OSU hospital again facing crisis
BY JANET PEARSON Associate Editor
Sunday, February 10, 2013
2/10/13 at 7:31 AM
This might have a familiar ring to it:
If the Oklahoma State University Medical Center in downtown Tulsa does not receive an adequate level of funding from the Legislature this session, then the hospital will have to close. If it receives only an inadequate amount, services will have to be drastically reduced.
If the hospital were to close, the residents and medical students training at the OSU Center for Health Sciences' College of Osteopathic Medicine would face an uncertain future - and maybe no future at all in Oklahoma. And the remaining Tulsa hospitals would face a huge influx of new patients, many of them uninsured.
Whew. Here we go again.
It was just a half-decade ago when the hospital was last on the brink of closure, leaving many of the OSU medical school's residency programs in limbo, and thousands of patients wondering where - or if - they'd receive care.
But lawmakers came through with a plan - albeit not a permanent solution - for keeping the hospital and medical school in business for another five years. The Legislature approved $25 million in funding over five years to keep the hospital operating. The city of Tulsa created a public trust that the hospital was placed in, and St. John Health System stepped forward to operate the hospital. The George Kaiser Family Foundation also donated funding to help stabilize the situation.
The plan literally was the hospital's salvation. But it wasn't a cure-all.
Over the last few years, OSU has been able to leverage the $5 million in annual state funds to obtain federal matching funds, resulting in an annual total of about $17 million a year for operations, explained OSU-Tulsa President Howard Barnett. But that leveraging capability is about to end, he added, which is one of the reasons the operational funding problem has become urgent.
Capital funding also is a big problem. OSU has borrowed money and used some of its own funds to finance some much-needed capital and equipment purchases to keep the hospital in adequate operating condition.
Diane Rafferty, the medical center's new chief executive officer, explained that the hospital's condition reflected the failure of past operators to "put anything into it."
"We had beds there that weren't even safe," she said. "There are federal programs that take used hospital equipment and give it to Third World countries, and even the federal government wouldn't take some of the stuff."
So while the legislative rescue plan, along with the extra aid from OSU and private philanthropy, saved the hospital in the short term, by no means were these combined efforts a long-term solution. Nor were they meant to be. Which brings us to today.
An analysis of the hospital's needs and projected revenues shows the medical center will need an additional $18.25 million in annual operating revenue "to maintain the teaching program and continue to serve our patients" who are uninsured.
Rafferty said it is unusual for a teaching hospital to receive no state subsidy, and equally unusual for a public hospital not to be subsidized. The OSU medical center is both.
In addition to an annual operating subsidy, the medical center also needs about $19 million in one-time funding for such capital improvements as a parking garage, heating and air-conditioning system improvements, other repairs and maintenance, and implementation of an electronic health records system.
And why, some leaders might ask, should anyone outside of Tulsa care if a Tulsa hospital stays open? In a nutshell, because Oklahoma is facing one of the worst physician shortages in the nation, and OSU is one of just a few physician pipelines producing more doctors for the state. OSU currently is training 154 residents and 185 medical students, and past history suggests the majority of them will establish their practices in Oklahoma.
What's more, because of its status as both a public hospital and a teaching hospital, patients come from all over Oklahoma and even other states to get care here.
If the OSU medical center were to close, the 45,000 emergency-room visits it handles each year would end up being handled by other hospitals - which would be a crushing financial blow to them. About 19,000 of those ER contacts are patients who have no ability to pay. More than 10,000 patients who also cannot pay also receive inpatient care each year at the OSU hospital.
In addition to funding, the OSU medical center is in need of a new operating partner, in part because of federal health-care reform. The operating partnership with St. John proved to be unfeasible, in large part because the two hospitals are in reality competitors.
"Because of all the hoops we're going to have to jump through in the next few years, it's really hard to do it stand-alone. And you're not going to get a partner without state funding," said Rafferty.
OSU leaders are negotiating with a national hospital administrator and Barnett said the talks are promising. But any deal would have to be contingent on state funding.
And if the hospital gets no new state funding? "Then we start closing down the hospital," said Rafferty. And if funding is below what is needed - say only $5 million or so a year? "Then we start the process of cutting services," she added, which would mean shutting down some major services such as the surgery center, and significant job losses. Inadequate funding also would mean further deterioration of the physical plant, which would jeopardize the medical school's accreditation as well as patient and employee safety.
Some unfamiliar with the health-care landscape may dismiss the hospital's plight as Tulsa's problem. But it plainly is a statewide problem. The OSU medical school and hospital are a vital component of the state's health-care delivery infrastructure.
If you don't believe it, consider the case of the Martin Luther King Jr.-Harbor Hospital in Los Angeles, which was closed in 2007 after years of major problems. Rafferty was a federal regulator at the time and had recommended the closure. "When we closed it, another hospital 32 miles away that was hit by the extra patient load had to downgrade its ER, and two other hospitals that were severely impacted had to close," she recalled.
The OSU hospital "has to survive," she said. "It is so important to the future."
Original Print Headline: Unhealthy Situation
Janet Pearson 918-581-8328
The OSU Medical Center is facing a critical funding shortage. TOM GILBERT/Tulsa World file