Hospitals Face Pressure, Six in Brooklyn Could Close

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From left, Long Island College Hospital, Brooklyn Hospital Center and Wyckoff Heights Medical Center, all of which state officials have said could close or merge.

Photo by: Jim Henderson, Freshpond, youngking11

From left, Long Island College Hospital, Brooklyn Hospital Center and Wyckoff Heights Medical Center, all of which state officials have said could close or merge.

If you want to do Regina Green’s job at Elmhurst Hospital in Queens, you’d better put on your running shoes. For the past 16 years, Green has worked as a lab technician in the hospital’s pediatric clinic, drawing blood, soothing nerves, running tests and logging results. The only lab technician for the entire clinic—a big, brightly painted room with bench seating, a snack cart and cartoon animals cavorting on the walls—Green toggles so seamlessly between greeting patients and doing blood work that you have to remind yourself she is working for 20 doctors, who may see between 70 and 90 patients a day.

“It’s crazy,” says Green, whose infectious smile, and sparkling eyes belie a slight limp and the use of a cane when she walks. Since Mary Immaculate Hospital in South Jamaica and St. John’s Queens Hospital in Elmhurst closed in 2009, the uptick in patient volume, particularly of those who are uninsured, has been staggering. “We have 50 percent more patients,” says Green. “They come from all over.”

Three years ago, then New York City Comptroller William Thompson warned the state Department of Health that Queens was on the brink of a crisis – the closing of St. John’s and Mary Immaculate and the near simultaneous emergence of the H1N1 virus were jeopardizing the ability of the borough’s remaining hospitals to provide quality care. And the problem was only going to get worse. “New York City is losing primary care at an alarming rate,” warned the former comptroller in a citywide health alert. “Since hospital outpatient departments represent a significant portion of the city’s primary care capacity,” the continued closure of New York City emergency rooms “has markedly reduced capacity.”

Flash forward to the present: three more hospitals have closed since 2009—one, Peninsula Hospital Center in Rockaway, Queens, just this year. Six more hospitals, all in Brooklyn, are currently on shaky ground.

None of this spells good news for low-income families and the working poor. When neighborhood hospitals close, it creates a domino effect, says Alyssa Aguilera, a health care advocate for New York Lawyers for the Public Interest. Families who once relied on hospital clinics for their care move to the next closest hospital, creating longer waits and endemic overcrowding. Care is disrupted, health records are lost, and patients become confused.

Under a plan now under consideration by the state Department of Health, six Brooklyn hospitals, all of them private, are being considered for merger or closure. If these hospitals are closed or consolidated, patients could be pushed into the public hospitals, overloading a system that is “already bursting at the seams,” says Aguilera. “There’s definitely the potential for a really negative outcome.”

Anatomy of a crisis

A quick survey over the past 10 years reveals a cascade of hospital closures around the city. It began in 2003 with the closure of Interfaith Medical Center’s second campus bordering Crown Heights. In 2004, Our Lady of Mercy Medical Center in the Bronx closed; that same year, Beth Israel closed its Manhattan campus on East End Avenue off East 87th Street.

In 2005, St. Joseph’s Hospital in Flushing closed, followed by St. Mary’s Hospital in Brooklyn. In 2008, four hospitals closed: St. Vincent’s Midtown Hospital and Cabrini Medical Center on East 19th Street in Manhattan, Victory Memorial Hospital in Brooklyn and Parkway Hospital in Forest Hills – and one, Manhattan Eye Ear and Throat Hospital, merged with Lenox Hill Hospital. In 2009, St. John’s and Mary Immaculate in Queens closed. In 2011, North General Hospital in Harlem closed and St. Vincent’s Catholic Medical Center on West 12th Street officially closed (though it had ceased taking patients the previous year). This past April, Peninsula Hospital in Rockaway, Queens, also closed its doors for good.

The contours of the crisis that faced these 15 hospitals around the city are different than those facing hospitals today. But the pressures overlap considerably. In its simplest dimension, the hospital problem is one of revenue—from insurers, Medicaid, Medicare and direct government subsidies—not being able to keep up with costs. At a deeper level, this economic imbalance reflects flaws in how hospitals are configured, physically and financially.

