Baton Rouge General–Mid City closed its emergency room to save itself but is exploring more changes as the hospital maneuvers to find a way forward in a competitive market.
Closing the emergency room directly saved money — but it also threatens to crimp revenue by throttling the flow of patients.
Nationally, about half of all hospital admissions come through the emergency room. At Baton Rouge General–Mid City, that number was closer to 70 percent, according to hospital officials.
Federal law requires hospitals to care for those patients, regardless of whether they can pay. After the state closed the local charity hospital, Earl K. Long, in 2013, many of the patients who got treatment there migrated to Mid City.
Emergency room losses mounted to $1 million per month in 2014 and more than $2 million a month in 2015. By the time the emergency room closed at the end of March, 90 percent of Mid City’s patients were either covered by Medicaid, which hospitals say doesn’t fully cover the cost of providing care, or they had no insurance.
Baton Rouge General, which has a second, more profitable campus at Bluebonnet Boulevard, was no longer willing to carry that load.
“We had the emergency services, walk-ins, ambulance service,” General Health Chief Executive Officer Mark Slyter said of the situation at Mid City. “There’s not an ability to control or design your future. It’s kind of dictated to you.”
Now Mid City is free to pursue other options.
The hospital could recast itself as a specialist in post-acute care, which includes short-term skilled nursing, therapy and rehabilitation services for patients recovering from an illness. Slyter said doing so would position Mid City to take advantage of the rapidly growing number of seniors and people with chronic conditions, such as heart disease, high blood pressure and diabetes.
The hospital also could target more “community-based needs,” like psychiatric and other behavioral health services that Mid City already provides.
“From our perspective, this gives us a new ability, a new dynamic and a controllable environment that we didn’t have before,” Slyter said. “So, we’re really optimistic.”
A route some smaller hospitals in south Louisiana have taken is collaborating with a larger health system. Such arrangements are on the increase, according to industry watchers.
Smaller hospitals and health systems gain access to a larger organization’s resources, buying power and expertise without surrendering control. Baton Rouge General officials declined to comment on that possibility.
The details of the Baton Rouge General’s Mid City campus’ new business model have yet to be determined. The broader sketch includes a smaller hospital, with a fraction of the current beds and more-focused services. Baton Rouge General has hired consultants to fill in the details.
A major piece of the plan — closing the emergency room — slows the bleeding, but the move also cuts off some major sources of revenue.
“If you look at general surgery, how many people present with appendicitis to their family doctor?” asked Dr. Frank Mell, a spokesman for the American College of Emergency Physicians. “They don’t. They present to the ER.”
Without an emergency room, a hospital also loses out on some of the better-paying service lines, such as interventional cardiology, or cardiac cath labs, Mell said.
In cardiac catheterization, doctors insert a long, thin, flexible tube into a blood vessel and thread it to the heart and then do diagnostic tests of treatment.
All of the major hospitals have chest-pain receiving centers ready 24/7 to do cardiac cath, Mell said. The vast majority of those patients arrive by ambulance.
In short, it’s tricky to keep a hospital open and offer full services without providing emergency care, Mell said.
Some experts say Mid-City is battling the same issues that have shuttered hundreds of inner-city hospitals over the past several decades.
Alan Sager, director of the Health Reform Program at Boston University School of Public Health, has tracked more than 1,200 hospital closures in 52 large and medium-sized cities dating back to the mid-1930s.
“In the studies I’ve done, in decade after decade, larger hospitals, major teaching hospitals are more likely to survive, and hospitals in black neighborhoods are more likely to close,” Sager said.
The biggest and most consistent predictors of a hospital’s survival are its size, teaching status and the racial mix of the surrounding neighborhood, he said.
Sager found that the hospitals that failed from 1950 to 2003 were in areas where black people made up at least 30 percent of the population, which would apply to Mid City. Fewer black residents are likely to be covered by private insurance, which hospitals often depend upon to offset the costs of treating the uninsured and underinsured, he said. Like so many other inner-city areas, Mid City saw many of its more affluent residents, both black and white, move to the suburbs. Baton Rouge General has spent more than 20 years attempting to reverse that trend, even as General built its Bluebonnet campus. The health system established the Mid City Redevelopment Alliance and has provided it funding since 1991 in an effort to revive the corridor.
