on such factors as insurance coverage, available of care at other institutions, and patient preference. But these are not now very predictable. Under conditions of uncertainty, contingency planning is necessary. Otherwise, money will be wasted or patients will be denied needed care. The hospital must therefore develop a flexible staffing plan, one that can efficiently respond to the needs of the patients the hospital should serve. As discussed shortly, in the section on physical condition, I recommend that the hospital defer building a new physical plant until the existing hospital is renewed and reformed. This will allow time to estimate future need, and it will allow patients to vote with their feet to be served at D.C. General Hospital—if the hospital is renewed and reformed. 5. Prepare a detailed reform plan. Writing a detailed reform plan is beyond the scope of this report. It is the job of the hospital’s administration—the people who will be charged with implementing it. The reform plan should build on the reports by Cambio and its consultants. 6. Set priority objectives. A great number of things must be done to renew the hospital—many more things than can be done at one time: lower costs, higher revenue, improved quality, a new physical plant. Some of these must be launched immediately; others—such as a new building—will probably have to wait until the hospital is renewed medically and financially. - 26 - 7. Recruit the best available public hospital administrator (CEO) in the nation, and grant wide latitude to this person. Pay enough to attract and retain that person. Many non-profit urban hospitals’ CEOs are paid from one-half million dollars to over one million dollars yearly. And their jobs are typically not as hard as the job of running a public hospital. Similarly, recruit the best available chief operating officer, chief financial officer, and director of nursing in the nation. Pay them enough as well. Fully integrate their efforts with those of the current Cambio management. Obtain consultation from experts in turning around troubled hospitals, particularly public hospitals. 8. Design and implement a plan to coordinate adequate primary care funding at the District’s clinics and health centers with the specialized ambulatory services, the inpatient care services, and the emergency room of a revitalized D.C. General Hospital. The Bureau of Primary Health Care’s review of the PBC’s health center program included a set of 20 specific recommendations to “improve operating efficiencies, expand its primary care base, expand related health services and improve the quality of care available to the District’s neediest citizens.”61 These recommendations rest on reviews of each health center’s operations. As a set, they appear reasonable and useful. Renewing and reforming D.C. General Hospital requires much more than taking these eight strategic steps. It requires a great deal of prolonged and hard work to address the four problems detailed in Section I of this report. • • • • Finances: cost (efficiency) and revenue Quality of care Physical condition Strategic and political assessment (availability of other hospitals; perceived greater need primary care, prevention, insurance; and administrative feasibility of reform) A. Finance By some reports, the hospital may have begun to turn the corner financially. • Cash is reported to be up by 150 percent from June to September. • The hospital is billing for most of its services, though this needs to be extended to newly-licensed clinics. • The “charge master” has been updated. 1. High costs must be cut in appropriate and realistic ways. Design and implement a staffing plan that is commensurate with actual patient volume and with patient need for high-quality care. This will require cooperation among all parties, and willingness to work for the good of the patients the hospital serves today— and those who will need it tomorrow. The staffing plan must be pursued in a way that promotes the highest-quality care. The decision about which employees will staff the renewed hospital will rest on competence, effectiveness, and dedication to good patient care. This has implications for quality of care as well as cost. - 27 - Protection for employees’ rights must be balanced fairly against the need to contain costs. All present protections were put in place to guard against real abuses. Today, the survival of the hospital will probably require overcoming both exploitation and barriers to appropriate staffing. Work rules, job descriptions, and other protections deserve scrutiny. If they raise costs unnecessarily, ways to guard against exploitation and to protect employees’ rights at lower cost need to be explored. Labor – management committees should take responsibility for negotiating this balance. That implies a cooperative style of management, one very different from the “us versus them” style that predominates at many hospitals. Goldsmith wrote that “frightened or angry people make awful partners in any new enterprise.” 