On the operational side, hospitals depend on the provision of high-priced specialty services to cover more traditional but less lucrative care. “Hospitals are high-cost places to get care. They have high overhead costs and are based on an elaborate system of cross subsidies,” explains David Sandman, who in 2004 served as executive director of the Berger commission, which looked at the financial viability of hospitals and nursing homes around New York State. The commission, known formerly as the 2004 Commission on Health Care Facilities in the 21st Century, quickly became a lightning rod for controversy when it called for the closure, merger or downsizing of hospitals across New York State – 13 in New York City alone.

Because hospitals can lose money on some of the key services they provide – such as running emergency departments and delivering babies, “they make money on other services,” explains Sandman, who now serves as senior vice president of the New York State Health Foundation.

To make up for the losses they incur, hospitals compete—aggressively–for patients needing the high-end, tertiary surgeries, such as open heart surgeries or surgeries to reverse spinal stenosis (a narrowing of the spinal column), where insurance reimbursements can run to the high tens of thousands of dollars.

But even if hospitals are able to use the reimbursements from tertiary care to cover the cost of primary and emergency care, many are still facing the problem of being too big, i.e. having too many beds. New York City is over-bedded for the simple fact that the demand for in-patient care has shrunk. With advances in medicine, many procedures that once required a hospital stay are now performed on an outpatient basis. Even when people are hospitalized, the length of stay across the board has come down. For hospitals, that means less money: The big bucks used to be in inpatient care.

Part of the reason why New York City is over bedded (according to some healthcare analysts 30 percent of beds in Brooklyn are vacant) is due to laxity on the part of the state. Once upon a time, to open a new hospital, healthcare executives had to prove a compelling need, but over the years, as regulations on hospital openings loosened, “everyone was growing their empires,” observes James Knickman, president and CEO of the New York State Health Foundation. “They could afford to do it.”

Not so now. With cuts in Medicaid and Medicare and private insurers slashing their reimbursements, hospitals have been backpedalling furiously, trying to figure out how to reconfigure their space to reduce the amount of inpatient beds and reconfigure their hospital systems to save money.

Hence the push, at least in Manhattan, among hospitals to merge their healthcare systems.

The urge to merge

Under the new federal health care law, health care providers will no longer be strictly reimbursed on a “fee for service” basis, but on the basis of how many people each system is caring for. Suddenly, says Knickman, health care providers have a huge incentive to cut costs and deliver care smarter and more efficiently. “Hospitals are realizing that they are not going to survive if the government reduces their [reimbursement] rate.” With health care systems getting a fixed amount of money to care for each patient in that system for a year, “there is a greater incentive to use resources more effectively.”

This is turn creates a motive to merge. Adds Sandman, “If you are bigger, you have additional negotiating clout” (with insurers). “It also offers opportunities to rationalize and consolidate your services.” Hospitals can create centers of expertise, says Sandman, where tertiary or complicated surgeries are performed at one location, and primary care services at another. And hospitals that merge don’t need two of everything anymore; a merger can bring cost efficiencies in areas such as laundry services, purchasing medical supplies, “all these things are quite expensive,” points out Sandman.

Across the country, the merger pressure is on, says Sr. Kathleen Kelly, chairwoman of the board of Ascension Health Care Network, a St. Louis, Mo-based health care network encompassing health care systems across 35 states. She ticks off the reasons: “a supply chain where you buy in bulk, maintenance services that are shared among all the hospitals,” and “being able to be large enough to negotiate with insurance companies.”

Hospitals can pay very high prices to provide certain types of care, “and as we become larger, we share in the pricing of that,” Kelly points out. “We have had in the last two years, five systems join us. So I think definitely the need for larger health systems is on the rise, because it’s very difficult for individual hospitals or even very small health systems to make it in this competitive environment.”

But while closures and mergers can make financial sense for individual hospitals, the costs and benefits to the larger, surrounding healthcare infrastructure can look quite different.

When a hospital closes or merges, health care advocates point out, it doesn’t just affect the hospital itself. It also affects all the facilities around it: pharmacies, specialty clinics, doctors’ offices, and ambulatory care centers that rely on hospitals to provide the subspecialty care they are not equipped to give.

When St. Mary’s Hospital in Crown Heights closed in 2005, the accompanying health care support system—the seven clinics associated with the hospital—went on life support.

“St. Mary’s was one of those hospitals that actually had federal funding to do community health centers and they had a network and they really did a great job,” recalls Judy Wessler, director of the Commission on the Public’s Health System. “Finally, Kingsbrook Jewish Medical Center took over five of the seven clinics.” Eighteen months later, says Wessler, “there was only one.”

