A Dose of Reality

By Peter Galvin, MD

With all the recent talk about a trauma center for Rockaway, I thought it was time to look at the realities of hospital finances. I don’t think that many people understand the economics of emergency and inpatient care, and that includes our elected representatives. I became very familiar with this topic in my various positions at Peninsula Hospital, including President of the Medical Board, Associate Director of Medical Affairs, and Chief Medical Officer. In 2005, I attended and testified at the Berger Commission, which was tasked with downsizing inpatient beds in NYC and was responsible for the closing of many hospitals, including Cabrini, Interfaith, Mary Immaculate, and St. John’s Queens, among others.

Most hospitals lose money on inpatient care, starting with the emergency department. Under the Emergency Medical Treatment and Labor Act (EMTALA), an ER cannot refuse to treat or transfer anyone to another facility, unless that patient requires a treatment that the hospital cannot provide. Many ER patients are uninsured. NY State does reimburse hospitals for the care of the uninsured, but at a rate of about 10 cents on the dollar. Medicare and Medicaid pay hospitals about 85% of the cost of inpatient care. Hospitals try to make up for that shortfall by charging private insurances (i.e., Blue Cross, Emblem Health) more and do get reimbursed at a rate of about 130% of the cost, but usually that does not make up for the losses. So, to remain open, hospitals need to look elsewhere for revenue. That’s why many big, prestigious hospitals have tiny ERs – they don’t want ER admissions.

Today there are no more stand-alone urban hospitals like Peninsula. Hospitals are owned by large healthcare consortiums like Northwell Health. St. John’s Episcopal is supported by Episcopal Health Services. Plus, hospitals turn to other revenue streams based on outpatient and specialty care, for example outpatient cancer care and heart disease care. They also host medical student and residency training programs. Medical schools pay hospitals to train their students, and the federal government pays for residency and fellowship training programs.

Let’s look at some of the history of Peninsula Hospital, which closed in 2012. The community did not support it, and by support, I mean use it. Federal data showed that over 80% of Rockaway and Broad Channel residents who were hospitalized were admitted to hospitals outside of Rockaway. Peninsula was left to treat the uninsured and Medicaid population. But even if the community used the hospital, it still would have lost money on inpatient care. So, the hospital looked for revenue elsewhere. It was very involved in osteopathic training (osteopaths are D.O.s, allopaths are M.D.s). Peninsula had the largest osteopathic orthopedic training program in the country. It had over 40 orthopedic residents per year who trained at hospitals all over the tri-state area. It also had a large osteopathic family medicine program. It had the first MRI unit in Queens as well as the first linear accelerator for cancer radiotherapy. Yet, despite all of those achievements, the hospital couldn’t keep its door open without help, which it sought but never found.

Therefore, the question regarding a Rockaway trauma unit is who will pay to build it and who will cover its nearly guaranteed operational losses, which would most likely be millions of dollars per year?

Please direct questions and comments to editor@rockawaytimes.com