62 They would not be good partners in the struggle to renew and reform D.C. General Hospital. Fear that D.C. General Hospital may close could frighten and infuriate, or it could motivate and energize. Careful negotiation of relationships between hospital workers and hospital management—and provision of adequate resources—will be vital to shift from fear and anger to motivation and energy. Assure a practical, workable nylon parachute for each employee who is laid off during the renewal process. At hospitals and other organizations, high-level executives routinely secure golden parachutes. Nothing like that is contemplated here. Rather, a full package of appropriate job training and placement services—along with severance pay commensurate with length of service—must be offered if any downsizing is to be acceptable. Carefully consider the role of D.C. General Hospital as a teaching hospital. This has both cost implications, discussed here, and quality implications, discussed in the next sub-section. Perhaps because resident physicians fill so many roles and work such long hours, the cost of replacing resident physicians appears to be substantially greater than the cost of retaining them. I have calculated that the gross financial cost could be as great as $17.6 million annually. This does not reflect offsetting savings from greater productivity of attending physicians, or from improved staffing. The results of this calculation are summarized in an appendix.63 2. Raising revenue. One way to raise revenue is to serve more patients in need of care. Serving more insured patients will typically generate revenue that exceeds the incremental cost of care for those patients. Serving more uninsured patients enhances the hospital’s legitimate claim on public dollars. Amidst all of the turmoil surrounding the hospital, it is reassuring to learn, as noted earlier, that the hospital’s annualized inpatient admissions for 2000 will be almost exactly equal to those for 1999 (59,600 expected for 2000 versus 59,782 for 1999).64 The hospital must secure all the revenue it deserves from all parties: Devote the dollars, training, and software to do whatever is necessary to bill to collect all the revenue the hospital deserves. - 28 - Ensure that all hospital services are licensed and all hospital-affiliated sites are licensed, so that no payor can deny legitimate claims for patient care. Calculate and secure an appropriate subsidy from the District government. 3. The hospital’s subsidy needs for the 2001, 2002, and 2003 fiscal years should be calculated and guaranteed. B. Quality Hospital management must make high-quality patient care the hospital’s first objective. Management needs the authority and the flexibility to attract and retain the workers who are dedicated to attaining this objective. Renewing the hospital may require as much as three years, but it will appear rapid and stressful to the dedicated employees who are working for renewal. Appropriate support, training, technical assistance, and counseling in professional growth must be provided. Pay all physicians, nurses, and other hospital employees enough money to attract and retain highly-qualified, dedicated, and productive professionals. All newly appointed physicians should be board-certified or board-eligible. Consider which physicians should be retained full-time, without competing commitments, and which should be retained part-time. Some full-time physicians might split their days between the hospital’s inpatient and ambulatory services, and a clinic or health center’s primary care service. If D.C. General is to remain a teaching hospital, its teaching programs must be strengthened, to ensure that it attracts ever-more-competent and -dedicated residents each year. The turmoil and uncertainty that today cloud the hospital’s future cannot be allowed to make it harder to attract good residents during the up-coming match between residents and hospitals. The hospital’s future must be clarified in time to attract good residents, and appropriate guarantees must be provided. Medical records of the hospital and of ambulatory care sites should be integrated to enhance coordination and continuity of care. - 29 - C. Physical condition 1. Capital planning. Undertake indispensable capital investments when needed, but consider big investments in physical reconfiguration or reconstruction only after the hospital is stabilized financially, medically, and politically. Prepare an affordable capital plan. A fully rebuilt D.C. General Hospital might seem vital to some—to enhance both quality and efficiency—but the high cost of rebuilding now might block the hospital’s medical renewal. A great number of things must be done—many more things than can be done at one time. The best should not be allowed to become the enemy of the good. Rebuilding should come later, not earlier—when its cost could defeat or undermine reform and renewal of patient care itself. This means trimming costs through improved management, through staffing that is appropriate to meet patient needs, and through other reforms. It means harvesting all the revenue to which the hospital is entitled. It means improving quality of care in existing buildings. Other countries have shown that superb medical care can be provided in old and even run-down physical facilities—especially when the attractive prospect of a new building awaits as one appropriate reward for renewal. 2. How many acute care beds should be operated? The CAH would have no ordinary acute care beds. Other proposals have contemplated building a new physical plant to house 110, 126, 140, 150, 165, 184, or more beds.65 It is useful to avoid a numbers game until the need for acute inpatient care at D.C. General can be measured carefully. That will not be possible until the hospital is renewed and reformed medically and financially. Only then will it be possible to meaningfully measure the hospital’s attractiveness to patients and doctors. This is a second reason to postpone construction of a new building. A third reason stems from uncertainty about the survival prospects of other hospitals in the District. 