INDIANAPOLIS-Clarian Health Partners is taking a financial risk with its ambitious capital program, Moody's Investors Service warned earlier this month. The program includes plans to keep up with competitors by building two hospitals through joint ventures with physicians. Moody's downgraded Clarian to A1 from Aa3 just as the system planned to issue $500 million of bonds, nearly doubling its debt. Moody's cited the greater debt, along with dependence on future cash flow to fund about half of Clarian's $1 billion capital program through 2007, more market competition, revenue sharing with physicians and the possibility of cannibalizing existing services. It said Clarian would not be able to defer larger projects without compromising market share.
LEE'S SUMMIT, Mo.-Saint Luke's Health System won a legal battle with the Missouri Health Facilities Review Committee over plans to build a 52-bed hospital in suburban Kansas City. The Kansas City, Mo.-based system, which owns eight hospitals in the area, is hoping to begin construction of the $86.5 million project later this year for an opening in late 2005 or early 2006, system officials said. The Lee's Summit, Mo., location was rejected in 2002 by the state review committee, which regulates construction of new hospitals under the state's certificate-of-need law. The system then filed a lawsuit in Cole County Circuit Court and won approval to build the hospital. The state later appealed the ruling in the Missouri Court of Appeals. Under the agreement announced earlier this month, the review committee is withdrawing its appeal and Saint Luke's is ending a Supreme Court challenge.
ST. PAUL, Minn.-Minnesota has become the first state to adopt all of the error-reporting standards set by the National Quality Forum. Under a new law, the Minnesota Department of Health will collect information from hospitals on 27 different types of medical errors and adverse events, including wrong-site surgery, medication mistakes and blood-type errors. Data about the number and type of reported events will be shared with the state Legislature and the public. While giving its go-ahead to the error-reporting system, the Legislature did not appropriate money to fund it. An official said the Minnesota Hospital Association will seek grants and donations to support the program, expected to cost about $300,000 a year. About $115,000 is needed for initial implementation, which could occur by fall if the money is raised. During a two-year transition period, hospitals will report data to the MHA, which will aggregate the data and turn it over to the health department.
DETROIT-Detroit Medical Center said earlier this month it would restructure its corporate and individual hospital boards to reduce potential conflicts of interest and make it easier to attain more public funds. Detroit Medical Center President and Chief Executive Officer Arthur Porter told physicians and employees that the system does business with companies employing some of its 206 board members. "We have an extensive internal audit and compliance process that reviews all work done by board member firms ... but maybe we have not gone far enough," Porter said. "In order for DMC to achieve its goal of obtaining any public funds, every question must be answered and every negative perception must be cleared." The center plans a two-tiered board structure, with one level composed of individuals without business or financial ties to the system. Last month, Porter announced changes to reduce the system's losses, which totaled almost $400 million over the past five years.
SPRINGFIELD, Ill.-Doctors Hospital said its bankruptcy reorganization plan had failed and late last month transferred patients to neighboring hospitals in preparation for a shutdown. The 63-bed hospital, owned by a partnership of more than 55 local doctors and International Health Systems, filed for Chapter 11 bankruptcy protection in April. The partnership purchased the hospital in 1987. Peoria bankruptcy attorney Gary Rafool, who represents the hospital, said it is operating with a skeleton crew. Kent Cochran, a vice president of International Health Systems, said declining reimbursement, physician practice patterns and a cash-flow crisis sparked by slow Medicaid reimbursement decided the hospital's fate. "We were left with no margin of error and couldn't pay our vendors," Cochran said. He said investors and employees hope someone will buy the facility.