Health Care and St. Francis and Health Care Reform and Hospitals and Health Care & Life Sciences

St. Francis CEO says Beech Grove move inevitable

March 19, 2007

Robert J. Brody, president and CEO of St. Francis Hospital & Health Centers, announced March 8 that St. Francis would shutter its inpatient hospital in Beech Grove, where it has operated since 1914, and expand its hospital on the southern rim of Indianapolis by 2010. In an interview with IBJ, Brody laid out the ills that now beset hospitals here and across the country. Below is an edited transcript of reporter J.K. Wall's conversation with Brody.

IBJ: From the day St. Francis opened its south-side Indianapolis campus in 1995, local health care consultants say, you knew you would have to shut down the inpatient services at Beech Grove at some point. Is that true?

BRODY: Absolutely that's true. We bought that [Indianapolis] campus property back in 1989 with the long-term vision of ultimately relocating our inpatient activities to that campus as we found need to upgrade, refine and redesign our model of delivery. Certainly, with the opening of our south campus back in 1995, the writing was on the wall.

IBJ: When St. Francis ends inpatient and emergency room care in Beech Grove in 2010, won't you be leaving Beech Grove in the lurch?

BRODY: Not at all, not at all. We'll continue to provide services here in this community, primarily within the outpatient arena. Eighty to 90 percent of what we do is in the outpatient arena. We will be more centrally located now that the population has shifted farther and farther south. And in building new, what we'll be doing is, in fact, consolidating and eliminating a lot of costs in our current program. Maintaining two acute-care hospitals seven miles apart, there's a lot of redundancy and lot of inefficiency.

IBJ: You've been critical of the recent boom of hospital building in Indianapolis' suburbs. Isn't St. Francis now doing the same thing?

BRODY: We're staying in our own community, and we're operating and maintaining our not-for-profit status. I don't know that that is necessarily true for a lot of the hospital development you're seeing across the state. You will find it's been in service areas that historically have already been served by providers. A lot of it is designed to deliver services that are of a more lucrative nature.

IBJ: Why do you think it's wrong to build a for-profit hospital?

BRODY: One of our principal failings, I think, is the emergence of the for-profit hospital and what it does to the existing network of not-for-profit hospitals. In my mind, there is an obligation that we have to provide for the poor and the underserved in our communities. What we are seeing is that this entrepreneurial spirit is undermining the traditional not-for-profit hospital's ability to serve as the safety net in their community. It erodes our ability to generate the [profit] margin necessary to continue operations in [unprofitable] services. So you find hospitals cutting back.

IBJ: If for-profit hospitals are, indeed, skimming off profitable patients, is the pressure they create any worse because of WellPoint/Anthem's dominance of the health insurance market here?

BRODY: What's happened is, Medicare and Medicaid don't pay costs. They pay less than cost. There's a differential there that needs to be made up. That differential is typically borne by the commercial side, those with private insurance, in a thing called a "cost shift." So the cost shift has created a burden on the private employer and those who provide private insurance. And those costs continue to grow. All that does is add to the uninsured population.

And the insurance companies come in, and Anthem's a great example, intent on lowering costs by using whatever leverage they have to lower the reimbursement to hospitals. That forces us to operate more efficiently, and that's a good thing.

There's no question there is opportunity for us to provide our services more cost-effectively. What suffers, however, is that we're not able to do as much as perhaps we've done in the past for those elements of the community that are underserved.

IBJ: What's been the result of this cost shifting?

BRODY: What we've created is an environment that is not very fair to a significant portion of the population and is creating an uncompetitive employment situation for businesses, because costs are higher here in Indiana. We effectively are taxing our employers and those who pay for private health insurance [to cover] the costs associated with the gap between cost and reimbursement for Medicare or Medicaid and the cost associated with one-sixth of the population that has no coverage.

IBJ: With all these problems, you've said in the past that we're headed for a single-payer health care system, where tax dollars, funneled through the federal government, pay for everyone's health care.

BRODY: I don't know that I've ever subscribed to a single-payer approach. I think universal health care is something that we need and desperately. How we get there remains to be seen.

IBJ: Actually, during a panel discussion in September 2005, you said, "We have so many vested interests at stake here trying to protect the status quo that the inevitable answer, the ultimate answer, is a single-payer system that takes care of everybody and lets the providers compete for that business as necessary. It works in other countries around the world. It can work here."

BRODY: Ultimately, I think we'll end up like the education system. We'll provide health care services for the entire population. And my guess is, given the nature of our society, we'll allow for a two-tier system to evolve, where those with means or interest [are] accessing a different model than that available to the mainstream public. It's a little bit different than the single-payer system. The single-payer is something like the post office [with] no UPS.

IBJ: Do you think that's the best solution?

BRODY: I don't know what the best solution is. I'm only one person. I think that there has to be a better solution than we have today. We're one of two developed nations in the world without universal coverage. That's a travesty. In effect, we offer health care services for everyone, but they have to access it through the emergency room or some other means. And everyone is paying for it through this cost shift that occurs.

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