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To some, Parkland Memorial Hospital will always be remembered as a place of death -- the hospital where President John F. Kennedy succumbed to gunshot...
by | July 31, 2008
 

To some, Parkland Memorial Hospital will always be remembered as a place of death -- the hospital where President John F. Kennedy succumbed to gunshot wounds. But to the residents of Dallas County, Texas' largest public hospital is a place of life. On a typical day, the hospital's busy obstetrical unit delivers between 45 and 50 babies -- roughly 16,000 a year. In some years, that's more than any other hospital in the United States. The conditions under which these infants are delivered are far from ideal. Women with high-risk pregnancies, for instance, labor in cramped, windowless rooms just a few feet wider than the beds they contain.

Other units are similarly crowded. Hospital architects have told Parkland officials that the facility is operating 54 percent over capacity for its current levels of work in medicine and surgery and at least 200 percent over capacity for women's and children's services.

Renovation isn't an option. Current building codes mean that whenever Parkland remodels a ward, its bed count decreases. Given the seemingly unlimited demand for services, losing beds isn't something Parkland is prepared to do. So instead, Ron Anderson, Parkland's president and CEO, has proposed that Dallas County do what no local government has done in recent history: build a new 862-bed, $1.2 billion facility, largely with local tax dollars. At a time when other public hospitals are taking on the characteristics of their private and nonprofit competitors, Parkland's effort to stay committed to a distinctly public mission raises a fundamental question: Does the urban public hospital, a quintessential institution of the 19th century, have a future in the 21st?

For Ron Anderson and the staff at Parkland, the answer clearly is yes. Despite substandard facilities, Parkland routinely achieves remarkable results. Nationwide, 12 out of every 1,000 infants born to African-American mothers die just before or during childbirth or in the first week after their birth -- a mortality rate that is more than double that of Latino and white infants. Although Parkland serves a poor and overwhelmingly minority population, its perinatal mortality rate is just 2 children per 1,000. That is thanks largely to its focus on evidence-based medicine and a network of community clinics that provides prenatal care to 95 percent of the women giving birth at Parkland.

It's a dramatic example of what physicians in Dallas call "the Parkland way" and a source of pride throughout the institution. So are Parkland's 11 community-based clinics that are set up to treat Dallas County residents, without regard for their ability to pay -- or their immigration status.

"This place is like nowhere else," says emergency department unit supervisor Jennifer Hey. Every day, she sees patients come in to the emergency room, referred by other institutions across the Dallas-Fort Worth metroplex where they have had less-than-ideal experiences. "No matter how frustrating it is to hear those stories," says Hey, "I can look at them and say, 'You are safe now. We will take care of you, even if that means you will give us 50 cents a week or nothing at all.'"

But Parkland's open-door policy comes with a cost. Last year, the hospital and its clinics received 1.2 million visits and provided more than $500 million in uncompensated care. Much of that shortfall was covered by the taxpayers of Dallas County, who last year provided Parkland with $370 million in public funds. No county in the country contributes more on a per-capita basis to its public hospital district. But it's not enough. Per-patient operating losses have increased every year since 2002. The relentless growth in the number of uninsured patients and illegal immigrants finding their way into Parkland's clinics and emergency room -- and the tendency of the surrounding counties to send numerous patients but few dollars to the public hospital -- also have put pressure on Parkland's bottom line. Even so, Parkland's biggest challenge is age. The hospital is 54 years old.

"The Black Hole of Calcutta"

The first public hospitals were little more than almshouses. Wanderers without family, the deathly ill and those too poor to arrange for care within their homes were literally imprisoned within hospital doors, there to succumb to mortality rates that often exceeded 20 percent. In the decades following the Civil War, public hospitals changed. As physicians became more knowledgeable and respectable, hospitals became their schools and workshops. Instead of simply confining the sick, the indigent and the insane, hospitals now tried to cure them. Manhattan's Bellevue Hospital shuttered its almshouse and dispatched its prisoners to the Tombs. The Philadelphia Almshouse became Philadelphia General Hospital. Others followed suit, and by the late 19th century, cities and counties across the country were building new hospitals on the more enlightened model.

The original Parkland hospital was one of those new facilities, opening in 1894 as a modest cluster of wooden buildings, eventually growing into a unified public hospital system with a handsome Beaux Arts building. But by the 1940s, much of Parkland had fallen into disrepair and become known among medical-school residents as "the black hole of Calcutta." Finally, the local government decided to build a new seven-story facility -- the core of today's hospital complex. The current Parkland Memorial Hospital opened in 1954.

Parkland's design was true to its mission: caring for Dallas County's poorest residents at the lowest possible cost. "Amenities" such as air conditioning were ruled out as unnecessary for poor people and minorities. The county court of commissioners made it clear that the Parkland administrators' top job was to keep costs down. That changed in 1979, when Texas Industries co-founder Ralph Rogers was rushed to Parkland after a heart attack.

