Frank Sinatra had it right when he crooned, "If I can make it there, I'll make it anywhere." New York, N.Y., is one tough town, even for major healthcare institutions.
Although the Big Apple's academic medical centers get paid for their higher research, teaching and patient-care costs, by some measures they're barely making it.
New York's five voluntary academic medical centers have much longer lengths of stay than the national average, total margins bordering zero, inadequate cash supplies and heavy long-term-debt burdens. An analysis published this spring by the United Hospital Fund, a New York-based philanthropy and research organization, quantifies the damage. The findings are based on 1993 data.
Lengths of stay at New York hospitals are notoriously long. In 1993, the average for the city's academic medical centers, at 9.5 days, exceeded the national 1993 average by 2.5 days, the hospital fund reported. But as more people enter HMOs, lengths of stay are dropping dramatically. Reductions of a day to a day-and-a-half are not unheard of.
Since 1989, the city's academic medical centers have posted total margins below or near zero, the hospital fund said. Presbyterian Hospital's 1993 margin, at -3.1%, was the lowest among the five institutions. With a 0.9% margin, New York Hospital fared the best. Those figures fall far below the 1993 national average total margin of 4.2%.
The hospital fund's report also showed that the city's academic medical centers are light on cash. In 1993, they averaged 5.5 days' cash on hand, compared with 43.7 days for all U.S. hospitals.
However, they appear to be doing a better job of collecting what's owed them. In 1993, the academic medical centers reported 57 days in accounts receivable, 11 days better than the average for the nation's hospitals and 16 days better than other major U.S. teaching hospitals.
Because rate regulation has suppressed profits, many hospitals in the state cannot issue debt without obtaining credit enhancements.
Sixty-three New York state hospitals, including Montefiore Medical Center, Mount Sinai Medical Center, New York Hospital and Presbyterian, have debt insured by the Federal Housing Administration through the U.S. Department of Housing and Urban Development's mortgage guarantee program.
At $283,000 in long-term debt per certified bed, New York City's academic medical centers had a debt burden that was 200% greater than the average for U.S. hospitals overall in 1993 and 22% higher than major teaching hospitals' average, the hospital fund said.
Because of concerns about New York state hospitals' ability to meet their financial obligations, HHS-HUD's mortgage insurance partner-is beefing up its monitoring of individual hospital credits, said John U. Sepulveda, director of the hospital mortgage insurance program.
Hospitals will be asked to provide additional information about how they're addressing state Medicaid cuts. "We'll also begin to assess how well prepared they are to address the kinds of reductions that are being proposed on the national level," Sepulveda said.
While he declined to say which providers are most vulnerable, Sepulveda said he remains optimistic that hospitals will meet their debt obligations, even if it means refinancing their debt.
Two uncertainties hang like smog over New York City's academic medical centers.
A new report commissioned by Mayor Rudolph Giuliani has recommended that the city sell, lease or transfer its 11 acute-care hospitals to the private sector. The future of the New York City Health and Hospitals Corp. will have profound financial and operational implications for New York's private academic medical centers.
Currently, HHC hospitals serve as specialized training sites for academic medical centers' residency programs. In addition, the city spends more than $500 million annually to compensate academic medical centers and other private-sector affiliates for staffing the municipal hospitals.
The plan to privatize city hospitals should significantly alter the competitive landscape. Mount Sinai has been identified as a potential candidate to take over two city hospitals-Elmhurst Hospital Center and Queens Hospital Center. But Mount Sinai President John W. Rowe, M.D., said he hasn't been contacted and wouldn't be able to respond until he's seen the specifics.
Although many observers doubt any sane hospital administrator would want to buy another bed, there may be other motivations at work. Maria K. Mitchell, HHC's chairwoman and health adviser to Giuliani, said she had compiled a list of people who've called to inquire about the privatization plan. "I think what they're buying is market share," Mitchell said.
The second variable is whether the nation's for-profit hospital chains will attempt to enter the New York City market through a buyout or joint venture. Many believe there's no justification for the state law that prevents for-profit chains from owning hospitals in New York. The final barrier could come crashing down as early as next summer, when the state's hospital rate-setting system is set to expire.