Management and financial turmoil continued last week at Brackenridge Hospital in Austin, Texas, as the administrator agreed to resign and a state report described the state's oldest public hospital as overstaffed and inefficient.
State Comptroller John Sharp was contacted in January by the city to analyze the 380-bed hospital's financial and operational performance. In his 207-page report issued last week, Mr. Sharp said the hospital's financial record would have been poor had it not received millions of dollars in Medicaid disproportionate-share funds during the past two years. Those funds reimburse hospitals for the extra cost of treating large numbers of poor patients.
The hospital reported net income of $6.4 million on revenues of $135.8 million for the fiscal year ended Sept. 30, 1993, but it received $17 million in disproportionate-share monies during that period.
In January, the city acknowledged that it had made a major accounting blunder. The hospital had counted on earning $27.4 million in fiscal 1993, (Jan. 31, p. 18), but it failed to record in revenue estimates some $21 million in discounts from its normal prices for payers, mostly managed-care firms.
The hospital reported net income of $28 million in fiscal year 1992.
In the wake of the revelations, Austin City Manager Camille Barnett resigned two months ago. Then, Deborah Lee-Eddie, the hospital's administrator, said last week she would resign effective July 29, saying the situation was taking its toll on her "physical well-being."
Ms. Lee-Eddie was named one of the nation's Up & Comers, or rising young executives, by MODERN HEALTHCARE last year (Sept. 6, 1993, p. 36).
Ms. Lee-Eddie said she recognized that the city wanted a new management structure for the hospital, and would stay on during the transition. Austin's acting city manager, Jesus Garza, said the city is talking to hospital management companies about a contract.
In his report last week, Mr. Sharp cited several problems with the city-owned hospital, notably that it is run as a department of city government. That structure makes it difficult for the hospital to compete and purchase supplies cost-effectively, Mr. Sharp said.
Operating margins declined from 1.9% in 1991 to -5.2% in 1993, the report said. It attributed this to a 29% growth in operating expenses per adjusted admission.
Mr. Sharp also criticized the hospital's high management turnover. The hospital has had seven CEOs in the past 10 years. However, he noted that senior managers are paid 15% less than the market average. Mr. Sharp recommended paying top managers more, and eliminating nine senior and middle-manager positions for an annual savings of $300,000.
He also recommended hospital staffing be reduced 12% to 1,653 full-time equivalents, for a savings of $8.2 million.
Finally, he advised the hospital to maintain tighter control of collections, reining in 4,000 delinquent accounts worth $2.4 million.