City Hospitals Moving Away from the Poor

The 200 people gathered in a conference room at the Intercontinental Hotel on the campus of the Cleveland Clinic in Cleveland talked until late afternoon about the problems the city’s uninsured face when accessing care. But the meeting didn’t include only medical representatives from Cleveland’s four health systems. Eighty people in attendance were uninsured. Since they were the very people being hurt by the system, health professionals figured it was about time the uninsured have a voice in discussions about how to improve health care.

Cleveland is not the only city struggling with providing access to the uninsured. Many hospitals around the country are making it more difficult for the uninsured to receive health care. Hospitals in several U.S cities have been consolidating and expanding their facilities outside of the city center where many uninsured live. In Cincinnati and Denver, new outpatient centers are springing up in wealthy suburbs. These hospitals are designed to look like high-end health spas. Hospitals in the city, where most uninsured receive care, remain overcrowded and run-down.

“What’s happened more and more— I guess you can call it uninsured and Medicaid patients are marginalized—but I like to say they’re abandoned,” said Gary Benjamin, a spokesperson from the Universal Health Care Action Network of Ohio.
One-third of U.S hospitals are operating in the red. In order to stay afloat, many of these hospitals have decided to relocate to areas where there is a better payer mix. “It’s just like retail, they are going where the well off live—out of the city into better paying neighborhoods,” said Alan Zuckerman, president of Health Strategies and Solutions. Zuckerman said it’s tough to operate a hospital in the city these days. Not only are urban hospitals caring for the uninsured, they also have larger amounts of debt, density issues, more competition, and higher labor costs because of a unionized work force.

The Cleveland Clinic and University Hospital are the two big hospitals operating in greater Cleveland. Although the main facilities for both the Cleveland Clinic and University Hospital have remained in the city, both hospitals built outpatient facilities in the suburbs to boost revenue and attract insured patients. “And they wonder why poor people are using the ER in the city? It’s all that’s left,” said Benjamin.

As cities expand, hospitals are taking advantage of an opportunity to open up new outpatient facilities out in the suburbs so that they can make money.

Cincinnati is steadily growing. By 2020, the area between Dayton and Cincinnati is expected to fuse together. Tom McCormally, a spokesperson for Children’s Hospital in Cincinnati, said there is a demand for more space at Children’s Hospital, the big nonprofit hospital in the city center. “It’s not like we’re cannibalizing. Our growth has been phenomenal in the last 10 years, and I’m not seeing the numbers drop when we open up new facilities.” Children’s has set up 10 outpatient centers in the suburbs of Cincinnati in the past several years.

In Denver, the population has already grown out toward Aurora and Boulder. The Denver-Aurora-Boulder combined statistical area had an estimated population of 2,998,878 in 2007, and ranked 17th most populous U.S. metropolitan area. Mike Romano, a spokesperson for the Catholic Health Initiatives, thinks that if hospitals want to make money, expanding into suburbs is certainly one way to do it. Denver’s expanding metropolitan area has made it one of the nation’s hottest markets for healthcare construction.

As hospitals follow the money out to the suburbs, they’re also able to embark on a new image that’s designed to attract patients with money.

While care is compromised for the uninsured in Cleveland, it’s top notch for those who can pay. In September, the Cleveland Clinic opened up two new buildings. The first was the state-of-the-art Sydell and Arnold Miller Family Pavilion, home to the Clinic’s cardiovascular program. The center is recognized as being the best in the world, according to U.S News and World Report, which is why the Cleveland Clinic is able to transport non-local patients in one of their two private jets.

University Hospital, the Cleveland Clinic’s main competitor, is trying to catch up. Their new projects include a $232 million cancer hospital, a seven-story garage, and a $45 million emergency center, scheduled for completion in 2010.

In Cincinnati, hospitals are not reaching out to uninsured patients as they expand. Instead, new hospitals are marketing their facilities to the insured, taking advantage of population growth just north of the city.

The Westchester Medical Center is currently being built from the ground up and will be operational next year. A new hospital hasn’t been built in Cincinnati for the last 25 years. But this hospital is being built in the suburbs, not on “Pill Hill”—the area in the city where the most hospitals had been located for decades. “Pill Hill” is also known as Clifton Heights, near the University of Cincinnati and walking distance from downtown Cincinnati where most poor, African-Americans live.

Most recently, Children’s Hospital opened up an outpatient facility in Liberty Township, a suburb north of Cincinnati, in the center of the fast-growing Cincinnati-Dayton metroplex. Although the two big nonprofit hospitals have been able to stay in the city center, they have also been able to expand elsewhere.

