The Dose

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Health Care & Life Sciences / Life Science & Biotech

St. Vincent hospitals not quite as rich as they seem

January 27, 2014
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The reaction has been palpable ever since I wrote that St. Vincent Health is in solid financial shape.

Apparently, copies of my story were posted in St. Vincent nurses stations and have circulated among current and former St. Vincent employees. They feel my story doesn’t fit with what their bosses are telling them.

“I find it interesting that this article was published right on the heals of he hospital informing their employees that will not receive raises or bonuses again this year; citing profitability and uncertainty,” wrote one of the 15 commenters that responded angrily to the article.

I’m not privy to those conversations. And I didn't interview any St. Vincent execs before writing my article--I just summarized their annual financial report, which can be read here.

If St. Vincent execs have claimed that slower growth in reimbursements from Medicare and private health insurers means they’re at risk of closing their doors, it wouldn’t be the first time health care executives have trotted out that bit of hyperbole.

But I should point out one piece of St. Vincent’s finances that I did not mention in my previous story—which should give the execs a bit of vindication.

St. Vincent Health has been sending roughly $50 million to $70 million every year to its parent company, St. Louis-based Ascension Health, to support other hospitals in Ascension's 93-hospital network.

For example, in St. Vincent’s most recent year, it transferred $68.8 million to Ascension, which effectively sapped 41 percent of St. Vincent’s operating profit for the year. During the previous year, St. Vincent transferred $48.7 million to Ascension, which represented 24 percent of its operating profit that year.

Local St. Vincent executives have privately complained about this for years, because it ties their strategic decisions not to their own performance, but to the performance of all other Ascension hospitals, many of which are in areas that don’t have nearly the level of wealth that Carmel and Indianapolis do.

Local hospital executives tell me Ascension is an extremely mission-driven organization, which is committed to keeping hospitals open in areas that need them—even if those hospitals aren’t self-sustaining.

That means Ascension’s most profitable markets—Austin, Texas, Nashville, Tenn., and Indianapolis—have to support the rest.

To some extent, every local hospital system has this issue. Some of their hospitals are wildly profitable, while others are losing money or breaking even. That’s even true within the St. Vincent system.

According to St. Vincent’s most recent financial report, money-losing ventures, such as St. Vincent Medical Group, St. Vincent Fishers Hospital and St. Vincent New Hope, received transfers from Ascension. St. Vincent Medical Group, the hospital system’s group of 800 employed physicians, received a substantial $158.2 million transfer from Ascension.

Nearly every other St. Vincent facility contributed toward the overall transfer to Ascension, which more than offset the transfers from Ascension.

But neither Indiana University Health nor Community Health Network nor Franciscan Alliance have an out-of-state management team to answer to.

For the St. Vincent employees among the 865 that lost their jobs, or for the ones upset about the lack of pay raises, I feel your pain. (The newspaper industry has been suffering through similar changes for the past decade.)

But it’s important to remember that the cuts last year were an Ascension decision, part of 4,700 cuts nationwide.

It’s still true that St. Vincent has one of the best financial positions among Indiana’s major hospital systems. And I'd rather be in an organization with the strongest patient mix and profit margins than in one with fewer resources with which to withstand the storm of changes in health care right now.

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