Trustees review hospital options

The current management company gets high marks from consultant.
Sunday, August 6, 2006 | 12:00 a.m. CDT; updated 4:04 p.m. CDT, Wednesday, July 9, 2008

The county-owned Boone Hospital Center has been privately managed since 1988, and hospital trustees must decide by the end of the year whether to continue that arrangement.

Trustees heard a presentation Friday from consultant Keith Hearle of The Lewin Group that was favorable toward the management company, BJC Healthcare, citing its performance and the fairness of the lease.

The consultants concluded that trustees might be able to gain more profit with another management company or by taking over the 375-bed hospital, but both options carry additional risks and challenges.

Steve Lipstein, CEO for BJC HealthCare, said the volume and satisfaction of patients has increased during the time BJC has operated Boone Hospital.

Emergency room visits increased from 18,000 in 1996 to 30,000 in 2005, Lipstein said. He also cited survey results that found 72 percent of patients in 2005 would “definitely” recommend Boone Hospital to a friend, up from 56 percent in 1996.

BJC’s lease to operate the hospital is scheduled to end in 2010 with an option to extend the arrangement until 2015. The lease allows for a review by trustees this year that could end the arrangement no sooner than 2008, which is why trustees hired a consultant for $190,000 to conduct the review.

Lipstein told trustees that BJC provides human assets in addition to the physical and financial assets specified in its lease. “Buildings don’t take care of patients. Balance sheets don’t take care of patients. It’s people who take care of people,” he said, adding that Boone Hospital also benefits from administrative collaboration among BJC’s 13 hospitals.

BJC is also committed to position Boone Hospital for long-term success and provide community benefits, such as supporting the Family Health Center, Lipstein said.

Eric Thompson, a surgeon at Missouri Heart Center, asked about patient referrals from Boone Hospital to other BJC affiliates in St. Louis, such as Barnes-Jewish Hospital.

“There’s no pressure for us to send patients to Barnes, but it’s kind of the natural tendency,” Thompson said in an interview, adding that he’s “curious” about how much BJC might earn from such referrals.

Lipstein said BJC doesn’t ask physicians to refer within its system of hospitals and said that a certain amount of patient flow to St. Louis would happen regardless of hospital management. He noted that BJC doesn’t track the number of referrals from Boone to its other hospitals.

Hearle said the issue of patient referrals didn’t come up in interviews his firm conducted as part of its review.

Barbara Weaver, chairwoman of the Boone Hospital Center board of trustees, said she thought the report was fair and done well.

She said she has not made any decisions on lease issues.

“I’m trying to stay very open,” she said. “It’s very obvious from the financial bottom line and patient satisfaction scores that Boone is the place to go. Our goal as trustees is to continue to provide the best possible care.”

Robert McDavid, vice chairman of the board of trustees, said the process is to look back and see how good a job was done renegotiating the lease with BJC that took effect in 2001. McDavid said the lease has served well as reflected in third-party assessments. The hospital is one of nine in the nation to receive both Top 100 status from Solucient, a health care research group, and Modern HealthCare magazine and Magnet designation from the American Nurses Credentialing Center.

Trustees will see whether any other issues arise in the next few months, McDavid said.

The hospital is one of Boone County government’s largest assets; lease decisions are in the hands of the five publicly elected trustees. Under the lease, the hospital’s net worth increased $4.7 million annually, according to the consulting firm’s report.

Trustees and BJC have each received about $9.7 million annually from 2001 to 2005 from splitting hospital profits. Boone County government has received $1.4 million a year in rent. In addition, BJC receives about $6.2 million a year as part of a 3 percent management fee and $5.2 million annually for specific corporate services.

Boone County Presiding Commissioner Keith Schnarre said he was satisfied with the way BJC has fulfilled its obligations under the lease. He’s involved in discussions as an observer and said he will continue to provide input to trustees.

Trustee Llona Weiss said some people have already called trustees to share their opinions on the lease and may continue to do so.

David Pittman, a pathologist and former chief of medical staff at Boone Hospital, said his sense is that trustees will stay the course with BJC. “I think they went into it thinking it’d be better to get out,” he said, “but now they might be thinking it’s better to stay in.”

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