Still swimming in red ink despite numerous cost-cutting attempts, the head of Detroit Medical Center has threatened to shut down one of three downtown hospitals if they can't stem losses within 90 days.
President and Chief Executive Officer Arthur Porter outlined a plan to reform Detroit Receiving Hospital and Karmanos Cancer Institute, each of which was expected to lose $12 million to $14 million in 2002; and Hutzel Women's Hospital, which was expected to lose more than $33 million.
Porter said high levels of uncompensated care and low reimbursement rates at those hospitals are destabilizing the entire seven-hospital system. The system provided $130 million in uncompensated care in 2002.
Porter conceded that the plans are reliant on city, county and state governments assuming more of the burden. Porter has proposed using a city tax to fund care of the uninsured, taking steps to send more nonemergency patients to other facilities including city-owned clinics, and trimming $92 million from its payments to Wayne State University Medical School. He also challenged Karmanos to increase fund raising.
Porter, who was hired in 1999, told Modern Healthcare last week that his message is being heard. He said the system "will make the sound business decisions it needs to make to protect its other entities."
The system, which lost $80 million in 2002 on revenue of $1.6 billion, has hemorrhaged $300 million since 1998 despite hiring financial turnaround consultants, taking cost-cutting measures including layoffs, selling physician practices and contracting for data-processing services. That last step proved a disappointment, as the system sued to dissolve a contract with Provider HealthNet Services, Dallas, claiming it fell short on improving the performance and lowering the cost of managing medical records (Feb. 24, p. 6).