The Osteopathic Medical Center of Texas began the process of transferring patients and shutting down on Oct. 8, after negotiations to sell the hospital failed, creating a healthcare headache for the Fort Worth medical community.
Osteopathic Medical Center was the last accredited hospital in the country to use osteopathic in its name, according to the American Osteopathic Association, though there are others operating as osteopathic-focused facilities. Osteopathic medicine targets the interrelationship of the body's nerves, muscles, bones and organs, according to the association's Web site.
The 206-bed hospital had been in financial trouble for months and recently suffered a sharp bond-rating downgrade after it defaulted on a portion of its $82 million in outstanding bonds. MBIA, an insurer of municipal bonds, last week set aside $50 million to cover most of its $70 million exposure to Osteopathic-backed bonds.
In the seven months ended April 30, the hospital reported a net loss of $5.2 million on revenue of $73 million, according to financial statements publicly filed late last month. In addi-tion, the hospital lost $6.8 million in 2003 and $21.7 million in 2002, but had earned $2.6 million in 2001, according to the filings.
The closure, expected to be complete in a month, resulted from the same issues all hospitals are facing: declining reimbursements and decreased margins from competition, Interim Chief Executive Officer Justin Doheny said. More than 1,000 employees, 300 doctors and 60 interns and residents will be affected.
The hospital's closing forced the nearby University of North Texas Health Science Center, which relied on Osteopathic Medical Center as one of its main teaching and patient-care facilities, to begin transferring its internships and residencies to other affiliated hospitals.
Doheny said the hospital's osteopathic focus was not a factor in its demise, though one potential buyer mentioned it as a downside.
The negotiations failed over terms of a bankruptcy filing, Doheny said. The potential buyer, whom he declined to name, asked for terms that the hospital's current creditors weren't willing to meet, he said.
The hospital struggled as a result of its large number of low-income and uninsured patients, said John Gavras, president and CEO of the Dallas-Fort Worth Hospital Council.
The hospital's closing is likely to add to other local hospitals' burdens, particularly in their emergency rooms. "We happened to be an area that experienced tremendous growth," said Barclay Berdan, president of Harris Methodist Fort Worth Hospital, located approximately three miles away and one of about eight hospitals in the area that will have to pick up the slack. "The number of beds is behind the curve in our community. This is moving in the wrong direction," Berdan said. "It's a sad day for Fort Worth because we're losing a valuable resource."
The closing could lead to an influx of patients heading to other hospitals' emergency rooms. "That particular hospital had its share of low-income and uninsured" patients who tend to go straight to an ER for primary care, Gavras said. That could "knock things out of balance," though the hospital is not a trauma center, he said. Moreover, many of the area's hospitals are within a stone's throw of each other, Gavras said. The osteopathic hospital was one of the few outside that zone, meaning some patients will be inconvenienced by longer travel times.
The hospital's problems were difficult to fix. Its patient mix was out of balance, with too large a focus on Medicare, Medicaid and uninsured patients, Gavras said. Doheny said more than 40% of patients paid through a government-sponsored program, and none of its managed-care payers was willing to give the hospital extra money to help subsidize doctor training.
And without strong support from managed care, the hospital had trouble attracting specialty doctors to work out of the hospital, Gavras said. "You've got to have a good physician mix" to remain viable long term, he said.