Hospitals in Crisis

September 26, 2005 | by Joshua Brustein

When Katrina McCloud was one year old, she hit her head on a coffee table in her Brooklyn home. Her mother, Harriet, rushed her to the emergency room at nearby St. Mary's hospital.

That was 31 years ago. The McClouds still rush to St. Mary's emergency room -- they actually did so almost 20 times in the last year. Now, though, the roles are reversed. Harriet, who has developed diabetes, is in a wheelchair; Katrina lives with her and helps her mother with a condition that has become increasingly serious.

One morning two weeks ago, Katrina noticed that Harriet's blood pressure was spiking to a dangerously high level, one of the main risk factors for a stroke. Immediately, the two women took off for St. Mary's, which is only a block away from their home. "I pushed her in her wheelchair to the emergency room myself instead of waiting for EMS," said Katrina. "If it wouldn't have been for them being there she would have had a stroke."

This type of trip will no longer be possible after October 4. The emergency room at St. Mary's -- which received 35,000 visits last year - is shutting down, and the entire hospital will be closed within 90 days. Katrina and Harriet McCloud will have to find somewhere else for Harriet's regular medical needs.

St. Mary's will be the eighth hospital in New York City to close since 2003. It is unclear how many more of the 73 remaining hospitals in the city -- 11 of them publicly owned -- are in danger of failure, but there is a general agreement that New York's hospitals are facing financial crisis.

To an increasing number of experts, these financial problems signal a major change in the health care industry to which New York must adjust. Walk-in clinics are providing an increasing range of services once provided only by hospitals, they say, and the state should have fewer hospitals as a result. The state, which must approve hospital closings, has taken this view. Governor George Pataki recently appointed a commission to determine which hospitals should be closed.

Others sharply disagree. The main problem with the health care is not financial, they say, it is a lack of access to health care. Simply closing hospitals will not only fail to solve the industry's financial problems, they argue, it will aggravate the serious inequities already present in health care. Most of the struggling hospitals are those in the communities that need them the most, and those likely to suffer from future hospital closings are people like the McClouds -- residents of low-income, medically under-served areas who are already affected disproportionately from every chronic disease ranging from diabetes to cancer to AIDS.

Because many people in such neighborhoods do not have health insurance or access to reliable transportation, their health care options are limited. Closing their local hospitals will mean -- as it has meant in the past -- that many who need care will simply stop getting it.

REASONS FOR FINANCIAL TROUBLES

There is no doubt that New York's hospitals are in bad shape financially. The industry in the state has lost money for five consecutive years (in .pdf format), even as hospitals nationwide post profits. A smaller proportion of New York hospitals have access to sufficient capital funds (in .pdf format) than in any other state, while also carrying the most debt.

Last year the city's public hospital system -- the Health and Hospitals Corporation -- ran a $200 million deficit. Operating losses at the city's private hospitals (in .pdf format) are also rising at a shocking rate. As a whole, private hospitals lost $190 million in 2003, close to five times the $39 million they lost the year before. The percentage of private hospitals that ran deficits rose to 54 percent from 40 percent over that same period.

Many things are contributing to the weak financial state of New York's health care system:

Federal and State Regulations:

Albany determines how much money hospitals can make from certain services, places restrictions on how much they can invest in infrastructure and other capital projects, and prohibits certain types of investors from owning hospitals. These regulations were put in place to keep hospitals from making unwise or unscrupulous financial moves, but most experts agree that they are placing a burden on the state's hospitals.

On the federal level, changes in aid for teaching hospitals have affected New York's community hospitals. Proposed cuts in Medicaid will mean less money for those hospitals serving low-income communities.

Changes in Health Care Delivery:

Long-term trends in health care have also taken a financial toll on New York City hospitals. Since the 19th century, when philanthropists, religious groups, and the city itself began enthusiastically building hospitals, a large proportion of medical care has been given through hospitals. Today, New York City has more hospital beds per capita than other American cities. But over the past few decades, health care has shifted away from hospitals. Improvements in medical care have allowed patients undergoing procedures that would have kept them in the hospital for long periods to go home earlier. Advances in drug treatments for AIDS, for instance, have allowed patients who in the past have been hospitalized to live reasonably normal lives.

