How a tiny children's hospital is benefiting from shifts in pediatric care

Lying inside a white crib in Cabin 34, his room at La Rabida Children's Hospital, 7½-month-old Owen Collins plays peekaboo and works on simple tasks like gripping a plastic ring and merely smiling with his infant development specialist. The swoosh of a ventilator helping him breathe is background noise to Erin Gustafson's playful commands. She's preparing him for life at home, especially Owen's ability to bond with his parents and their ability to pick up on his cues. "A lot of these kiddos have spent the majority, if not all, of their life in a hospital," says Gustafson, 31.

La Rabida, a small specialty facility in a corner of Jackson Park, is seeing a big uptick in patients—babies younger than 1 in particular—as community hospitals shrink or close their pediatric units, fueling the consolidation of young patients into children's hospitals and big systems. Patients who are no longer sick enough to be hospitalized but are still too frail to go home are increasingly referred to La Rabida, especially those coming from intensive care units.

La Rabida's expertise is treating low-income children with complex medical conditions. The patients are kids on ventilators like Owen, as well as children who need rehabilitation to regain all types of functions (eating, standing) and respiratory therapy for their maturing lungs.

Insurers mindful of their own bottom lines are pressuring hospitals to discharge patients faster, either sending them home or to a cheaper facility. At the same time, hospitals are shuttering or reducing pediatric units as the number of kids who flow through their doors declines.

Children who do end up hospitalized are sicker and stay longer. In Illinois, the number of pediatric hospital admissions decreased 27 percent from 2012 to 2016, while the average length of stay increased from 3.8 to 4.6 days during that period, state data show. This mirrors nationwide trends.

La Rabida noticed its patient volume started to climb around two years ago as hospital pediatric care dwindled, and for facilities that treated kids, the demand for their high-end services intensified while the squeeze from insurers did, too. From the 2015 to 2017 fiscal years, patients went from staying around 15 days on average to 25 days, the average daily census grew from about 18 to 25 patients and the number of children admitted who were younger than 1 ticked up from 19 percent to nearly 40 percent.

"The major medical centers have gotten much more focused on how they get paid and trying to get kids discharged when they don't need a certain level of service, and we are there to offer this 'step down' for these kids and families," explains Brenda Wolf, CEO of La Rabida since 2011.

Lurie Children's Hospital, a large Streeterville-based specialized medical center that's had a long relationship with La Rabida, has sent more kids there as its own volumes have grown: from 13 referrals in 2014 to an estimated 50 this year, says Michelle Stephenson, Lurie's chief operating officer.

UChicago Medicine Comer Children's Hospital in Hyde Park, just 3 miles northwest from La Rabida, is a big referral source as well, with 55 percent of La Rabida's 377 total referrals in the 2017 fiscal year. "The plan is to always get that child home," says Dr. John Cunningham, Comer physician-in-chief. "La Rabida is that next step, where they can provide intensive respiratory therapy and occupational therapy. They also have experts who actually provide management of the tracheostomy and ventilator to gradually get them off (the technology)."

La Rabida isn't a typical hospital. It doesn't perform surgeries or have an intensive care unit for babies. Doctors are there around the clock, but providers focus on development and provide extra services that many hospitals don't typically offer. That includes programs that teach parents how to feed and bond with their babies, coordinating their doctors' appointments and driving (sometimes via ambulance) patients to and from various tests and procedures at other facilities.

This is why the care at La Rabida is expensive and a financial challenge for this small hospital, whose operating profit in 2015 was about $300,000 and $2.1 million last year. La Rabida gets paid about $2,000 a day per inpatient, no matter how many services it provides, yet it's not unusual for one child to cost more than $50,000 during their stay, says La Rabida Chief Financial Officer Mark Renfree. Patients are arriving younger and more complex. The hospital has been adding staff (now totaling just over 400 full-timers) partly to treat the influx of new referrals.

La Rabida also has an outpatient clinic, which has nearly 30,000 visits a year from children with chronic conditions like sickle cell anemia and diabetes, while also conducting forensic interviews and providing counseling for children affected by trauma.

Since the hospital's reimbursement has remained relatively flat, it's focused on growing patient volume. A major shift in the way Medicaid is provided and paid for in Illinois has helped. The state is expanding its managed care program, where Illinois pays private insurers to administer health insurance benefits for Medicaid recipients and focus on preventive care in a bid to save the state money.

Three years ago, La Rabida won state approval to join the program to coordinate treatment for kids who aren't La Rabida patients. So far, the hospital has contracts with managed care insurers CountyCare and IlliniCare to oversee about 2,000 kids. Those deals represented about 8 percent of La Rabida's $54.2 million of revenue in 2016—a business line the hospital hopes to grow.

"A​ tiny​ pediatric​ hospital​ gets​ a​ shot​ in​ the​ arm"​ originally​ appeared​ in​ Crain's​ Chicago​ Business.