The suburban areas of Denver are being populated at a rapid rate. Douglass County—where two state of the art hospitals have been constructed—has been one of the nation’s fastest-growing areas for the past decade. From 1990 to 2001, the population increased by 224%. People in this part of town are also considered high-end patients. In Douglas County the median income in 1999 was $82,929—more than double the figure in the city of Denver. In the Sky Ridge area, about 73% of the population is covered by private insurance. Both hospitals in Douglass County—Sky Ridge Hospital and Parker Adventist Hospital—were designed with marble floors and healing gardens to appeal to this wealthy demographic.

The same is true in Denver’s northern suburbs where the Exempla Health Care System is trying to control the market. The median income there is almost 40% higher than Denver’s urban center.

Dr. David Sbarbaro, medical director of University Physicians, a doctor and patient resource at the University of Denver School of Medicine, said that Denver’s construction boom is designed to meet demand. “The city has grown, so the question is how to redistribute services,” he said. “It’s become increasingly difficult to maneuver around Denver because it has gotten so crowded. We’re seeing a redistribution of services that will be better balanced.”

Rick Wade, vice president of the American Hospital Association, said hospitals usually follow population growth. He said hospitals are the economic engines of an area. They create jobs within, and commerce is built up around them. “They [hospitals] have a dual and conflicting role as a hospital and an economic engine. They have to deliver care but also be economically strong because the city depends on it,” he said.

The Center for Studying Health Care Change, a nonpartisan policy research organization, published a study this summer that said safety net hospitals are suffering because of the liberties private hospitals are taking in expanding to affluent suburbs. Newer suburban facilities are taking away paying patients from these safety net hospitals and further straining them with a disproportionate number of uninsured. In addition to the nice rooms, patients now can stay in the suburbs for their hospital care instead of traveling longer distances to downtown areas. These new suburban facilities are also equipped with the latest technology and amenities. This creates the impression that the suburban facilities have higher quality of care than some of the older looking safety-net hospitals. Disparities in health care are only getting worse as a result.

Cleveland’s shrinking hospital system has certainly hurt the uninsured. Ashwini Sehgal, co-medical director at the Cleveland’s Department of Public Health and a kidney specialist a MetroHealth Medical Center, moved to the city 15 years ago. There were 22 hospitals then, now there are only four. The Cleveland Clinic controls half of the market and University Hospital controls one-third. The other small hospitals—MetroHealth, Parma Community Hospital, St. Vincent Charity Hospital and the VA Medical Center— take on the remaining patients. Most of them are uninsured. With so few hospitals and so many uninsured people in Cleveland, it’s an unfair burden.

Both the Cleveland Clinic and University Hospital have primarily been sending their uninsured patients to MetroHealth. Sehgal said that most recently, MetroHealth had to lay off staff and in turn, they have had to send some of these uninsured patients to the Free Clinic or the Neighborhood Family Practice. Peggi Chella, a spokesperson from the Neighborhood Family Practice, said her clinic has been overwhelmed in recent months because of an influx of so many uninsured patients.

In Cincinnati, Children’s Hospital and University Hospital take in most of the uninsured. As a result, their emergency rooms are overwhelmed. McCormally said Children’s Hospital has had to turn away patients from the main campus hospital in the city for the first time this year. Similarly, University Hospital has had to send their ambulances to other hospital emergency rooms, usually further away, because their emergency rooms are full to capacity.

But care at an outpatient center away from the city is even harder to come by for an uninsured patient in Cincinnati. Trey Daly, a senior lawyer from the Legal Aid Society in Cincinnati, said the typical scenario follows along these lines if a patient from Children’s Hospital or University Hospital is sent to an outpatient facility: “someone needs surgery at an outpatient center, and the surgeon requires payment upfront but the client can’t afford to pay so they are turned away.”

If the city’s nonprofit hospitals are turning away the uninsured because their emergency rooms are full, and the outpatient facilities are not accepting them because they can’t pay, uninsured patients only have clinics to turn to. Cincinnati has a total of eight free clinics set up to treat the poor. But, these clinics are only opened during business hours and are going to be more overwhelmed as the uninsured population grows. In October, the Greater Cincinnati Health Council released a report that said the number of uninsured people in Cincinnati has increased. Approximately 250,000 persons are estimated to be uninsured in Greater Cincinnati.

In Denver, four new hospitals have been built in the suburbs, and the three existing downtown facilities are uprooting. Presbyterian St. Luke’s Medical Center and St. Joseph’s are both building facilities on the University of Denver’s campus nine miles from downtown, while still maintaining services at the city hospitals. St. Anthony’s Hospital is leaving the city altogether and moving south to Lakewood where there is a better payer mix. Sbarbaro said this leaves the predominately Hispanic northwest Denver uncovered. There will be 39% fewer hospital beds in downtown Denver in the next couple of years because of these moves. This means less access to care for poor, uninsured patients.