Having clinics provide services that once required hospital admissions has improved the lives of patients. But New York's hospitals have found themselves under strain as they look for ways to adjust.

"Health care is a service or set of services that continuously feels the pressures of change," said James Tallon of the United Hospital Fund. "If you were at the top of the mountain in the hospitals' heyday then you've got a little bit steeper slope as you face the changes."

Concentration of Services at Specialty Hospitals:

Such pressure is not being felt equally by all medical institutions in New York City, however. Complicated surgeries and other procedures that must be handled in hospitals are being concentrated in the academic specialty hospitals such as Mount Sinai and Columbia Presbyterian that can afford to invest in increasingly sophisticated equipment. These procedures bring in money, and these hospitals have remained in good financial standing as a result.

The situation is much different in smaller, community hospitals. Because community hospitals are more likely to serve patients without health insurance, they have less income than specialty hospitals. As a result, they do not have funds to invest in the equipment for advanced procedures - the kind that would allow them to develop a specialty and bring in more income.

It is these hospitals that are in the greatest danger of closure, and there is little disagreement about their perilous financial state. There are diverging views, however, on why these hospitals are in such trouble -- and on how best to respond.

ARGUMENTS FOR AND AGAINST CLOSING MORE HOSPITALS

It's Inevitable, So Do It Rationally

After years of financial trouble, Brooklyn Hospital decided to close one of its branches - the Caledonian Division in Flatbush - to preserve its main branch in downtown Brooklyn.

"It became increasingly evident that we needed to do something in terms of a financial turnaround plan, or the place wasn't going to be a viable organization anymore," said Nancy Peterson, Brooklyn's director of planning.

The plan worked. In 2002 the hospital had lost $20 million; last year it made $4.6 million.

Brooklyn Hospital made a choice that other hospitals in the city and across the state have also faced in recent years. An increasing number of public officials, health care industry groups, and representatives of organized labor are saying that the state itself must follow Brooklyn Hospital's lead. By closing hospitals in a rational manner, they say, the state can make the health care industry more sustainable without reducing access to care.

This spring, Governor George Pataki created a commission to examine how to best 'right size' the hospital industry. This commission, the Commission on Health Care Facilities in the 21st Century, will make decisions about which hospitals to close by the end of next year, though it is unclear what will happen with this list once it is formed.

The state and the commission itself insist that it will do more than simply make a list of hospitals to close -- it also intends to look, for example, at issues like the way hospitals are paid for serving Medicaid patients. That said, its structure is based on the federal commission that decides which military bases to close. The recommendations of the commission are binding unless voted down by both houses of the legislature in their entirety -- lawmakers cannot pick and choose what to implement. The reason to have a commission that functions this way is keep officials from deciding which hospitals to close based on political considerations.

The commission operates on the belief that some closures are inevitable. "The marketplace is driving some changes and contractions," said the chairman of the state commission, Stephen Berger, last week. "We're not going to change that."

Berger and others believe that there are too many hospital beds in New York, a fact illustrated by dropping occupancy rates in New York hospitals. According to the state's department of health, hospitals operated at only 60 percent capacity in 2004, down from 73 percent ten years earlier. Dennis Whalen, the department's executive deputy commissioner, has said that as many as 20,000 of the state's 63,000 hospital beds are unnecessary. These empty beds are straining the entire system.

The purpose of doing facilities in a comprehensive manner, instead of dealing with each hospital closure issue as it emerges, is to improve the overall efficiency of the health care system, allowing continued access to medical care. This would not necessarily happen if the state simply allowed the hospitals that were suffering financially to fail.

"The most important institutions may or may not be the institutions with the best balance sheets," said Berger.

