A battered New York City hospital industry only has to look at its public hospital system-the nation's largest-for inspiration on how to work through the healing process.
As Luis Marcos, M.D. slowly recovers from the trauma, both professionally and personally, the president and chief executive officer of the 11-hospital New York City Health and Hospitals Corp. shares his own gripping story about the events of Sept. 11.
Marcos was called to the crisis assistance unit at the World Trade Center, a few blocks from his downtown office, only seconds after the first airplane crashed into the north tower. But the command post was quickly evacuated because of fears that a second plane might be coming. At the hastily constructed new command post, he said he was spellbound watching the fire department's top brass expertly managing the crisis.
Suddenly it dawned on Marcos that he should alert his own staff at Bellevue Hospital Center in Manhattan to prepare for patients, he said. He tried his cell phone. It did not work, so he ran to a nearby building in search of a telephone. While making the call, the south tower collapsed, killing those who remained at the command unit, including the fire department's chaplain and three top fire department officials.
Marcos recalled how he watched people jump from the buildings. "Time helps," said Marcos, a psychiatrist by training. "And talking."
In the weeks since the tragedy, HHC picked itself up and resolutely forged ahead with an ambitious capital project begun several years ago even as it struggled with the depressing aftermath of Sept. 11. Earlier this month, less than three months after the attacks crippled the city and sent hospital revenue citywide spiraling downward, Marcos watched as New York Mayor Rudolph Giuliani officially opened the new 200-bed Queens Hospital Center, a $149 million replacement facility for the 66-year-old hospital. The seven-story replacement includes centers for cancer treatment, women's health and diabetes.
Consumed in recent years by a bulging but money-losing outpatient business, HHC is now focused on sprucing up its long-neglected inpatient facilities, where it can more realistically expect profit margins, especially when it comes to Medicaid, which accounts for 63% of HHC's inpatient revenues.
Depending on whom you ask, the new focus on inpatient services is either a step ahead or a step behind what hospitals are doing nationwide. Marcos said it's a step ahead. The push for hospitals to build outpatient clinics was based on two false assumptions that cost hospitals millions: that outpatient clinics would generate inpatient referrals and that managed care was moving toward capitated payments that rewarded hospitals for empty beds, he said. The evidence is also mounting across the country that some markets are beginning to see growing inpatient volumes, which has sparked a new wave of construction (See story below).
"We all believe primary-care prevention is important. That's common sense. But the Medicaid rate has not changed in 10 years for outpatient," Marcos said. "The financial reality is that inpatient rates are competitive but the outpatient rates are inadequate."
The ribbon cutting was held just one week after city officials opened an eight-story, 338-bed tower at 654-bed Kings County Hospital Center in Brooklyn. That $86 million modernization and the new replacement hospital are all part of a new direction the publicly owned hospital system is taking to respond to healthcare competition, Marcos said. All told, HHC plans to invest $1.1 billion in capital projects over the next five years. HHC also is modernizing 771-bed Bellevue, 545-bed Jacobi Medical Center in the Bronx, and 406-bed Coney Island Hospital in Brooklyn; and it is implementing a second phase of the Kings County modernization. Another $285 million will go toward infrastructure and medical equipment.
Funding for the capital plan includes $320 million of bonds issued by HHC in 1997 and another $286 million issued in 1998 by the Dormitory Authority of the State of New York, a quasi-governmental agency.
Marcos hopes the gleaming new patient rooms, state-of-the-art equipment and revamped services will boost hospital admissions, stemming the loss of patients from the outpatient clinics.
He boasts that the two recently completed projects came in on time and on budget-something he said he felt the public hospital system had "to prove to the world" it could do.
Cost-cutting throughout the system, including two layoffs totaling 13,000 workers, helped put HHC in the black for five years from 1996 to 2000. In the fiscal year ended June 2000, HHC earned $9 million on $4.1 billion in operating revenue. In fiscal 2001, it lost $72 million on $4.3 billion in revenue, because of a spike in the number of uninsured patients, flat Medicaid rates and a 16% rise in pharmacy costs (Feb. 26, p. 19).
Obviously, in the wake of Sept. 11, more losses are in the offing. Bellevue bore the brunt of the system's unanticipated expenses and revenue losses. HHC emergency rooms treated 1,000 patients in the wake of Sept. 11, primarily at Bellevue. Marcos estimated the financial toll on the system was $25 million.
But unlike other area hospitals, which waited weeks for patients to return to Manhattan, HHC rebounded almost immediately. The system draws its patient population directly from Manhattan, immunizing it from the admissions problem that has plagued neighboring hospitals, said Martin Arrick, a director for Standard & Poor's.
In the aftermath, there remains one other nagging issue for the corporation: telephones. The telephone system at the HHC's offices, just blocks from ground zero, was knocked out by the collapse. Before Sept. 11, the corporate offices had 550 lines; now it has to make do with 200 lines. People are using cell phones to make up for the deficit, he said.
"I love cell phones," Marcos said.