3. Options for acute bed operation Dr. Newton’s memos on “Possible Models for Consideration” of 27 September 2000 and 2 October 2000 considered five options and their consequences, as described by Dr. Newton: 110 staffed beds. This model, approved by the PBC board, would serve only as a transition to the CAH. • Inpatient pediatrics, substance abuse, OB, NICU, nurseries would be closed. - 30 - • • • • • • Adult medical-surgical beds and ICU would be cut. ER would be downsized by 15,000 try ER visits. Fully 20,000 patient-days would have to be provided at other hospitals, an average of 55 patients daily. 48,500 outpatient visits must be relocated, 33,500 to health centers and 15,000 to other hospitals Some 516 workers would be laid off. The two-year deficit would be $108.9 million 126 staffed beds • Inpatient pediatrics and substance abuse would be closed. • 30 adult medical-surgical beds would be closed. • 16,000 patient-days would have to be provided at other hospitals, an average of 44 patients daily. • 28,500 outpatient visits must be relocated to health centers • Some 300 workers would be laid off. • The two-year deficit would be $114.1 million. 140 staffed beds • Inpatient OB, nursery, NICU, and substance abuse would be closed. • 8,700 patient days would have to be provided at other hospitals, an average of 24 daily • 28,500 outpatient visits must be relocated to health centers • Some 380 workers would be laid off. • The two-year deficit would be $98.6 million. 150 staffed beds • Substance abuse care would be eliminated. • 5,500 patient-days would have to be provided at other hospitals, an average of 15 patients daily. • 28,500 outpatient visits must be relocated to health centers • Some 270 workers would be laid off. • The two-year deficit would be $89.6 million. 184 staffed beds (165 staffed beds excluding bassinets) • No services would be eliminated. • Some 240 workers would be laid off. • 28,500 outpatient visits must be relocated to health centers. • The two-year deficit would be $79.5 million. Discussion of the current numbers game Dr. Newton’s memos state that 165 beds are staffed currently, or 184 including the 19 bassinets. (For clarity and convenience, all future discussion will not count the bassinets as “beds.”) - 31 - A reasonable occupancy rate It does not seem possible, though, that only 165 beds are being and have been staffed this year on an average day. Average daily census will be lower during warm weather but it typically rises during the winter. If the hospital generates some 59,600 total discharges during calendar year 2000, as calculated earlier,66 that translates into an average daily census of 163 patients. But no hospital can be run at 98.8 percent occupancy. There is no elbow room to serve patients who need isolation, for separation of children, men, and women, and the like. Allowing for an efficient average occupancy rate of 85 percent yields a requirement for 192 beds to handle the average daily census of 163 (163/192 = 84.9%). This means, in conventional hospital parlance, that 192 beds need to be set up and staffed to serve an average of 163 patients. But if D.C. General Hospital is renewed and reformed along the lines suggested elsewhere in this Section, patient need and demand would be expected to be substantially greater than 163 patients on an average day. Forces that could raise need and demand for inpatient care at D.C. General Hospital Improvements in the process of referrals and continuity of care between PBC and other health centers and D.C. General Hospital Improvements in the perceived technical quality of care at D.C. General Hospital and at the health centers. Improvements in the perceived receptivity to patient needs at D.C. General Hospital and at the health centers. Marketing D.C. General Hospital to greater numbers of insured patients. This would reduced fixed costs per admission, thereby improving efficiency of care for all patients— and also cutting the required public subsidy to serve uninsured patients, other things equal. Closing or downsizing of one or more of the hospitals that serve patients who could be expected to be displaced to D.C. General Hospital. Relocating uncompensated care. The lower bed numbers examined in Dr. Newton’s report do not seem to consider how many insured patients—or uninsured patients— will remain at D.C. General Hospital or relocated to other hospitals. If uninsured patients are relocated elsewhere, the public subsidy required to finance their care must follow them or other hospitals will be reluctant to serve them. If insured patients are relocated elsewhere, D.C. General loses the revenue associated with their - 32 - care. And fixed costs per patient-day rise as patient-days fall, increasing cost of care for the remaining patients, other things equal. The same observation applies to relocating ambulatory care services. Financial assessment. Financial projections are never easy. Still, it is worth noting that the data included with Dr. Newton’s memos indicate that the largest hospital discussed, with 165 beds, would incur the lowest projected two-year deficits. Fully developed financial projections must account for the range of reasonable contingencies that will affect demand for care at D.C. General Hospital and health centers, costs of operating the hospital and health centers, and third-party revenues generated by the hospital and health centers. These contingencies should include: • probable expansion of Medicaid enrollment through a waiver, • adequate generation of Medicaid and other revenue to which the hospital and health centers are entitled, • possible closing of other hospitals in the District, • higher productivity and more efficient staffing and D.C. General Hospital and health centers, and • increased patient volume owing to higher perceived quality and convenience D. Strategic and political assessment 1. An integrated plan for primary care and hospital services. Develop a concrete plan to integrate—in appropriate ways—the hospital with the clinics and