“When it came back up for another vote, lo and behold, it passed,” said David Kinsaul, president/CEO of The Children’s Medical Center of Dayton, who confirmed the story with Mead’s daughter-in-law, Ruth.
Since the founding of Dayton Children’s in 1967, supporters say the children’s hospital — one of fewer than 50 such freestanding hospitals nationwide — has continued to prove its relevance.
They note its role as the pediatric safety net in a region without a public hospital, and as home of the pediatrics department for Wright State University’s medical school. And it has the only integrated military pediatric residency training program in the nation, training almost all of the Air Force’s pediatricians.
Before the opening of the Barney Children’s Medical Center, as it was known until 1970, “some kids with means could get to Cincinnati and Columbus, but a lot of kids couldn’t,” Kinsaul said. “Even today, we have kids with chronic illnesses where we help them get to the hospital. We pay taxi fares so they don’t miss a treatment.”
With the growth of ambulatory surgery centers and better management of complex chronic conditions in physicians’ offices, fewer children are hospitalized. But those children tend to be sicker, said Lawrence McAndrews, president and CEO of the National Association of Children’s Hospitals and Related Institutions.
Children’s hospitals, with their stable of pediatric specialists, are better prepared to care for those kids, McAndrews said.
As a result, “children’s hospitals are getting a larger share of a shrinking pie,” he said.
In the past decade, for example, the hospital’s in- patient market share grew from 73 percent to 83 percent in its primary service area: Montgomery, Greene, Miami and Clark counties. To the south and west, in Warren, Butler, Clinton and Preble counties, its inpatient share grew from 15 percent to 21 percent during that period.
Most of the hospital’s services aren’t duplicated elsewhere, Kinsaul said.
“What would happen if you lost one of the adult hospitals in town?” he said. “In the adult system, every program that you’ve got is duplicated two or more times around the community. If you lose one, you go somewhere else.
“If you lose Children’s, you’ve lost a true community asset. We’re not going to let that happen.”
Maintaining financial stability
During an era when many local adult hospitals have banded together to control costs, Dayton Children’s has stayed financially sound as an independent hospital.
And hospital officials prefer it that way.
“The competition for resources is huge” at children’s hospitals that are affiliated with adult hospitals, Kinsaul said. If Dayton Children’s affiliated, “we would really be the low man in the pecking order.”
A Dayton Daily News review of the hospital’s public financial statements from the past decade found its operating revenues have exceeded expenses each year, though the margins tightened in recent years. Dayton Children’s attributed the smaller surpluses to its $27 million investment in electronic medical records during a five-year period.
Hospital leaders are working to improve productivity and keep the cost of its more than 1,800 employees in line with revenues and services rendered, said Charles Foley, Dayton Children’s board chairman and a partner with Battelle and Battelle LLP, a locally based accounting firm. He said there hasn’t been discussion about affiliating with either of the region’s adult health systems.
Recognizing its relatively small size could be a disadvantage, Dayton Children’s has been careful not to overextend itself financially, said Vicki Giambrone, Dayton Children’s vice president for marketing and external relations.
“When other hospitals were out buying lots of physician practices, we resisted the temptation to do that,” she said. “We were concerned about the financial investment and what that might mean for the future.”
In some ways, however, the future is beyond Dayton Children’s control.
President Obama’s proposed fiscal 2012 budget, which seeks to rein in federal red ink, would eliminate funding for the Children’s Hospitals Graduate Medical Education payment program. That would cost Dayton Children’s nearly $3 million annually for its pediatric residency program. Hospital officials are hopeful that, as in past years, bipartisan support in Congress will restore the funding.
Dayton Children’s faces possible cuts from the state as well.
The state Department of Job and Family Services projects a 49 percent increase in the state’s share of Medicaid costs in fiscal 2012, largely due to the loss of federal stimulus money. At the same time, Ohio is looking to close a potential $8 billion budget gap.
