Thursday, October 16, 2008

Ascension Health's Descent Away from its Mission

This week, the Wall Street Journal continued its series on US not-for-profit hospitals and health systems with a story about how Ascension Health is abandoning inner-city Detroit for the more affluent suburbs,

Ascension Health, the country's largest nonprofit hospital system, says its mission is to serve all, 'with special attention to those who are poor and vulnerable.' But in this city, where one in four people don't have health insurance, it's become harder for the poor and vulnerable to find Ascension.

Last year, Ascension's local subsidiary closed Riverview Hospital, the third hospital it has shut down in Detroit in the past 10 years and the only hospital that remained on the city's blighted east side. Meanwhile, 30 miles away, in a suburb of multimillion-dollar homes, Ascension is opening a new $224 million hospital.

Ascension's approach to the Detroit market is an increasingly common strategy among nonprofit hospital systems: Close money-losing facilities in poor areas where a large share of patients are uninsured, and build or refurbish hospitals in affluent places where people have private insurance coverage.

Before its closing, Riverview was one of the few remaining hospitals in the Detroit city limits. Of the 42 hospitals that dotted this 139-square-mile city in 1960, only four are now left. At the same time Detroit's hospitals have dwindled, its number of uninsured has grown. An estimated 200,000 of the city's 800,000 residents have no health insurance.

Located in one of Detroit's poorest wards, Riverview sits among empty buildings on East Jefferson Avenue, a thoroughfare sprinkled with subsidized senior housing, empty and overgrown lots, partially burned homes, and graffiti-stained shops.

Even in a struggling city, Riverview's neighborhood stands out for its abysmal statistics: Thirty-four percent of the population lives below the poverty line, infant mortality is more than double the national average and the rate of AIDS deaths is five times higher, according to Richard Lichtenstein, an associate professor at the University of Michigan's School of Public Health. Its poor patient base made Riverview a perennial money-loser.

The closing of Riverview Hospital by Ascension Health seems to be a product of Ascension's current business strategy.

Shutting down unprofitable operations and expanding profitable ones is a common business maneuver, but nonprofit hospital systems aren't ordinary businesses. They're required to provide benefits to their communities, such as free care for the indigent, in exchange for the billions of dollars in annual tax exemptions they receive.
Ascension, which is affiliated with the Roman Catholic Church, says its more profitable subsidiaries can't be used to subsidize those that are struggling. 'Such an approach would mean that needs in other communities may not be met,' says Ascension spokeswoman Trudy Barthels. The 38 subsidiaries, which Ascension calls 'health ministries,' operate with a large degree of independence and have to be 'self-sustaining,' she says. Ascension adds that it ties how much capital it allocates each subsidiary, in part, to its profitability.

How Ascension Health regards its individual hospitals is similar to how many academic hospitals now regard their departments and divisions. Each sub-unit is regarded as semi-independent, and responsible for bringing in its own revenue.

That makes sense, to a limited degree, if one regards each sub-unit as a separate production facility in a business.

BUT IT MAKES NO SENSE to run a not-for-profit health care organization in this manner. A not-for-profit first and foremost is supposed to fulfill its mission, not make a profit (hence, the term "not-for-profit.) Thus, in a not-for-profit, each sub-unit should be viewed in terms of how its work fulfills the total mission.

Thus, it might make sense for a hospital system whose mission is to care for the poor to allow certain sub-units to run at a financial loss if they are important to this mission. It might also make sense for an academic medical center whose mission is to provide education and research to allow certain sub-units to run at a financial loss if they are important to this mission.

So what is Ascension Health's mission? It is:

Rooted in the loving ministry of Jesus as healer, we commit ourselves to serving all persons with special attention to those who are poor and vulnerable. Our Catholic health ministry is dedicated to spiritually centered, holistic care, which sustains and improves the health of individuals and communities. We are advocates for a compassionate and just society through our actions and our words.

The hospital system states that:

We are called to:

Service of the Poor — generosity of spirit, especially for persons most in need
The abandonment of Riverview, apparently on financial grounds, appears to be in stark contrast to that mission.

Furthermore, per the WSJ, Ascension Health seems instead to be devoted to increasing its bottom line, and rewarding its top leader sufficiently to make him rich:

Net income at Ascension, which owns 67 hospitals located mostly in the Midwest, South and Northeast, nearly tripled to $1.2 billion between 2004 and 2007 thanks largely to investment gains. With financial markets struggling over the past year, Ascension reported net income of $351 million for the year ended June 30.

Ascension is also a well-oiled money machine with sterling credit ratings. Its cash and investments totaled $7.3 billion for the year ended June 30, including about $1 billion restricted to self-insurance trust funds or limited by donors for specific uses or to be maintained in perpetuity. Ascension's chief executive, Anthony Tersigni, earned $2.4 million in total compensation in 2006, according to the hospital system's latest filing with the Internal Revenue Service. Ascension declined to provide more recent compensation figures.
It appears that Ascension Health displays the most "generosity of spirit" to its own CEO.

I am not a Catholic, so perhaps am less qualified to comment than others. But it seems there ought to be some special place, not a comfortable one, reserved for organizations that promise service to the poor while raking in billions, and paying their leaders millions.

This appears to be a classic, and tragic example of mission-hostile management by the leadership of once proud not-for-profit health care organizations. It suggests why we need a wholesale reassessment of how such organizations are lead.

Is it any wonder that health care costs rise while access falls when those pledged to increase access mainly seem to be about increasing their own bottom line?


Anonymous said...

non profit hospitals are no different than for profit hospitals. It's a matter of creative accounting.

BJC, a st. louis based non profit, got busted earlier this month for over-billing, et al., and was fined.

Anonymous said...

We are seeing this all over NE Ohio as hospitals try to realign themselves to improve the bottom line, and I am referring to nonprofit. From my perspective the patients these hospitals serve are the chronically ill. The ER becomes a substitute for a primary care giver. They know what they have and scans or test are not going to improve their quality of life.

So now we have these large empty buildings, best suited to serving this population, standing empty. There is no glamor in not having the latest CT scanner and who wants to ask for still functional out of date equipment. Heaven forbid we ask doctor's to practice old fashion medicine with their hands and their heads to simply improve the quality of life of these people.

I have come to the conclusion that people do not want universal care. What they want is unlimited universal care with all of the bells and whistles possible, needed or not, and we have a large group of hospitals willing to give them that service, for a price we cannot afford.

Steve Lucas