When a neighborhood’s demographics change, white doctors tend to move their offices to follow their patients, Sager said. Without those doctors admitting and caring for patients, a hospital’s ability to generate revenue is hampered.
Large teaching hospitals have the residents and medical school faculty to admit patients, provide care and generate revenue that allow the facilities to survive, he said.
Slyter said he can’t debate Sager’s research.
But Baton Rouge General–Mid City’s situation is different, Slyter said. For one thing, specialty facilities, such as Woman’s Hospital and Surgical Specialty Center of Baton Rouge, have prospered in the local market. The Mid City campus is also a teaching hospital, which Sager’s research shows is an advantage when it comes to survival, Slyter noted.
Baton Rouge General–Mid City serves as a satellite training campus for Tulane University School of Medicine students. Mid City trained 28 third- and fourth-year Tulane medical students during the most recent academic year. At least 47 additional medical students from other universities rotated through the Mid City campus. That’s 75 of the total 134 medical students the system trained.
By contrast, Our Lady of the Lake Regional Medical Center trained 200 students.
Major teaching hospitals leverage their teaching status, charging higher prices to help offset training costs, Sager said. They also typically command higher reimbursements from Medicaid, which usually pays less than other health coverage. It’s part of a trend Sager refers to as “survival of the fattest.”
“Sometimes they say their costs are higher. Sometimes they say it’s teaching. Sometimes they say it’s research. It may be inefficiency,” Sager said. “But also they’re often viewed as indispensable medically, and they typically have more heft politically.”
Large hospitals also control a larger share of the market, which allows them to negotiate more favorable arrangements with insurance companies. It’s no coincidence that in the past 10 years, Our Lady of the Lake, the state’s largest hospital, and Blue Cross and Blue Shield of Louisiana, the state’s largest health insurer, have twice waged public battles over payment rates.
Smaller hospitals, particularly those that aren’t part of a large health system, have little leverage over private insurers, Sager said.
Baton Rouge General is one of the smaller health systems in the Baton Rouge area. The Mid City and Bluebonnet campuses have a combined 590 beds, which hospital officials wouldn’t break down by campus. Our Lady of the Lake has 800 beds and is part of the Franciscan Missionaries of Our Lady Health System, which has five hospitals and 1,800 beds. Ochsner Medical Center-Baton Rouge has 151 beds but is part of the much larger Ochsner Health System.
Lane Regional Medical Center in Zachary, with 140 beds, is the smallest independent hospital in the area, serving rural communities north of Baton Rouge.
Sager said arrangements where one hospital campus subsidizes another were once fairly common but have been gradually disappearing.
Baton Rouge General spokeswoman Maryann Rowland said the Bluebonnet campus does subsidize the Mid City facility. That’s why Baton Rouge General had to immediately address the escalating losses at Mid City, Rowland said, adding that no business could sustain such losses.
Baton Rouge General’s decision to close its Mid City emergency room drew widespread criticism.
Some people blamed the state’s decision to close Earl K. Long and contract with Our Lady of the Lake to treat the uninsured, paying the Lake a higher rate than it gives Baton Rouge General and other hospitals. Others questioned whether Baton Rouge General fully explored other options or even whether closing the emergency room was financially necessary.
Looking forward, Slyter says his Mid City campus could benefit from one of the many changes taking place in health care, a payment model that rewards providers for keeping patients healthy and out of the hospital.
Hospitals can’t just focus on short-term treatments that take place inside the hospital and forget about therapy or rehabilitation services, he said. Hospitals can’t ignore all the other services involved in helping patients manage chronic conditions, such as high blood pressure and diabetes, care that keeps people healthier and keeps them out of the hospital, he said.
“Quite frankly, for those who are really looking forward to the future and understanding how to make health care more affordable, you have to get your arms around those components,” Slyter said. “We feel like that there are some good options for us moving forward, and we’re exploring just a whole litany of those.”
Editor’s Note: This story was changed June 5, 2015, to correct the number of Tulane medical students trained at the Mid City campus and include other students rotating through the Mid City campus, as well say that the General has provided funds to the Mid City Redevelopment Alliance since 1991.
Follow Ted Griggs on Twitter, @tedgriggsbr.