“This is the worst budget I’ve ever seen,” said Greg Moody, who heads Gov. John Kasich’s new Office of Health Transformation.
It’s unclear how big of a cut Dayton Children’s and others in the health care sector could see in their Medicaid funding.
Dayton Children’s is especially vulnerable to Medicaid cuts. Medicaid and Medicaid-managed care now account for nearly half of its revenue. In contrast, Medicaid accounts for only 14 percent of revenues at Premier Health Partners, whose largest hospitals are Miami Valley and Good Samaritan and whose revenue also includes Medicare.
Commercial (private) insurance, which offsets losses incurred by hospitals in caring for Medicaid patients, has shrunk from 61 percent to 44 percent during the past decade at Dayton Children’s.
For every 1 percent shift from commercial to Medi- caid, the hospital has estimated it loses $1.2 million. Hospital officials say Medicaid reimburses only 79 percent of what it costs the hospital to care for those covered by Medicaid.
Dayton Children’s has had to cut costs to deal with that shift in its “payer mix.” In late 2008, when an expansion of Medicaid eligibility coincided with a worsening economy, the hospital carved $10 million out of its fiscal 2008-09 budget. It trimmed 50 jobs in 2009, mostly through a voluntary separation program and attrition.
Collateral damage from competition?
In recent years, Kettering Medical Center has sought to upgrade its newborn intensive care unit to care for critically ill newborns. Such an ICU, called a Level III NICU, would better position that hospital’s high-risk maternity center to compete with Miami Valley Hospital’s by letting mother and baby stay to- gether.
But those plans have drawn fire from Dayton Children’s, whose own NICU is its largest revenue source, accounting for more than one in four patient days and generating a $5 million annual surplus that subsidizes pediatric specialties that don’t pay for themselves.
Dayton Children’s went public with its opposition in 2009, claiming KMC’s plans could inflict collateral damage on the children’s hospital.
“This community needs a lot of things for pedia- trics,” Giambrone said. “Another Level III isn’t one of them.”
Both Miami Valley’s parent, Premier Health Partners, and Kettering Medical Center’s parent, Kettering Health Network, expressed support for Dayton Children’s.
“They bring a focus on children as patients, which I do believe is a unique expertise,” said Mary Boosalis, Premier’s executive vice president. “When you concentrate on something like that, you do well.”
Boosalis said Premier hospitals don’t have pediatric units, a “deliberate effort” to support a children’s hospital. Miami Valley Hospital did expand its own Level III NICU during the past decade, but abandoned potential creation of its own neonatal transport service in 2008 at the request of Dayton Children’s, whose transport service runs a surplus.
Kettering Medical Center declined an interview, instead issuing a prepared statement attributed to its president, Roy Chew:
“Children’s Medical Center is a vital part of our community. Many of our employees’ families, as well as my own family, have personally experienced an exceptional level of care at Children’s Medical Center.”
Chew’s statement concluded, “The member hospitals of Kettering Health Network are not pediatric hospitals, and planning for the development and enhancement of services does not include pediatric care.”
KMC declined comment when asked to reconcile that statement with plans to upgrade its NICU.
“Regarding maternal and newborn care, our actions are guided by the belief that mothers and babies need to stay together when requiring advanced medical care,” KMC spokesman Bob Jackson wrote in an e-mail.
While Dayton Children’s competes with other children’s hospitals at the fringes of its service area such as Cincinnati’s, the relationship with other children’s hospitals is largely collaborative, hospital officials said.
Going forward, Dayton Children’s ranks recruiting pediatric specialists as one of its top challenges, as it is for other children’s hospitals. “They’re hard to come by,” Giambrone said.
Having pediatric specialists concentrated at one place — Dayton Children’s — saves time for critically ill patients, according to Dr. David Roer, a general pediatrician with Pediatric Associates of Dayton.
“Many of my patients would not be alive today had the hospital not been here,” Roer said.
Contact this reporter at (937) 225-7457 or bsutherly@DaytonDailyNews.com.
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