On Oct. 25 of last year, Sue Brody, the president and CEO of St. Petersburg’s Bayfront Medical Center, announced that the hospital was going corporate after more than a century as a non-profit. Bayfront plans to join health care giant Health Management Associates, Inc. (HMA), which will purchase 80 percent of the hospital and make it the hub of a regional group of six smaller hospitals that will span from Hernando County to the north all the way down to Port Charlotte.
The announcement was the culmination of a search that Bayfront began in earnest approximately two years ago, when the board of directors realized that it would be in the best interests of themselves and the community to begin looking at what Bayfront officials call a “strategic partnership.” (They shun the term “merger.”) With major changes coming to the health care industry thanks to the passage of the 2010 Affordable Care Act (ACA), as well as other trends making it increasingly difficult for stand-alone hospitals to be successful, a partnership seems like a good way for the 106-year-old medical facility, located at Sixth Avenue South and Sixth Street, to survive deep into the 21st Century.
But a funny thing happened on the way to a final deal being presented to the St. Pete City Council, which gets final say on any merger because the facility sits on city property. HMA was the subject of a December 2012 expose on CBS’s 60 Minutes, during which reporter Steve Kroft told America that the venerable news program interviewed more than 100 current and former employees and, “we heard a similar story over and over: that HMA relentlessly pressured its doctors to admit more and more patients — regardless of medical need — in order to increase revenues.”
The segment featured interviews with emergency room doctors, including Jeff Hamby, an Arkansas-based ER physician who said he was fired for not meeting admission targets, and is now suing an HMA-owned hospital for wrongful termination. Kroft also spoke to the health care giant’s former compliance director, Paul Meyer, a 30-year FBI veteran, who filed a whistleblower lawsuit saying the company improperly admitted Medicare patients. (HMA countersued Meyer, saying he was fired for insubordination, and alleging that he took confidential documents and has refused to return them.)
At a City Council workshop on Jan. 17, Councilman Wengay Newton challenged Bayfront officials about the HMA allegations, indicating that he thought they were less than fully candid about the report.
“I wonder what else the Council should know?” he asked. “I can’t pose a blind eye. I don’t care if it was in Pennsylvania or the Soviet Union. I’m going to have to ask the tough questions.”
While Bayfront officials and Council members acknowledge that there have been regular consultations over the past year, leading up to a final document being presented, Councilman Charlie Gerdes said he didn’t like the fact that the 60 Minutes report was not mentioned to him or his colleagues at a meeting just a week before it was broadcast.
Bayfront spokeswoman Kanika Tomalin said the hospital only learned of the report 48 hours before it aired. She also said that Bayfront has come to its own independent and far-reaching “confident conclusion” that “the allegations are contrary to the evidence.”
“I immediately called [Tomalin] after the 60 Minutes episode was over and said ‘Look, I’m really disappointed that nobody indicated that this is going on,'” Gerdes told CL last week. “Whether you think there’s something to it or not, I would have liked to have known.”
Council Chairman Karl Nurse said he’s okay with what he’s heard so far on Bayfront’s end about the HMA story. “I did see that,” he told CL in reference to the 60 Minutes piece. “I don’t know if you’ve been to a doctor lately, but … we’re already being driven in that direction. I’m not shocked by that,” he said in reference to doctors performing numerous, possibly unnecessary proceedures.
Councilman Gerdes nevertheless said he wants the disclosure language in the new lease to be “very strong,” and agreed with Nurse’s suggestion that a Councilmember be part of the new joint Bayfront-HMA partnership.
Leaving aside the charges against HMA, a main concern about the partnership is what will happen to the charity care that Bayfront offers. The medical center has historically been a community leader in providing such care (approximately $35 million last year), and Bayfront officials insist that the amount of service to the indigent will not be cut back.
Dr. David Weiland, Vice President of Medical Affairs at Bayfront, said the word is that, “we will still be providing the exact same level of care.”
Theoretically, the purchase could be reviewed by a higher governmental power, but that’s doubtful. Last year, the Federal Trade Commission blocked only four such deals, contending that such consolidation was too much for one region.