A New Course

Rogers was a doer: After retiring to Dallas in 1950 for health reasons, he led the philanthropic effort to eradicate rheumatic fever, rescued the Dallas Symphony and helped establish PBS. Emergency bypass surgery at Parkland saved Rogers' life. He now set out to do the same for it.

Rogers was dismayed by the conditions he saw as he convalesced. In short order, he succeeded in pushing the longtime hospital administrator out. He also launched an unprecedented $80 million fundraising campaign to build a new hospital tower. In 1982, when the position of CEO again became vacant, 102 candidates from across the country applied. But the person Rogers really wanted for the position was a 35-year-old internist named Ron Anderson.

Anderson had arrived at Parkland in 1973 as a resident. He shared Rogers's concerns about conditions there -- and his vision of an institution that was both altruistic and excellent. But he was loath to stop doing research and practicing medicine. He turned the job down three times before Rogers finally prevailed.

"You can take care of one patient at a time or you can develop systems of care that take care of thousands of patients a day," Rogers told the young doctor. If he didn't like being CEO, he could return to being a full-time clinician and researcher. All he wanted from Anderson was a five-year commitment.

"So I told him I would give him five years," recalls Anderson. Twenty-six years later, Anderson is still the CEO.

Failing Health

Anderson took over Parkland just as many other public hospitals were faltering. In 1977, Philadelphia's General Hospital closed. In 1982, Detroit's Receiving Hospital was folded into the nonprofit Detroit Medical system. Three years later, St. Louis's city hospital closed. The following year, Ramsey County (which includes the city of St. Paul) converted its public hospital to a self-governing nonprofit. The particular circumstances varied from city to city but the recipe for trouble was essentially the same. Uninsured patients with expensive chronic illnesses resulted in low operating margins that made it difficult to upgrade facilities. Old facilities got older. Skilled nurses and doctors started leaving for modern facilities. Patients started dying, through neglect or preventable error, and the downward cycle accelerated.

Anderson was determined to buck the trend. "Public things are usually funded to mediocrity but you don't have to accept mediocrity," he says. "There are public institutions and public universities that are world-class outstanding. How do they get that way? With philanthropy, with management and with leadership."

Soon after taking over, Anderson started to deliver on this promise with innovations that have been widely emulated throughout the industry. Perhaps the most important was his decision to create a network of community health clinics across the county. Since then, other institutions have built on and arguably surpassed the Parkland approach. One of the most innovative has been Denver Health. Like Parkland, Denver has created a network of clinics to sort patients and provide cost-effective care. It also sought to escape from the perceived stigma of being a public hospital by changing its name, building centers of excellence that can attract patients with private insurance, and expanding into new markets, most recently with a new trauma unit in Vail.

Other public hospitals are taking a variety of measures. Miami-Dade's Jackson Health System launched an effort to serve wealthy residents of Central and South America. Neighboring Broward County's public system has opened new facilities that target its affluent western suburbs. Aggressively pursuing private patients has played an important role in helping these systems to meet the rising burden of uncompensated care in their communities.

Commercially-insured patients aren't the only thing public systems are importing from the private sector. They're also privatizing themselves. Earlier this year, the Fulton-DeKalb Hospital Authority handed over responsibility for running Atlanta's 118-year-old public hospital, Grady Memorial, to a new nonprofit corporation. The Cook County board of commissioners is likewise proceeding with plans to transfer management responsibility for Chicago's public hospital system to an independent board. As competition with private and nonprofit hospitals intensifies, even the National Association of Public Hospitals seems to doubt that public governance is the best structure for urban safety-net hospitals.

"Health care is a very competitive environment," says NAPH senior vice president Lynne Fagnani. "When you are a part of government, you're frequently subject to civil-service requirements. You have to abide by sunshine laws; you're doing strategic planning in public where competitors have access to data. It makes it difficult." In her opinion, hospitals function better when they have an arm's-length relationship from local government.

Parkland has resisted this trend. "I've been an advocate for a public system that works," says Anderson. In truth, he has to be. Denver Health receives about 7 percent of its funding from the city. In contrast, Parkland gets 29 percent of its revenue from Dallas County homeowners, who pay 25.4 cents in property tax (per $100 valuation) to underwrite the Dallas Hospital District. That works out to $250 a year for the average Dallas County homeowner. No homeowners in the country pay more. It's a testament to Parkland's standing in Dallas (and to Texas' stingy Medicaid and SCHIP reimbursement rates). It's also a big problem. The hospital may be a locally funded public entity, but it has regional obligations as a level-one trauma center, a level-one burn hospital, a level-three neo-natal unit, and a sophisticated cancer care center. "Hospitals in the surrounding counties," Anderson says, "don't have the capabilities that we have."

So they send their patients to Parkland.

Stingy Neighbors

One Friday evening this summer, residents along Fenet Street in the nearby town of McKinney, caught a strong whiff of natural gas. A ruptured gas line was flowing into the sewer lines and seeping into the nearest houses. Half an hour later, three homes exploded.

