Medical center's traumas illustrate struggle of all Medicaid-dependent hospitals

At Community First Medical Center on the Northwest Side the other day, an intercom repeated, "Code diversion, cath lab." Dr. David Fishman, a cardiologist, paused and said, "That's a bad sign."

The hospital's cardiac imaging equipment was down again, meaning ambulances with heart patients would have to divert to another hospital. At best, that would be nearly 5 miles away.

The outage didn't last long—just long enough to illuminate the challenges of Medicaid-dependent hospitals such as Community First, where less than 1 in 10 inpatients have private insurance and ambulance volume is the city's fifth-highest. It echoes the situation in Melrose Park, where Westlake Hospital is threatened with closure by a new, for-profit owner. Community First also is a rare for-profit hospital.

"You're going to see more and more Westlakes of the world," says Dr. Joseph D'Silva, an orthopedist and chief of surgery at Community First.

Five years ago, Chicago lawyer Edward Green and a 50-50 financial partner paid $30 million for the former Our Lady of the Resurrection at Addison Street and Central Avenue—$10 million down and a promised $20 million upgrade over five years—in the Portage Park neighborhood dotted with bungalows and two-flats and where a barbershop offers $8-and-up haircuts.

A Foley & Lardner partner specializing in health care transactions, Green has narrowed operating losses and steadied revenue ($613 million in 2017). He says 2018's results are "a little bit better" than the previous year's $745,800 operating loss and compared with 2014's $12.3 million deficit. Virtually all of the improvement has been achieved by lowering discounts for service, filings show.

The hospital's location and safety-net status is, in a way, its salvation. "I think the hospital is viable because it's the only game in town," says Dr. Vishnu Chundi, chair of the department of medicine. Otherwise, "it's going to be like the West Side of Chicago without grocery stores."

Fishman, a physician for 41 years, paints a harrowing picture of an institution having to suspend operating-room shifts, borrow temporary pacemakers from another hospital and cobble together other supplies. Health and dental insurance for employees lapsed for a while because of unpaid premiums, he says. Carpets are worn; a dank parking garage is potholed.

Green, 52, says Community First's situation isn't unusual.

"It is very tough to be a hospital in Illinois," Green says, noting backlogs in state payments and a shift to Medicaid managed care. Denial of payments to Community First runs 30 to 40 percent, he says. He's counting on Gov. J.B. Pritzker and a Democratic Legislature to free up more state funding. But for now, it's only a wish.

"It's a government hospital" in effect, Green says. "It's not like a suburban hospital."

He says there are no plans to sell the 296-bed hospital, despite the looming expiration of the five-year purchase agreement. He considers the time frame a technicality associated with the purchase under a then-new Illinois law authorizing benefit corporations. They shield owners from shareholder lawsuits over investments made for reasons other than the bottom line—a moot point (so far) in the case of partnership-owned Community First.

Green has fulfilled his financial commitment, and more, under that agreement, pouring $22 million into the hospital, he says.

Most of it, however, has been eaten up by an IT conversion necessitated by its stand-alone status. Green says that's the point: "Now we can control our data. The future of health care is not a nice parking lot." To pay down debt, he wants to sell and lease back a five-story medical office building affiliated with the hospital.

A pay freeze dating at least to Green's takeover in the beginning of 2015 has frustrated staffers watching salaries rise at other hospitals. A clinical pharmacist has been tempted by a 25 percent pay increase offered by an academic medical center. Green points out that employment has increased during his tenure—up 6.5 percent, to 1,046.

Says Chundi, the medical department chair, "The medical staff is basically stable, but it's harder and harder to attract younger doctors."

In any case, prior owner Presence Health (now Amita Health) considered turning the hospital into an outpatient facility, which could have funneled inpatients to other Presence locations. The hospital's survival is, in itself, a triumph.

"We see very, very, very sick people here," says Dr. Shirish Shah, president of the medical staff. "The intensive care is always full."

The interim CEO is Suzanne Richards, 51, a roving hospital consultant and former nurse with an MBA and a master's in public health. Among the roles her five-member team is filling is chief clinical and administrative officer, a job Sheila Senn recently quit after less than two years.

Although initially excited about a turnaround project, "I did not feel I could be an effective leader there," Senn says, citing a churn in chief financial officers and a lack of available financial data and other resources.

Richards is credited with reviving a seven-hospital system in Southern California. At her last assignment, a Philadelphia hospital with characteristics similar to Community First's, she lasted only a few months. The Philadelphia Inquirer said she was fired by the private-equity owners. She says she can't comment on her departure, on the advice of a lawyer she's hired while contemplating litigation.

Richards considers her role here open-ended, she says. She acknowledges staffing operating rooms "is very tough" for hospitals in general, and relying on outside vendors of temporary medical personnel can be "very expensive." (Fishman says suppliers have balked because of unpaid bills.)

In some areas, Richards says, the hospital has been able to attract younger doctors, adding, "Looking from the outside, I'd say the equipment is pretty good."

The hospital is forming "telemed" relationships with other hospitals, allowing doctors at Lurie Children's Hospital to examine pediatric patients and physicians at the University of Illinois Hospital in Chicago to treat stroke victims. There's also a midwife and obstetrics collaboration with Advocate Illinois Masonic Medical Center.

D'Silva, the chief of surgery, says: "The spirit is still there. If you look at what the alternative could have been, it says a lot. We bought five years. Maybe this is the best we can do in this environment."

"Medical center's traumas illustrate struggle of all Medicaid-dependent hospitals" originally appeared in Crain's Chicago Business.