There remains a strong emotional attachment to Bayfront in the community. It was the first St. Petersburg hospital to integrate with black patients, back when it was known as Mound Park in 1961. (Before that, African-Americans would only be admitted at St. Pete’s now-defunct Mercy Hospital.) The ties are deep and thick, and spokesperson Kanika Tomalin said this new agreement ensures that Bayfront can continue to be there for the indigent and less fortunate, saying the deal makes certain that the community will continue to have access to “the very best.”
Dr. Paul McRae was the first African-American to hold the title of Chief-of-Staff at Bayfront (2005-2011). He said the community shouldn’t be alarmed that a major, out of town health care organization (HMA is based in Naples) will be partnering with Bayfront. They should be grateful.
“Most of the free standing hospitals, particularly Bayfront and Tampa General, have had difficult times in order to deliver the same type of health care to the communities they serve,” he said.
Stand-alone hospitals have very little negotiating power in terms of buying medical supplies, equipment, and even pharmaceuticals when compared to corporate facilities. “Our operating expenses are going to be a lot lower in that regard,” said Emily Nipps, another Bayfront spokesperson.
But Steve Ullman, Professor and Director of Programs in Health Sector Management and Policy at the University of Miami School of Business, said in a partnership like this there could be a situation where, “there might be some services (currently offered) that are perceived to be not profit generating, so there could be an adjustment in the mix of services provided. And it may mean patients may need to get care for specific conditions that are not profit generating in other health care facilities.”
Ullman said one benefit for St. Pete is that nonprofit hospitals don’t pay property taxes, while for-profits do. He also said that most studies he’s seen show there’s not a “huge difference in the level of uncompensated care.”
There’s been an increase in similar partnerships since the passage of the Affordable Care Act (ACA), which became the law of the land in 2010. Chicago Magazine reported that since the law passed, hospital mergers have increased by 45 percent. The ACA dictates an adjustment in Medicare payments to hospitals, providing another incentive for stand-alone facilities to team up with corporations.
Though the ACA remains extremely controversial in some quarters, those paying attention realize that action needed to be taken to bring down the costs of health care, lest it bankrupt individuals, businesses and eventually the government.
Bayfront’s Dr. David Weiland said there are exciting new developments coming, such as electronic recordkeeping and cloud computing, which will allow for cost savings “in ways we’ve never seen.” He referred to an uninsured person who goes to an emergency room at one hospital, then goes to a second or third hospital ER in future weeks and receives the same treatment. Weiland said streamlining in the health care industry will prevent that duplication.
John Mandujano, who does I.T. work for health care providers in the Tampa Bay area, said smartphone apps could monitor things like blood pressure, allowing people to be more proactive in taking care of themselves.
Part of the proposed Bayfront partnership is an alliance with Shands HealthCare, the Gainesville-based facility long considered the premier academic teaching hospital in the state. The announcement of that alliance angered USF Health’s Dr. Steven Klasko, who was hoping they could partner with Bayfront on an education component. Klasko said the deal “fragments care for the Tampa Bay community,” and adversely affects USF Health’s future. (USF health officials did not make themselves available for comment for this story.)
Bayfront officials were hoping to have a final agreement ready for City Councilmembers on Feb. 7, but that increasingly looks questionable. At the Council’s request, another workshop will be held to discuss the fine print on Jan. 31.
Councilman Steve Kornell said he needs at least a full week to read and absorb the material. If that’s not granted, Kornell said he won’t be able to support the proposal. “I need to read it, live with it, study it, evaluate it before I can say I’m going to support it,” he said, adding that the plan sounds great, but he needs to “Trust but verify,” quoting Ronald Reagan’s famed admonition to Mikhail Gorbachev in the mid-1980s.
Charlie Gerdes agreed. “Thirty years from now, most of us sitting around here today won’t be around, and it needs to be something that everybody can read and say, ‘this is what they intended.’ So hopefully that’s what we’ll get to look at.”