with the health centers that refer patients to the hospital. The plan must specify financing, management, quality assurance, and mechanisms to ensure continuity and coordination of care. All residents of the District deserve immediately accessible and high-quality primary care. But primary care and hospital care are not alternatives. They must complement one another. Without adequate primary care, some problems are not prevented and others are detected later than they should be. Patients suffer. But without adequate back-up by appropriate specialist physicians, laboratory tests, diagnostic radiology, and inpatient hospital care, the problems that are identified by primary caregivers will not be treated adequately. Viewed in another way, a wheel needs both a hub and spokes. If either is lacking, the wheel falls apart. Those who hope that the CAH or even the closing of D.C. General Hospital will boost financing for clinics or health centers in the District may find that something very different - 33 - materializes. Clinics serving large numbers of uninsured or Medicaid patients may find it more difficult to obtain referrals for specialty ambulatory care, for tests and diagnostic radiology, or for inpatient care. And the closing of D.C. General Hospital may prove to be the beginning of the District’s abandonment of direct financing of health services of any sort. Without D.C. General Hospital as a political mortgage on financing from the District’s government, primary care funding could be cut. That is, financing primary care can be sold today as a less costly alternative to hospitalization. But once the District’s obligation to finance hospital care for uninsured patients is eliminated or severely truncated owing to the closing of D.C. General Hospital, financing primary care will appear to be a more costly alternative to doing nothing at all. 2. Affiliations and mergers The possibility of affiliating or merging D.C. General Hospital with other District hospitals has been discussed from time to time. Regardless of the possible long-term advantages or difficulties associated with such an affiliation or merger, it should not be considered now. There are four main reasons: First, the foundation for good administration, free from city interference, was to have been laid in October of 1997, when a quasi-public Public Benefit Corporation took control of the hospital. It hasn't really accomplished what was intended. People in DC may therefore be somewhat disenchanted with what they might view as formal organizational change. Second, there has been some friction over the years about the right possible partner. Howard is the logical one in many respects (such as mission) but we don't seem to be close to unanimity on who might merge with or take over DCGH. Third, any formal changes would take a great deal of time to debate. The hospital probably has six months of money left, as things stand. Fourth, potential partners don't seem to trust the District government, or Congress, well enough to take on the hospital in the absence of solid assurances of adequate continuing subsidy for cost of caring for uninsured patients. It will therefore be necessary to focus on renewal from within, with the Public Benefit Corporation and mayor agreeing to give a solid and trusted CEO a much freer hand. This will require a real, shared commitment to save the hospital, and a willingness to mobilize resources and allow thorough reform quickly. 3. Renewing and reforming D.C. General Hospital. In a time of crisis, Americans pull together—whether in war or natural disaster. Unless D.C. General Hospital is renewed and reformed, the people of the District who rely on this hospital may suffer a public health disaster. It is possible to prevent that disaster. - 34 - It is possible to overcome D.C. General’s cost, revenue, quality, physical plant, and other problems. • But only if all parties make whole-hearted commitments to doing what is necessary, and then fulfill their commitments. • And only if required transitional investment funding and ongoing uncompensated care subsidy funding are secured. The alternative will be either: • continued stagnation (amidst uncoordinated efforts to improve the hospital) and a steady stream of bad news, accompanied by disagreement and blame, • a brief stabilization, followed by new crises in the years to come—and if any one crisis results in closing the hospital, it will be very difficult to re-open it If D.C. General Hospital attracts patients in need of service, if it provides high quality care, if it is operated efficiently, and if it is well-integrated into a comprehensive system of ambulatory and inpatient care, it will attract the financial and political support required to keep it operating. By surviving as a revitalized and reformed institution, the hospital will provide health services that are essential to patients who are vulnerable to deprivation of needed care. - 35 - Appendix Estimated Costs of Replacing Resident Physicians at D.C. General Hospital67 total annual cost of replacing residents with ancillaries $6,653,982 total annual cost of replacing residents with attendings $12,462,813 grand total replacement cost $19,116,794 less current cost of residents $4,200,000 net cost of replacing residents $14,916,794 forgone medical education revenue $2,691,296 total financial penalty (net cost + forgone income) $17,608,090 Note: As mentioned in the text, these estimates do not reflect possible offsetting savings from greater productivity of attending physicians, from streamlined patient care, or from improved staffing. These savings are likely to be substantial, but probably not sufficient to offset the costs of replacing residents at this time. - 36 -