Bayonne Medical Center announced last month that it had made a profit of nearly $10 million last year.
While this should have been good news for Bayonne, a city that for several years lived in fear of its hospital’s closing, the announcement comes amid several problems: an ongoing lawsuit with a major insurance carrier, notices of upcoming employee layoffs, and a disheartening report card from the state.
Richard Kane, president and chief executive officer of BMC, spoke about some of these issues during a recent interview, attempting to put them into perspective.
One of the key indicators of how hospitals are doing is the state’s annual Hospital Performance Report. The most recent version examined data from 2008 for 72 hospitals across New Jersey. This year, BMC ranked near the bottom of the pile statewide for heart attack treatment, following correct procedures only 80 percent of the time. It was second from the bottom for surgical care improvement with 82 percent, and third from the bottom for dealing with pneumonia with 88 percent.
“Our focus was to restore the hospital to financial health.” – Daniel Kane
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Kane said the report covered core measures, but came at a time when the hospital was being taken over by new management. “Our focus was to restore the hospital to financial health,” he said.
In interviews done shortly after the takeover in February of 2008, Kane had indicated his staff’s intention to review many of the same areas the report found problematic.
Since taking over the hospital, the new administration has made improvements in recordkeeping, increased the technology, and has upgraded the emergency room. A new director for the hospital was named in August.
“I believe that next year’s report – which shows these same measures through the fourth quarter of 2009 – will have a substantial improvement,” Kane said.
Kane said the new owners have invested more than $10 million into the hospital in order to provide adequate services.
Although there were four general measures that received scores, each had a subcategory. The overall score was based on the summary of these, some of which included issues with paperwork and reporting.
BMC’s war with insurance companies
Since taking over the hospital, BMC’s management has been in a legal tug-of-war with insurance providers, and is currently at court with Horizon/Blue Cross Blue Shield. BMC said Horizon and other companies have been using scare tactics to steer patients to other medical facilities. BMC claims insurance companies are not honoring legitimate claims, and often underpays those claims it honors. BMC has dropped its contracts with certain insurance carriers, forcing the companies to pay full price for the services the hospital provides rather than discounted prices a contract would provide. Horizon claims that BMC is interfering with its coverage.
The legal battle has left many patients uncertain as to what they are legally responsible to pay, since insurance carriers such as Horizon claim patients will be responsible for the charges.
In the past, the hospital has told patients they would pay the same amount as they would if the contracts were still in place and that the hospital would hold the insurance carriers responsible for these bills.
This has changed somewhat, since some patients are currently required to sign documents saying they are aware of the charges they are responsible for.
Kane said the patients using the emergency room – even if they are admitted – are unaffected by changes in costs, and that those with Medicare or Medicaid pay the same as they did previously.
BMC has claimed that Horizon has tried to harass patients while they were admitted in the hospital.
But a statement issued by Horizon said that the company has not transferred patients out of the hospital, but is required by law to notify patients that they may be a risk of higher out-of-pocket expenses. They say that the hospital has stopped messengers from reaching people at the hospital.
Horizon said that BMC more than doubled their charges, which on average increased from $13,000 a day to $29,000 a day.
This reflects the lack of a contract, which no longer gives the insurance company a discounted rate.
Bayonne accuses Horizon of harassing patients and not paying its bills. Horizon accuses Bayonne of price-gouging and interfering with its health plans.
Bayonne has become virtually the only hospital in the country that has withdrawn in protest from the “provider networks” of every major insurer, abandoning a tradeoff that has become a staple of the health-care system: hospitals agree to be paid at lower rates in exchange for knowing that insurers will steer patients to their beds.
Bayonne is not, however, the only hospital at odds with Horizon. Four others nationwide have pulled out of Horizon’s network or are close to leaving.
Money
Dealing with the insurance companies became one of the key ways to turn around the hospital finances, and is part of the reason why the hospital managed to show a $10 million profit this year. Prior to the takeover, it was losing almost $1.5 million a month.
Bayonne Medical Center’s turnaround is significant. A recent report filed in August to the state showed that it had made $10 million since the beginning of 2009.
This has come as the result of a combination of upgrading facilities, downsizing employees, and eliminating contracts with insurance carriers that underpay claims.
The hospital closed a ward on the third floor, which accounts for some of the layoffs. Kane said this was done for efficiency purposes since the number of occupied beds varies.
“We have done this before,” he said.
Documents show that 32.7 percent of the 556 long-term hospital beds were filled in July, as opposed to 43.8 percent in 2008.
Freed from contracts, Bayonne Medical Center has increased its fees for these patients – a move that sparked a lawsuit from New Jersey Horizon Blue Cross Blue Shield.
According to Horizon, BMC increased the charge for a hospital stay, for example, from an average of $13,000 a day to $29,000 a day.
Health Professional and Allied Employees Local 5185, which represents roughly 800 members at the hospital, says patients are abandoning BMC because of the battle between the hospital and Horizon.
“The union has been notified of another 35 layoffs by Bayonne Medical Center, and we have scheduled a meeting to discuss the proposed layoffs with management,” said Jeanne Otersen, a spokeswoman for the Health Professionals and Allied Employees Union, which represents 800 people at the Bayonne Medical Center. “We do not accept the need to layoff another set of caregivers, and believe it is the result of the drawn-out contract dispute between BMC and Horizon.”
She added, “This dispute places the interests of the hospital’s for-profit owners and of Horizon Blue Cross ahead of patients. Laying off those who provide bedside care and exposing patients to increased costs is unacceptable to us, and we challenge the idea that insurance companies should be able to force community hospitals to accept reimbursement rates below the cost of care, and we also challenge the idea that hospitals should profit from being out of network. We believe it’s time for state agencies to intervene to mediate a settlement, for the sake of our patients.”
But layoffs were always an option, even during the honeymoon days just after the takeover of the facility by new management.
“We are living up to all our contracts with the unions,” Kane said, noting that services are being maintained and improved, but that like everything else, the facility requires some fine-tuning. “We intend to remain open and viable for the foreseeable future.”