Waiting for the future

The prospect of more hospital closings or mergers has other clinics wondering what their future holds.

“The major problem is the health care system is so fragmented. Nobody talks to each other,” complains Barbra Minch, president of the William F. Ryan Community Health Center, a federally qualified health care center (FQHC) with four locations around Manhattan.

Ensuring people have access to care, and good care, is a constant struggle, says Minch, whose centers serve a mix of patients, some with Medicaid or Medicare, and a tiny smattering with private insurance. The rest, about 30 percent of her patients, are uninsured, mostly the working poor that don’t qualify for Medicaid.

For years, the Ryan center has had a mutually beneficial agreement with Continuum hospitals: Medical residents at Beth Israel, a member of the Continuum network, treated patients at the Ryan center, and the Ryan center’s patients in turn were referred to Beth Israel or St. Luke’s-Roosevelt for subspecialty practices, such as gastroenterology or vascular services. The hospital’s doctors were respectful, saw center patients in a mostly timely manner, and most important, “they saw our uninsured at low costs, and took our Medicaid. They were good,” says Minch.

This past April, the Ryan center went into yellow alert with the news that Continuum was in talks to merge with NYU Langone Medical Center. Those talks broke off in June when a small group of Continuum board members approached Mt. Sinai Medical Center about a possible merger instead. Talks with Mt. Sinai are still ongoing. Minch says she has received assurances from Continuum that her patients will still “have access” to Continuum services, but what that means exactly is still unclear.

“If they (Continuum) are merging with hospitals planning to open primary care sites all over the place, that is a threat to us.” Those primary care sites will want her Medicaid patients, “and if we don’t keep Medicaid patients, how do we see the uninsured?”

Because the Ryan center is a federally qualified health care center (or FQHC), it receives an enhanced rate for all its Medicaid patients, which helps defray the cost of seeing patients with no health insurance. If their Medicaid patients are picked off by other primary care clinics, there is no way for the Ryan center to stay open, says Minch.

Minch relies heavily on the enhanced Medicaid rates paid to FQHCs to keep her centers operational, but it’s a battle to get the money she needs to provide the care her patients deserve, because of the constant competition with other hospitals and health care centers for “paying patients,” those with publicly funded or private health care.

For the uninsured, she adds drily, “there is no competition.”

A borough under strain

Crudely put, hospitals in Queens closed both through mismanagement – two separate health care consortiums failed to save Mary Immaculate and St. John’s – and due to the fact that they couldn’t attract the kind of well-insured, specialty-seeking patients who pay enough to permit a hospital to cover the costs of other kinds of care. The mergers in Manhattan are motivated by a desire to avoid the same fate.

In Brooklyn, however, the health care infrastructure faces an even more daunting challenge: A staggering 35 percent of borough residents with commercial insurance elect to go to Manhattan for care, along with 13.5 percent of residents with Medicaid. In a borough where 40 percent of the residents are on Medicaid, nearly one quarter are living in poverty, and 15 percent are uninsured, the flow of health care reimbursement dollars out of Brooklyn is creating a financial vacuum, putting the entire borough’s health care system at risk.

Most threatened are six hospitals that state officials have targeted for possible closure, merger or downsizing: Brookdale Hospital Medical Center, Brooklyn Hospital Center, Interfaith Medical Center, Kingsbrook Jewish Medical Center, Long Island College Hospital, and Wyckoff Heights Medical Center. And of the six, three, Interfaith, Brookdale and Wyckoff, are considered to be in extreme financial crisis.

Simply put, there’s not enough money that stays in Brooklyn to cover the cost of taking care of sick people in Brooklyn, says Grace Wong, vice president of managed care and clinical business at SUNY Downstate. And with patients in Brooklyn arriving at Brooklyn hospitals and health care centers with competing, high-risk problems—asthma, hypertension, diabetes—the health care safety net is fraying badly.

Brooklyn has a “very different population” than Manhattan’s, says Wong. “In underserved areas, it costs you more to serve ambulatory types of patients, or inpatients; because the patient has more needs.” They may want a free meal, or need free drug samples, so they may wait to be discharged. They often arrive with comorbidity conditions, meaning they come in for one issue, say hypertension, but often have other serious problems as well, asthma, or diabetes or high cholesterol.

