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St. Vincent’s Is the Lehman Brothers of Hospitals

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An abandoned St. Vincent's surgical recovery unit.  

Indeed, it may turn out that profound problems with the ways health care is paid for, combined with the inherent disadvantages of doing business in New York, will make it virtually impossible for all but a small number of the city’s hospitals to stay afloat. If that’s the case, the health of low-income and minority residents will be most affected, but even New Yorkers who currently have access to high-quality care will feel the impact. Remaining hospitals, struggling to cope with the costs imposed by an influx of new, mostly poor patients left behind by the places that shut down, will increasingly be overcrowded and understaffed. Services will be curtailed. Facilities will be degraded. Long waits and uneven care could become the norm.

“We’ve got a lot of hospitals in trouble,” says Kenneth Raske, the president and CEO of the Greater New York Hospital Association. “More closures will undoubtedly take place. I’ve been doing this job since 1984, and people used to say I was crying wolf when I warned about a crisis. No one says that anymore. In some communities, we’re one epidemic away from a disaster.”

Why are New York hospitals so unstable? Consider the case of Anna, a not atypical 62-year-old resident of Queens. Anna complained of chest pains. It was not the first time she was acutely ill. She had been living with kidney disease, congestive heart failure, mitral-valve disorder, and chronic pulmonary disease. She managed to get herself to the emergency room of her neighborhood hospital, where she was given an EKG and blood tests. It was determined she had had an acute myocardial infarction—a heart attack.

Because of the complexity of her medical history, physicians arranged for Anna’s transfer to one of the city’s largest and best-known hospitals, which boasted substantial technical wherewithal and a staff of top specialists. Soon after being admitted, she underwent diagnostic cardiac catheterization, including angiocardiography, in which an opaque fluid is injected into a chamber of the heart in order to observe blood flow. The test is typically used to determine the need for heart surgery. (Anna’s doctors decided against this measure, perhaps because her overall condition would have made operating too risky.) Anna spent the next three days in the hospital’s coronary intensive-care unit. She received a pair of CT scans and a round of dialysis. When her condition stabilized, she was moved to a semi-private room in a general-medicine unit, where she stayed another three days. Then she went home. During Anna’s six-day stay, the hospital spent $19,254 on her treatment.

Virtually every item that contributed to the hospital’s total cost of caring for Anna was more expensive in New York than it would have been elsewhere. Labor makes up some 60 percent of a hospital’s overall expenditures, and New York has among the highest labor costs in the country—a reflection of the enduring strength of its unions. The demands of an urban setting—more acute cases, more-diverse patients—require higher staffing levels than elsewhere, and in New York City there are 5.6 workers for every patient in the hospital on a given day, a figure about 15 percent higher than the national average. Executives, too, are paid more than their counterparts in other places. In 2008, Herbert Pardes, the president and CEO of New York–Presbyterian, reportedly received $9.8 million in total compensation; Miguel Fuentes, head of the comparatively small Bronx-Lebanon, took in $4.8 million. New York’s hospitals have the oldest “age of plant” in the country, and vintage properties are expensive both to run and to retrofit to contemporary standards. The New York Building Congress reports that hospital construction in New York City costs $600 per square foot, two and a half times the national average and still 50 percent higher than in other expensive cities, like San Francisco. The mid-nineties, 700-bed addition to New York Hospital, which involved floating a platform up the East River and setting it atop the highway with cranes operated from tugboats, took three years to complete and cost $1 billion—nearly $1.5 million per bed. Just as the price of consumer goods is higher in New York than elsewhere, so too is the cost of everything from MRI machines and CT scanners to medical supplies and linen services. And local hospitals’ epidemic indebtedness makes that problem worse. “Vendors know that the financial condition of most New York City hospitals means they’ll get paid very slowly, or perhaps not at all,” says John Lavan, a hospital consultant and the former chief financial officer of New York–Presbyterian. “They protect themselves by embedding the cost of their risk into the prices they charge.” Because New York City juries are famously friendly to plaintiffs, malpractice premiums here are double the national norm.


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