Health officials are putting the final touches on a deal to replace the oldest publicly owned hospital in Texas, University Medical Center Brackenridge in Austin, with a new hospital that is privately owned.
The Seton Healthcare Family plans to build and own a $250 million replacement for the teaching hospital once it gets expected approval for the project in June.
Officials of Central Health, the current owner, which collects taxes to support the hospital as Travis County’s hospital district, called the change a boon. Its board is planning to quickly act on a sweeping set of negotiated agreements that have taken nearly a year to craft and will deepen long-standing ties between Central Health and Seton.
The agreements will include details about what the private, nonprofit Seton must do as it takes on ownership of the new teaching hospital when it opens in 2017 and how it will be held accountable to taxpayers, officials said.
But the plans also call for a narrow time frame for the public to review and comment on the agreements, which will be publicly discussed at the Central Health board meeting Wednesday night, followed by a release of documents Friday and a vote by the Central Health board May 22.
Several health care policy experts consulted by the American-Statesman have said that such public-private conversions can preserve a community’s safety net but need transparency to assure accountability to taxpayers. Some observers had hoped for more time to air the deal.
The hospital, established in 1884, “is a public asset that we, the people of Austin, Texas, own,” said Lisa McGiffert, a senior health care policy analyst at Consumers Union in Austin. “If that asset is not going to be ours, the people of this community deserve to have a public hearing where this agreement can be discussed and they can comment on it.”
Central Health officials said that though they welcome comments at the two upcoming meetings, they received a mandate from the public to proceed in November. That’s when Travis County voters approved a property tax increase to help finance a site for the teaching hospital, an Austin medical school and a collaboration between Seton and Central Health.
“We’re doing what the public told us to do,” Central Health President and CEO Patricia Young Brown said. “Get this hospital and medical school built.”
Catholic-owned Seton has been operating UMC Brackenridge on behalf of the public since 1995. Its planned ownership of the new teaching hospital will solidify the nonprofit health care provider’s control of Austin’s primary training ground for new doctors and the safety net hospital for the poor and uninsured.
UMC Brackenridge relies on paying patients, Seton’s charity and tax dollars to cover the care of the indigent, an arrangement that will continue, probably with increased public support.
In the past 25 years, a few hundred public hospitals have crafted partnerships with private organizations, some to ensure their survival. But those partnerships need to be closely monitored to ensure the hospital’s continued service to the poor and to physician training, experts say.
That means disclosing financial and other hospital data to the public, said Nancy Kane, a professor of management at the Department of Health Policy and Management at the Harvard School of Public Health. “Transparency is key,” she said.
Central Health officials said they will post documents on their website, www.centralhealth.net, with details on the agreement May 17. A master agreement and related documents are expected to spell out ways Seton will be held accountable for its safety net obligations while outlining steps that would be taken if Seton ever backs away — up to and including taking away the hospital.
The agreements also include requirements that Seton expand specialty care and behavioral health services, officials said.
Seton and Central Health officials said the change in ownership won’t result in any big changes to the system.
“Our mission is to provide the best possible care to the community, especially the poor and vulnerable,” said Seton executive Greg Hartman, also president and CEO of UMC Brackenridge. “This fits exactly with our sweet spot.”
Observers of public hospital conversions said that while such deals are not worrisome on their face, the devil is in the details.
Although Seton has nonprofit status, it’s also a profitable business, said Mark Legnini, lead author of a 1999 report, “Privatization of Public Hospitals.” In lean times, care to the needy can take the first hit, Legnini said.
Seton did not meet its financial targets this year and is restructuring staff and services to the tune of $350 million over the next four years. It intends to reduce or consolidate some services and expand more lucrative ones. Even so, its commitment to the needy won’t change, Hartman said.
Tom Young, a former Central Health board member who led UMC Brackenridge from 1985 to ’89, said he was concerned when Seton stepped up to run the hospital 18 years ago but has been pleasantly surprised. “They have done a spectacular job ... and served the public exceptionally well,” he said.
The federal health care law and changes in the way hospitals and doctors are paid will put greater stress on providers of care to the indigent. That care needs to be protected, said Gary Filerman, president of the Atlas Health Foundation, which is devoted to reducing gaps in health care services.
The agreement is “another opportunity to negotiate disclosure and accountability,” Kane, the Harvard professor, said. “The district should require audited financials that are open to the public.”
Seton doesn’t release annual financial statements on UMC Brackenridge now, “and it’s not something we want to do in the future,” Hartman said. “We’re a private provider like any other private health care provider. ... There will be all kinds of ways to tell if the safety net obligation is being met.”
A partnership that Seton and Central Health are developing called the Community Care Collaborative will release audited financial statements yearly, Central Health spokeswoman Christie Garbe said. That collaborative’s goal is to better coordinate care to chronically ill and low-income Travis County residents so that it is more efficient and effective.
Seton “will be more tied to us than they are now,” Young Brown said. “We feel pretty confident that the taxpayers’ interest will be very well protected.”
Right now, Central Health just owns the UMC Brackenridge building, she said, while Seton owns all the rest, including the equipment and license.
Central Health had planned to own the land under the new hospital as a way to hold Seton accountable to taxpayers. That land, 4.8 acres across 15th Street from UMC Brackenridge’s parking garage, is owned by the University of Texas, and on Thursday, the UT System Board of Regents voted to lease the property to Central Health for the hospital, not sell it.
Regardless, “this lease arrangement will afford the same protections of the public interest as ownership,” Young Brown said in a written statement.
Seton has demonstrated a commitment to the community for many years and pays most of the cost of the more than 200 physicians it now trains and plans to expand with a medical school, Young Brown said. “The idea that we could upgrade the facility and the fact that Seton was willing to bring their own capital to that really is a tremendous benefit to the community,” she said.
Because UMC Brackenridge is aging and cramped and would eventually need to be replaced, that cost would otherwise have fallen to taxpayers, she said.
Travis County residents will pay a 5-cent property tax rate increase for indigent health care starting next year, raising average bills by $107.40 to $276.79.
Dr. Bruce Siegel, president and CEO of the National Association of Public Hospitals, said public-private hospital conversions tend to strengthen a community’s safety net. Conversion not only has ensured the survival of some publicly owned hospitals — which totaled 1,343 in 2011, a 9 percent decline in a decade — but it “often gives the hospital more flexibility to get out from under local and state regulations that may hinder it,” Siegel said.
“The important thing,” he said, “is that the mission not change.”
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