Valley Baptist CEO has big plans for BMC
By MEL HUFF
The Brownsville Herald
May 30, 2004-What Brownsville's largest hospital will be called after its sale has yet to be determined.
"For the time being it's going to be called Brownsville Medical Center," said James G. Springfield, president and chief executive officer of Valley Baptist Health System, the buyer. "We just haven't gone into that kind of detail. We don't even close until June 30."
Specific answers to many questions will have to wait until after next month's closing, but Springfield did offer some general observations.
"The charge master (rate schedule) probably bears a look," he said. "We'll be analyzing that."
A study by the California Nurses Association in June 2003 found BMC to have the highest cost-to-charge ratio, or mark-up, in Texas.
"There's no question that (BMC's) nominal rates-their charge master-are considerably higher than several other hospitals in the (Rio Grande) Valley," Springfield said. But he declined to discuss what action might be taken. "We haven't gone with any detail and looked at their charge master and made any decisions," he said, noting that hospital charge masters often include 15,000-20,000 line items.
A study of hospital charges by the Texas Business Group on Health released in January showed Valley Baptist's rates for six procedures to be much lower than BMC's. In general, rates for all Valley nonprofits were lower than those of for-profit hospitals. Valley Baptist is a nonprofit health system. Brownsville Medical Center is currently owned by Tenet Healthcare Corp., a for-profit organization.
Springfield noted that many factors affect a hospital's charges. The government fixes Medicare and Medicaid rates, so hospitals try to pass costs that exceed those programs' reimbursements through to private insurance companies that base their payments on charges.
"(Hospitals) have to raise their rates because so much of their reimbursement is fixed and their costs are going up. That's the Robin Hood plan of hospitals all across the country," Springfield said.
He said whether Brownsville Medical Center will continue to operate as a taxable, for-profit entity or as part of Valley Baptist's nonprofit system has not been determined. Valley Baptist has several subsidiary organizations that are taxable.
"Several physicians are interested in owning the hospital," he said. "If the physicians wanted to buy a percentage of that hospital and be partners in the deal, we would entertain that. If that happened, then necessarily that would be a taxable entity."
Springfield confirmed that there is a difference in the amount of uncompensated care-charity care plus bad debt-that Valley Baptist and BMC provide and that the amount might change. He said uncompensated care equals 12 percent of Valley Baptist's total revenue, but he declined to comment on BMC's rate "because we don't own it yet."
In general, he observed, the total cost of health care rises as the number of outlets increases. "It's a supply-side driven economy," he explained.
Consolidation of services offers an opportunity to achieve economies of scale.
"We look for opportunities to streamline support services and administrative services, ancillary services. You have a fixed component of those expenditures right now, and our notion is that we can ... get some economy by adding operating units," he said.
However, decisions about clinical services will be determined by local medical staffs and clinicians. "You don't just go in and start moving clinical services around. They're not portable," Springfield said.
There is no plan to merge the medical staffs of Valley Baptist and BMC.
The medical staff organizations of each hospital are separate and distinct, Springfield noted. Each staff has its own bylaws.
"We have to be respectful of those systems that have grown up over the ... years and build upon them," he said.
Springfield expects the consolidation to make it easier to attract specialists and subspecialists to the Valley.
Having a larger system and a partnership arrangement with the Regional Academic Health Center should improve recruiting ability, he theorized.
"(Some) specialties are so subspecialized that they have to cover multiple hospitals. Well, if you've got multiple hospitals for them to cover, it makes it a whole lot easier," he said.
Valley Baptist's plan is not to compete with BMC for patients but to enhance existing services in Brownsville.
"(BMC's) been a little bit capital starved. We're going to put a significant amount of money into that facility in the first four or five years of ownership, and I think you'll see a facility much improved from the perspective of the physical plant," Springfield said.
Decisions on investments in physical capacity, equipment, new services and training will be made with the involvement of clinicians and doctors, he noted.
The motive for Valley Baptist's recent expansions, including the purchase of BMC, was to bring care closer to its patients. Only 38 percent come from Harlingen. The other 62 percent come from "Brownsville, McAllen, Mission, Rio Hondo, La Feria, Pharr, Alamo - everywhere," Springfield said.
When Springfield came to Valley Baptist three years ago, the board's consensus was that "we really need to grow and expand our presence to increase our capability of taking care of and providing services to meet the needs of these patients." Consequently, for the past three years, Valley Baptist has been working "very diligently" on a growth strategy, he said.
Springfield knew that Tenet's strategy was to cluster its hospitals around urban areas, and that BMC was a "stranded asset."
Six months after he started working at Valley Baptist, he called Tenet's headquarters and asked if the corporation was interested in selling its Brownsville hospital. The answer was no. But when Tenet announced BMC was for sale and contacted Valley Baptist, Springfield said, "We were sitting in a position to respond very quickly. We were ready for it.
"It's not the only thing we're going to do in Brownsville," he added. "We're very committed there."