Closing Hospitals Is A Mistake That The Poor Will Pay For

Critics question whether Berger and the commision really undertand this. They say that recent discussions about hospital closures have allowed financial considerations to subvert the real issue posed by struggling hospitals: how the communities that rely on them are being affected.

"Is [the health of these communities] going to be the tenth consideration after a list of other things, or is that going to be the starting point," said Louis Guida of the Save our Safety Net Campaign, an umbrella group of organizations concerned about hospital closures. "We think that should be the starting point."

Opponents of systematic hospital closures question the accuracy of official occupancy rates, saying they disregard the reasons for low rates. At St. Mary's, for instance, the beds in the maternity ward were listed as empty in discussions leading to the hospital's closure, driving the occupancy rate to jut above 60 percent. But these beds were not empty because women didn't want to give birth at St. Mary's. They were empty because the hospital had closed the ward in 2003 because it couldn't afford to operate it.

Supporters of hospital closings have also played down how disruptive such closings are to patients, critics say. According to Alan Sager, a professor at Boston University School of Public Health who has studied urban hospital closures across the country, 30 percent of patients whose hospital closes simply stop receiving inpatient care.

"Patients displaced by a closing often take months or years to re-weave the fabric of their medical services," he said. "Vulnerable patients are made more vulnerable when hospitals close."

In addition, hospital closures tend to take place in areas with vulnerable patients. This pattern certainly continues at St. Mary's. Residents of central Brooklyn suffer disproportionately from every single category of health problem that the city's department of health keeps statistics on: from chronic diseases like diabetes, to violence, to mental health problems and drug-related conditions. People in the area are hospitalized at 30 percent higher rate than city residents as a whole, and still 30,000 central Brooklyn residents go without necessary medical care.

Such closures aggravate the very inequities that often caused the hospital's financial problems in the first place, say health care advocates. In order to confront these issues, advocates say New York must:

deal with the 1.8 million people living in New York City who don't have access to health insurance;
increase the effectiveness of public health plans;
and confront the causes of epidemic rates of chronic disease in low-income, minority areas.

Unless these issues are addressed, closing weak hospitals to improve the financial standing of more stable ones will only shift the high costs of health care in New York, not eliminate them.

THE CLOSING OF ST. MARY'S

Like many of their neighbors, Katrina and Harriet McCloud tried to stop St. Mary's Hospital from closing. Katrina, working with an ad-hoc coalition of groups called the Committee to Save Our Hospitals, organized her neighbors and traveled to Albany to meet with state officials about keeping the hospital open; Harriet was the plaintiff in a lawsuit to keep the state from allowing the hospital to close. Hundreds of their neighbors packed into the basement of a local church to voice their concerns to public officials and hospital management; dozens filled courtrooms during the bankruptcy proceedings of St. Vincent's Catholic Medical Center, which runs St. Mary's.

But in the end, the financial burden was too much to overcome. Last Tuesday, a judge gave St. Vincent's permission to begin closing the 123-year-old hospital. It has already arranged for ambulances to stop coming to its emergency room, and is making plans to move the 70 or so patients that are currently staying there to other facilities. St. Vincent's is beginning to look for buyers for the physical hospital, and says it hopes to find a developer who will build affordable housing on the site.

The hospital's management says that it has made appropriate plans to help those who were served by St. Mary's find replacement care. It notes that there are several hospitals nearby, the closest being Interfaith Medical Center on Atlantic Avenue, less than a mile away. But members of the community don't think will be an easy adjustment. The Committee to Save Our Hospitals singled out St. Vincent's plans to move the hospital's mental health and detoxification units to Mary Immaculate in Jamaica, Queens for criticism. By public transportation, the hospital is over an hour from St. Mary's. In addition, St. Vincent's has said that it is looking for buyers for the Queens facility - a signal that St. Vincent's is having trouble paying to maintain it.

The McClouds, who visit one of St. Mary's clinics or its emergency room almost weekly, have not begun to consider an alternative. Katrina says she has no idea what she would have done when her mother's blood pressure shot up had there not been an emergency room so close.