The first house was unoccupied -- the mother and son who lived there had just stepped outside. The occupants of the other two houses were not so fortunate. They stumbled out of their houses with second- and third-degree burns on more than 30 percent of their bodies. All were immediately taken by medical helicopter to Parkland hospital.

The ability to help people recover from horrific accidents is a source of immense pride. But reading about the story in the Dallas Morning News, Judge Jim Foster, Dallas County's top elected official, sighs. Burn rehabilitation is a painstaking and costly process. Burn units typically provide for a day to a day-and-a-half of recovery per percent-of-body burned. Treatment costs rapidly rise into the hundreds of thousands of dollars for the most serious cases. And given the neighborhood where the explosion occurred, Foster suspects there's a good chance that the injured people don't have health insurance. "The likelihood of Dallas County being reimbursed for that amount is slim," says Foster, "and that's not fair."

It wasn't supposed to be this way. Texas' constitution requires each county to care for its poor and indigent residents. But when Parkland sued its neighboring counties in the early 1980s in an attempt to force them to pay a larger share of the costs it was incurring, the state pushed through legislation that limits counties' responsibilities to persons earning less than 21 percent of the federal poverty level. This year, that's $4,600 for a family of four.

Recently, Collin County voluntarily increased its threshold to 100 percent of the federal poverty level. (Dallas County's threshold is 200 percent of the poverty level.) Even so, Collin County's total contribution to Parkland for the month of April was a mere $257.95 -- less than the cost of a single patient's trip to the emergency room.

The treatment of illegal immigrants has been even more contentious. Eighty percent of the children born now at Parkland have Hispanic surnames. How many of these children are born to illegal immigrants? No one really knows for certain because Parkland doesn't ask. "We don't consider ourselves to be border control," says Parkland CFO John Dragovits. "From ours and the county commissioners' viewpoint, individuals who live here have access to services."

That position hasn't proven popular. Senior staff members routinely receive what Anderson describes as "very hateful e-mails." Neighboring Tarrant County (which is home to Fort Worth and to the region's other major public hospital, John Peter Smith) recently decided to stop providing financial assistance to undocumented aliens, a policy that angers Dallas County officials. "Do they want to see people die in the streets?" says Commissioner Maurine Dickey. "Do they want to see babies born in parking lots? I don't know."

In fact, John Peter Smith continues to provide emergency room and maternity care. However, Parkland administrators describe Tarrant County's closed-door policy as self-defeating. Getting pregnant women into health clinics for prenatal care is far more cost effective than seeing them for the first time in the delivery room. (It's also covered by the federal government and is thus a profit center for the hospital.) And while their parents may be undocumented, the children born at Parkland are, of course, U.S. citizens. Nonetheless, as employers reduce benefits and shift costs and risks to employees in the form of higher premiums, co-payments and deductibles, there is palpable resentment in some quarters about Parkland's perceived generosity.

A Good Defense

Seven years ago, Ron Anderson began pushing hard for a new, 950-plus-bed facility. His board of managers was more concerned about rising costs. It directed him to ease off. Anderson refused.

In the fall of 2003, a slim 4-to-3 majority tried to force him out. But Anderson's opponents misjudged the support Anderson enjoyed among Dallas's African-American and Latino communities, within the business community and among Dallas-area physicians, 55 percent of whom trained at Parkland. The showdown came at a meeting in 2004 when 53 African-American ministers came to protest the board's plan. The board chairperson refused to let them speak or to move the meeting to a larger room that would accommodate the overflow crowd. With the ministers singing "We Shall Overcome," she eventually agreed to talk to the protestors, only to leave abruptly as television cameras captured the confrontation. She never returned. Instead of ousting Anderson, the four members of the board resigned and were replaced by four new members, appointed by the county court but vetted by a committee composed of allies from the business and hospital community. Parkland was still Anderson's to direct.

Earlier this summer, Parkland's new board convened to consider Anderson's request for a new $1.2 billion, 862-bed facility to be financed largely by a $705 million bond. The bond would require a new 2.5-cent levy on Dallas County homeowners, as well as another 1-cent increase in the near future. On the table were two less expensive building options as well.

The June 24 meeting began at 8 a.m. sharp but it didn't begin to address the hospital options until 2 p.m. Twenty minutes later, Anderson had what he had long sought: a formal request to put the financing plan for a new Parkland hospital before the voting public this November. The vote was 6 to 1.

"We're going to build it," says Commissioner John Wiley Price. "Like the ancient Egyptians, we've asked Parkland to make brick without straw, and they've done that." Parkland, he adds, "is entitled."

This November, Dallas County voters will go to the polls and let the commissioners know if they agree.

NOTE: This version corrects the number of community-based clinics run by Parkland Hospital and the spellings of the names of Jennifer Hey and Maurine Dickey as they appeared in the print version.

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