SOS: Public Hospitals

Philip Betbeze and Jim Molpus, for HealthLeaders Magazine , March 12, 2009
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"Others who prevent admissions lose revenue," Anderson says. "If I have empty beds, I'll take more patients and use my margin costs to take care of more people."

Further, Anderson claims the lack of insurance for most Parkland patients is the only reason it needs local subsidies.

"If everyone had insurance, local subsidies would go away, and you would see hospitals compete for patients based on quality, access, and safety, and those are the things we ought to be competing on," he says, adding that his goal for Parkland is to make it the hospital of choice, rather than last resort.

That doesn't mean Parkland doesn't have some work to do. When a man died in its emergency room late last year after waiting 19 hours for treatment, Parkland's ED endured a surprise visit from The Joint Commission, after which it was cited for failure to meet a list of 11 standards of care.

Medical school affiliation
A significant factor in the financial success of some public hospitals seems to be an affiliation with a top medical school from which to draw physicians who might stay on to practice there following the completion of their residency.

The 238 full-time employed physicians working at Denver Health's 395-staffed-bed flagship hospital and its 12 school-based clinics and eight primary care clinics are employed by Denver Health, but also have the opportunity to be on the faculty at the University of Colorado's medical school.

"Employing our physicians has been important because at the end of the day, physicians drive a lot of cost and quality," says Gabow. "By employing them we completely align the direction of the healthcare enterprise and the physicians." Further, several residency programs are housed at Denver Health Medical Center.

Parkland, which is affiliated with the neighboring University of Texas Southwestern Medical School, enjoys similar advantages. All of its physician services are provided under contract with UT Southwestern.

"That is helpful because we have access to very good physicians and house staff that may stay to practice here after they finish residency," says Anderson.

Those physicians and the opportunity to have them stay on at Parkland following their residency is one important reason for the construction of the new Parkland, Anderson says.

With a new facility, he hopes that the physicians who currently practice out of Parkland can leave their commercially insured patients there and not have to transfer them to other hospitals that have better amenities.

"First, that shoots their productivity," he says of the transfers. "Also, if they're trying to do elective surgery here, a car crash could come in and they get bumped" due to a lack of sufficient operating room space. "We've got to have enough capacity where that doesn't happen," he says. "I've always brought my family here when they have illnesses, but the amenity levels are not the highest."

Go lean on the staffing
Staffing levels are a critical area to look at with any institution that is consistently losing money, like many public hospitals are. Any turnaround plan wouldn't be complete without some layoffs, after all.

Denver Health hired an industrial engineer who had never been in a hospital to map all of its processes, Gabow says, and the exercise helped illuminate areas where processes were inefficient. Gabow estimates that by employing lean techniques, the hospital has generated more than $14 million in "hard cash" savings.

"Every time he would bring me a process I would say, 'Oh please tell me that is not what we do,'" she says. Following the exercise, "most people would say we are pretty efficient; I mean, 40% of our patients can't pay us. Still, we are in the black every year."

Gabow also commissioned focus groups with employees, starting with the housekeepers. But the groups focused on patient care. "It was more, 'What do you see happening to patients that you don't think should happen? What keeps you from working efficiently? What part of your job should someone else be doing?'"

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