In Brooklyn, “many of these clinics and hospitals have failed not because of incompetence,” Wong says (though she notes that happens, too) but because “it costs them more because the people have a lot of needs, have more comorbidity conditions, but their reimbursements are the same as Upper East Side clinics. It’s never a level playing field.”

Obama reform carries risks

So Brooklyn is in a bind, and just about everyone is holding her breath to see what happens once the Affordable Health Care Act (ACA) goes into effect, on January 1, 2014.

While there are many positive provisions under the new law, say health care advocates—more money for federally qualified health care centers, continued coverage of pre-existing conditions, another 1.68 million people in New York State alone enrolled in some form of health insurance coverage—not all the changes will be beneficial, particularly not for hospitals in Brooklyn.

Under the new health care law, Medicare reimbursements will be reduced and DSH payments (federal dollars allocated to low-income patients) will be cut, under the theory that fewer hospitals will need the money, because more people will be enrolled in some sort of health care. Of the remaining DSH funds, the new law mandates that the money go to those hospitals serving the highest number of Medicaid patients and the uninsured. In fact, states that don’t allocate the funds to the neediest hospitals stand to lose the money outright – a mistake that could cost New York State alone “hundreds of millions of dollars,” warns Wessler.

Those cuts, coupled with the capping of Medicaid reimbursements on the state level, have the potential to “devastate” hospitals in Brooklyn, a panel of health care advisors—the Brooklyn Working Group of the Medicaid Redesign Team (MRT)—warned in its final report to the State Department of Health in November of last year.

While it was necessary for Brooklyn to create “integrated systems of care” aligned “with community needs” while “reducing unnecessary health care spending,” federal cuts in Medicare coming on top of the state’s capping of Medicaid payments was very bad news for six Brooklyn hospitals already on shaky ground, wrote the health care panel.

“We have not calculated the cumulative effects of these changes (cuts to Medicaid, Medicare and DSH payments) on the bottom lines of the six focus hospitals but acknowledge that, under their current configurations and cost structures, significant reduction in Medicare and Medicaid would be devastating.” There was no way these hospitals, with their heavy reliance on Medicaid and Medicare, could “expect commercial payers to fill in the gaps,” the panel warned in report delivered last November.

A surprise in the ER

“Brooklyn is over bedded and it’s underfunded and the underfunding is going to get worse,” warns Larry McReynolds, head of the Lutheran Family Health Care System, a nine-location health care network associated with Lutheran Hospital in Sunset Park. “Hospitals will close and there will be money for health centers to open,” but whether those centers choose to operate in underserved neighborhoods in north and central Brooklyn remains to be seen, he says.

While hospital closures are actually good news for McReynolds and Lutheran – they pick up the patients and the outpatient services the closed hospitals used to provide— it’s bad news, he acknowledges, for residents living in neighborhoods where there aren’t viable alternatives to the local emergency department. And that remains true whether the residents have insurance or not, according to a new survey on emergency room usage.

Hoping to dig deeper into the whys of health care delivery in Brooklyn – in particular, why so many people seemed dependent on emergency rooms for primary care—a coalition of area hospitals and businesses led by Grace Wong at SUNY Downstate, known collectively as the Brooklyn Healthcare Improvement Project (B-HIP), recently produced an exhaustive study on the use of emergency rooms by low-income people in North Brooklyn.

Two years in the making, the 59-page study was the result of the survey’s collaborators, including SUNY medical residents, walking or driving every block in 15 zip codes across East New York, New Lots, Wingate, Bedford Stuyvesant, Crown Heights, Flatbush and Farragut to find out what primary care facilities were open and accessible—counting health clinics, ambulatory clinics, specialty clinics, drug and alcohol treatment centers, pharmacies, surgical supply stores and doctors’ office, and comparing what was present to what was listed in phone books and on the web.

The medical students then deployed to six local hospitals (the same ones identified as on weak financial ground by the Brooklyn Working Group of the Medicaid Redesign Team), and over a two-week, 24 hour a day period in the winter of 2010 and the summer of 2011, interviewed 11,600 patients about why they were in the emergency department.

The primary reason: it was open and accessible when they needed care.

While it was no surprise to Wong and her colleagues that many people use emergency departments or EDs for what is called “non-emergent” or non emergency reasons – 48 percent, in fact, of those interviewed said they did so – what was news was how many of those with non-emergent conditions had insurance: 41 percent.

Conventional wisdom has long held that it’s the uninsured that use the ER as their family doctor. So why were people with insurance seeking primary care in the emergency room?