Jim Hertel, manager of Managed Care Review, a monthly newsletter that covers Denver’s insurance and healthcare industry, said Denver Health has had to take on all the city’s poor since they are the remaining public hospital for uninsured. Rose and Swedish Medical Centers downtown are also feeling the impact of poor, he said.

Certain policies have fostered these health disparities between the insured and uninsured.
The certificate of need laws, originally designed to limit health care facility costs and allow coordinated planning of new services and construction, were repealed many years ago in several cities. Cleveland, Cincinnati and Denver are just a few examples where this has happened.

Benjamin said that doing away with the certificate of need laws has allowed hospitals to get away with a lot. “That they set it up that way is debatable, but the design of it was to abandon folks in the city,” he said. And unlike some other countries, the United States has no federal agency charged with hospital oversight. As is the American way, hospitals have turned into big conglomerates that compete with each other for business.

Although these big hospitals that are abandoning the poor could be easily mistaken for-profit hospitals, most are nonprofits. By law, nonprofit hospitals receive a tax exemption for providing charity care since they were originally set up to serve the poor. But after Medicare and Medicaid were created in 1965, the hospital industry argued that there would no longer be enough demand for charity care to satisfy the IRS’s tax-exemption standards. Most Americans, they said, would be covered either by the new government programs for the poor and elderly or by private health insurance.

Some of these hospitals have come under fire recently from patient advocates and members of Congress for slacking on charity care—especially as they build these new facilities away from the city center. Instead of defining charity work as caring for the poor, some hospitals think it’s acceptable to count health fairs as charity care. Still, they receive millions of dollars in tax exemptions and are able to compete as big businesses.

Colleen O’Toole, president of the Greater Cincinnati Health Council, attributes the
growth and expansion of the city’s hospitals to better reimbursement levels after federal budget cutbacks during the 1990s. By combing with other hospitals to form large health systems, individual hospitals have gained leverage and are able to negotiate better prices with health insurance companies.

One of the main reasons hospitals have done so well in the competitive health-care market today is because they have merged with a number of regional hospitals and family health centers in order to offer a single, stronger source for health insurance negotiations.

With this new capital, hospitals have been able to take on major construction projects, advance sophisticated technology and market it to paying patients. It makes sense that many of these new facilities are most accessible to affluent, well-insured consumers.

Hertel thinks the smarter hospitals saw an opportunity with the Bush administration and went on construction sprees. “The financial market was willing to finance hospital expansion… tied with the best level of Medicare payments in decades and the laissez-faire attitude of the government,” he said.

But as the number of uninsured keep growing, cities and states realize something has to be done. Twenty percent of adults in Colorado are uninsured. To make matter worse, Colorado has one of the most limited Medicaid programs in the country. The Blue Ribbon Commission on Health Care Reform was created by the Colorado legislature in 2006 to come up with ways to cover the uninsured and control health care costs. The commission realized hospitals played a significant role in the well-being of the uninsured. In its recommendation, the commission stated that “safety net providers such as community clinics and hospitals play an essential role in caring for those on public programs and those without any health coverage. If we expand public programs to include more people, and as we recognize that noncitizens will continue to need care even if they do not have coverage, we must preserve and enhance safety net providers’ ability to serve these populations.” This past March, however, health policy analysts in Colorado criticized the recommendations, saying they would damage the market and decrease consumer choice.

In Cincinnati, the situation is a little brighter. For the past 40 years, Cincinnati taxpayers have voted on a levy that gives money to Children’s Hospital and University Hospital. The indigent care levy is a measure that uses city revenue dollars to pay for the poor’s health care. University Hospital receives 80 percent of the local levy funds and Children’s Hospital gets the rest. On top of the money generated by local taxpayers, a federal program called the Hospital Care Assurance Program, or HCAP, has sent more than $147 million to the hospitals since 1996. Even with the extra money, hospitals said they lost a combined $12 million last year in providing health care to poor people.

Policies for hospital charity care have also improved in Cincinnati. Policies have  expanded income eligibility levels at a higher percentage above federal poverty levels recently. The Greater Cincinnati Health Council said in a report this year that while policies from hospital to hospital vary, a family of four with a household income of $80,000 would in some instances meet the requirements to receive discounted care.

Back at the uninsured forum in Cleveland, organizers believed they were doing something revolutionary when they got hospital representatives and uninsured people in the same room together that Saturday in November. “It’s a totally local level and it remains to be seen how much momentum this will get,” said Chella.