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.

  • What?
    So, some hospitals and groups are losing money and the companies answer for this is to cut the workers at the hospitals that are making the company profitable.... Less staff means some things don't get done, thing that don't get done don't get billed for..... you don't get paid for it.... and patient care; it can't be done if there isn't someone there to do it. Understaffed is a way of life at the Dove shop.
  • So Indiana suppports others
    Is there anyone else appalled at the fact that $50-$70 million is shipped out of state!! Would someone at the Legislature wake-up. . . . Oh, but money comes back to the money losing ventures like the medical group! Really!? $158m for 800 doctors is $200,000 per physician!
  • Healthcare
    The Ascension model is re-distribution of wealth or as they like to say, the haves giving to the have-nots. This model creates an environment of entitlement, and creates a burden to those who are profitable in a free market. It is based on a papal encyclical one hundred plus years old during a time when socialism was a progressive-ism was gaining a hold .
  • All about the money
    Friends, we have to remember that the work of a hospital or other healthcare institution can not be held to just being a money-maker. New Hope is a prime example. That is the branch that focuses on individuals with special needs. The one on one care that is essential is also expensive. Providing compassion for the underserved and those with disabilities is not something that I think HAS to "make money". We are ensuring that those most in need receive the care we all would want a loved one to have. Do I think St. V is huge and has a lot of duplicated positions? yes. That was a reason for the down-sizing. Do I think all their branches will or even can make a profit? Absolutely not. Should they still provide care for those who need it? I sure as hell hope everyone says yes. We are a compassionate society. Money can't be our only indicator of success.
    • Do poor people deserve health care too
      As alluded to in the article, this is how other mission-based hospitals operate as well. Some areas in the country wouldn't have a hospital if it weren't for the mission-based hospital groups that operate there. It would be easy for a for-profit hospital to state that a given location is poor-performing and not worth it to keep the place around. But if all groups had that mantra, you'd end up with segments that have no hospital facilities. My spouse works at one of these groups, and this is one of the primary reasons behind the layoffs and cutbacks seen in 2013 - Indy-area hospitals are relatively ok, but their poor performing, mission-based locations are suffering greatly with reduced Medicare reimbursement due to the Affordable Care Act (since most all of the patients in these locations are on Medicaid). Do we damn the poor to prop up the rest? Do we shoulder the burden together? These are tough times for the hospital and health community.
    • RE: Charles
      Well said, Charles. "Do I think all their branches will or even can make a profit? Absolutely not. Should they still provide care for those who need it? I sure as hell hope everyone says yes. We are a compassionate society. Money can't be our only indicator of success."
    • St Vincent cuts New Hope loose
      It is interesting that a prior comment commends St. Vincent for subsidizing New Hope! NOT ANY MORE! As of Jan. 1, 2014 New Hope is no longer a part of St. V It was cut loose (as a money loser) at the end of 2013.
    • Nederman is Right
      I'm glad Nederman spoke what everyone else is thinking about this faith-based institution engaging in redistribution. One can only imagine what Jesus would have thought of such reprehensible activity.
    • NOT
      This is NOT a, "Faith based" anything. It is a for, "financial gain" business. That is why there are layoffs, cost cutting, productivity numbers and man hours to keep track of. As well as millions of dollars getting moved around into other peoples hands, Just like in any other factory. The bottom line is everything in business.
    • Money's tight? At least the company's expanding to spread their core values to the Caymen Islands

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