Dimensions Healthcare System

by Allen Powell II * Capital News Service

Hospitals: Crisis in funding could close trauma centers

March 21, 2003, WASHINGTON D.C. -- Maryland hospitals say they have reached a financial "crisis point" that could force them to shut down some of the state's trauma centers by summer, threatening what is considered one of the best trauma networks in the country.

Hospital officials say they are being squeezed by increased demands for reimbursement by on-call physicians, inadequate insurance reimbursement rates and relatively large numbers of trauma patients whose bills are never paid. They say they need as much as $18 million from the state to keep their doors open.

"We're reaching a crisis point," said Richard Kennedy, CEO of Prince George's Hospital Center in Cheverly. "We're facing significant financial challenges in our trauma centers."

Kennedy, vice chairman of the Maryland Trauma Centers Network, said he can think of two to three trauma centers that could shut down, though he declined to say which of the state's 11 trauma centers were most at risk.

Washington County Hospital shut its trauma center for four months last summer and the same may happen this summer at Peninsula Regional Medical Center in Salisbury, officials there have said.

Thomas Lawrence, vice president for medical affairs at Peninsula Regional Medical Center, said his trauma center is facing a $1 million shortfall -- over half of which is due to standby costs -- and could close by July without state help.

Peninsula's trauma center treated 849 patients last year. If it closed, those patients would have to be taken to the state's main trauma center in Baltimore -- two hours by car and 30 minutes by helicopter from Salisbury -- after being stabilized at Peninsula.

Lawrence said no one in the state should be more than 20 minutes from a trauma center.

"For critically injured patients the first hour after the accident is called 'the golden hour,'" Lawrence said. "The patients that get the services in that hour have the best chance for a successful outcome."

Rapid response is also at the root of one of the trauma centers' problems.

Because trauma physicians must be within 30 minutes of a center when they are on call, they often cannot schedule other surgeries, which cuts into their income.

"For physicians this is a huge issue," Lawrence said. "If my other source of revenue continues to dwindle and I'm giving up other opportunities for revenue, that cost is going to go into standby costs [paid by hospitals]."

Maryland Hospital Association spokeswoman Nancy Fiedler said: "Physicians who are independent are now saying, 'We need to be reimbursed.' Clearly we feel very strongly that there needs to be additional funding."

Brian Gragnolati, president and CEO of Suburban Hospital in Bethesda, said the problem has been brewing for years. He said that as physician costs have risen, they have been less willing to go on-call for free or for a small stipend, driving up costs to hospitals.

Hospitals have long operated trauma centers at a loss, but said that is no longer feasible.

"It's not something we can do forever," Kennedy said, noting that Prince George's Hospital Center spends about $3 million a year to subsidize its trauma center.

More than a quarter of the state's trauma patients are uninsured, with rates as high as 39 percent at some trauma centers, according to a state task force's recently release draft report. Physicians who treat uninsured patients are rarely compensated, the report said.

The report also said that most trauma centers claim that reimbursement rates -- especially Medicaid rates -- do not cover the cost of care.

Those losses had been covered in the past through commercial insurance and hospital investments, but those sources are also starting to dry up, officials said.

"Hospitals just don't have the flexibility to accommodate these increased costs," Gragnolati said.

State lawmakers have filed several bills that would help fund trauma centers. They range from simply setting aside $15 million in the general fund to raising new revenues, by adding new levies to insurance policies, managed care organizations or moving violations.

Del. John P. Donoghue (D-Dist. 2C) of Hagerstown said a proposal to levy an additional charge on driver's licenses seems to be garnering the most support.

The $2-a-year fee would cost motorists $10, since licenses are renewed every five years. With the state issuing about 1 million licenses a year, the fee would bring in about $10 million.

"It's a fairness issue where we try to keep it [the bill] as broad and simple as possible," said Donoghue, who noted that drivers are responsible for about half of all trauma cases.

Donoghue, who sits on a House subcommittee dealing with health facilities, said those funds would not be available immediately, but that trauma centers could hold out if they know funds are coming.

When they reopened their trauma center last year -- at a cost of $1.7 million -- Washington County Hospital officials said they did so because they believed the state would find a way to help fund centers like theirs.

Washington Hospital President Jim Hamill said if the state does come through, his trauma center could once again have to close its doors.

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