The answers ranged from not knowing whom their primary care doctor was, to not being able to get a timely appointment, to feeling that the local primary care facilities were outdated and that the staff was disrespectful.

“When we asked patients where they would go if their local ED was closed, the answer was, they would find another ED to go to,” says Wong.

So to move patients seeking primary care out of emergency rooms, you can’t just give them insurance. You also have to figure out a way to get them connected to the right kind of care.

Questioning a prescription

After six months of visiting all 15 hospitals around Brooklyn, holding three public hearings and assessing “reams of data,” the Brooklyn Working Group of the state Medicaid Redesign Team came up with the same conclusion. Citing in particular B-HIP’s survey work of patients in area emergency rooms, “new models of patient-centered care must be developed,” the panel noted in its final report, and assessed for “geographic accessibility, quality, affordability and cultural competence.”

The problems in Brooklyn are far reaching, the working group noted: primary care and outpatient behavioral health providers “are unevenly distributed and insufficient in several high need areas.” Emergency departments are used heavily for nonemergency or primary care treatable conditions and “too often Brooklyn residents are admitted to hospitals for conditions that could have been prevented through high-quality primary care.” More than 15 percent of adult medical-surgical hospital admissions and 46 percent of all emergency department visits that do not result in a hospital admission in Brooklyn could be averted through high quality, accessible care in the community, the Brooklyn Working Group of the MRT noted.

But while they echo the panel’s diagnosis, many health care advocates question the panel’s key recommendation for remedying the borough’s health care crisis—in particular its proposal that the six hospitals in weak financial straits merge and or consolidate their services.

In its report, the Brooklyn Working Group recommends the merger of Kingsbrook Jewish with Brookdale Hospital; the merger of Brooklyn Hospital, Interfaith and Wyckoff hospitals; the consolidation of the SUNY Downstate Medical Center to one Downtown Brooklyn location (the Long Island College Hospital campus) as well as the closure of a seventh hospital, Kingsboro Psychiatric Center, and the transfer of those patients to community based clinics.

Advocates don’t see how the state can close hospitals in Brooklyn without having a better primary care infrastructure in place first. “You have to build the primary care infrastructure before they close the hospitals,” McReynolds says. “No way you can close Wyckoff, Brooklyn and Interfaith if you don’t have health centers that are full service in the community. You have do that piece first—build the primary care infrastructure, give people access to health care, educate them on the appropriate place to go – then you can close the hospital.”

In essence the panel’s plan addresses one problem, but in a way that exacerbates another. Hoping to shore up hospital finances by getting rid of excess beds, the panel wants hospitals to consolidate or close. But over-bedding is only one half of Brooklyn’s hospital problem. A lack of primary care options is another. And closing or merging hospitals—with all the ripple effect that could have on clinics and other provider networks—only deepens the primary care deficit.

The health plan proposes cutting beds before the primary care system has been strengthened and expanded, says a frustrated Alyssa Aguilera: “Instead of building the infrastructure and primary care and having that set and saying ‘okay, do we need all these inpatient beds,’ they do the reverse.”

“As highly regulated as New York State is, the state really doesn’t seem to regulate hospitals much,” adds Elisabeth Benjamin, head of health care initiatives with the nonprofit advocacy group Community Service Society (which owns City Limits. That lack of oversight on a state level has had repercussions not just in the over-expansion of some hospital systems, but also in the dispersal of key charity care dollars. Last year New York State received more than $1 billion from the feds to pay for charity care, and yet some hospitals that received that money ended up dunning the very patients they were supposed to use the money to provide care for. The whole system for distributing critical charity care dollars is “dodgy,” says Benjamin.

Over at Elmhurst Hospital in Queens, administrators are working on instituting new protocols to address the impact of overcrowding. Handwritten signs behind the pediatric registration desk remind staffers to be courteous to patients as well as to one to another, and the snack cart that rolls out at 11:30 a.m. includes milk and juice as well as tiny bags of chips.

All these are part of the overall efforts to improve the hospital’s relationship with its patients, says Green. “They’re figuring out ways to get the patients in and out and still give the care. In some ways, it’s working and some ways it’s not.” The hospital remains chronically understaffed and there’s only so many ways you can stretch personnel. Wait times for blood work can run from one to four hours, says Green, who adds, “I still think we do an excellent job, with the volume of people we have.” As for the patients, some people get agitated, says Green, but on the whole, “people understand and work with it.”