November 29, 2012

Bristol Hospital deal raises many questions

I'm more than a little confused by the deal that Bristol Hospital has struck with a for-profit hospital chain, the details of which remain secret.
To begin with, from what I can discern, the nonprofit Bristol Hospital is apparently selling the hospital itself to the Nashville-based Vanguard Health Systems. As long as the sale is at market value, that seems to be fine legally. But where does all the money wind up?
Bristol Hospital
The nonprofit itself would no longer have the hospital that gave it a reason to exist. So what would it do with the cash it earns from the sale?
I don't know what kind of numbers are involved in Bristol Hospital deal, but they're probably big. In 2010, according to The Health Care Blog, a for-profit chain paid $28 million for a 124-bed facility in Marion, South Carolina (population 7,000) and $86 million for a 108-bed hospital in Ottumwa, Iowa (population 25,000).
Bristol's hospital must be worth tens of millions anyway. So what does a nonprofit hospital organization do with a giant pile of money when it no longer possesses a hospital?
Then there is the obvious question of what Vanguard will do differently in Bristol so that it can make a profit, when Bristol Hospital has struggled for years to make sure it doesn't lose money. And sometimes it has wound up in the red despite its best efforts.
Everything I read seems to indicate that nonprofit hospitals that are converted typically wind up dropping some services that don't make money and added frills that attract only patients with insurance or high incomes instead, ultimately creating a situation where they don't serve the community as a whole quite as well.
Maybe that's inevitable, but it is clearly the thing Bristol has to be on guard about.
I don't have much doubt that the people who run the hospital are trying to do the right thing. It's hard to have a real hospital in a smaller city these days. The costs are so high and the margins so thin that making a go of it  isn't anything like it used to be.
But there are many, many issues involved in this deal, most of them not discussed at all yet. They need to be.

Update at 10:50 a.m., Thursday, Nov. 29, 2012 --
I'm not sure I was clear enough about the real difference between a nonprofit hospital and a for-profit hospital. Bristol Hospital today is held by a charity for the benefit of the community. If the hospital is sold to Vanguard, or any other for-profit company, its assets will be owned by private investors and used to generate income for those investors.
It's not necessarily a bad thing, of course. It could be that investors will pump money into the hospital to update it and ultimately generate more revenue through more business. But it's also possible that some of the things the hospital does today because it exists to help the community will change if it's in the hands of investors.
It's critically important that all of these issues be reviewed carefully, not just by the hospital board behind closed doors but by the community as a whole.
Bristol Hospital is vitally important to Bristol. Its fate is critical. Make sure that whatever happens to it, happens in the light of day with everyone aware of the reasons for making changes.

Copyright 2012. All rights reserved. Contact Steve Collins at

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