Mile-high ambitions: Divergent success stories

Two Denver-area hospitals have vastly different patient bases and different ways of serving them. But both are out to prove that location alone doesn't dictate profit or quality.

By Markian Hawryluk — Posted Feb. 23, 2004

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The two hospitals couldn't be more different: an inner-city hospital where 40% of the patients are uninsured and a luxurious suburban facility with private amenity-filled suites. But both are thriving.

City: Serving a mission by doing more with less

Denver -- The images of safety net and teaching hospitals evoke older, inner-city facilities forced to forgo improvements to stay afloat.

Denver Health is an aging, safety-net, academic hospital. But it is not only surviving, it is thriving.

"We're a model for the country in how care is provided that is highly efficient, highly integrated and of superb quality," said CEO Patricia Gabow, MD. "When you look at some of these numbers, we match up with anybody in the country."

Denver Health's trauma unit has a 94% survival rate. More than 80% of its 1-year-old patients are up to date with immunizations. The percentage of patients with their hypertension under control is twice the national average.

And this is despite the fact that 40% of its patients have no health insurance. The hospital has provided $1.7 billion in uncompensated care since 1992. Yet 2003 will mark the first time in a decade the hospital finished the year in the red.

In 2003, MBA candidates from the University of Denver Daniels College of Business researched how Denver Health was able to maintain positive margins while other public hospitals faltered. The research suggested that its integrated delivery system kept lower-acuity patients out of the emergency department, treating them in lower-cost community clinics and outpatient facilities.

The analysis of 11 safety-net hospitals suggested that Denver Health did a better job keeping its costs under control. It had significantly higher ratios of revenues to charges for Medicare, Medicaid and commercial patients than other hospitals.

Denver Health treated only 8% of its patients through the ED, less than half the rate of the other hospitals. And Denver Health had an average revenue per patient of $396, while the other hospitals averaged $602 per patient. Clearly, Denver Health was doing more with less.

Denver Health's 10 community health centers make up the backbone of its integrated system, managing more than 350,000 outpatient visits each year. The clinics, located in Denver's medically underserved neighborhoods, ensure that patients easily can access preventive and routine care. There are teen clinics in two of the centers and in 12 school-based centers.

Urgent care is available at adult and pediatric urgent-care clinics. The entire system is connected to a single computer system.

Denver Health's funding structure is equally complex. Medicaid provides the largest share of revenues at 22%. Although it's a public hospital, the city provides only 7% of its funding. Payments from private insurance plans contribute 21%.

"We have a trauma program that is attractive to private payers," said Wade Smith, MD, chief of orthopedic surgery.

Dr. Smith, like all doctors at Denver Health, is a salaried physician and a faculty member at the University of Colorado Health Sciences Center School of Medicine in Denver.

Faculty research activities bring grants from government and private-sector sources. Additional revenue comes from a poison control center, a detox unit and provision of care for convicts. Denver Health also operates an HMO and the state's largest Medicaid managed care plan.

But the administrator and doctors argue that the hospital's success does not come from a focus on the bottom line. The hospital's goals include 100% integrity, 100% patient-focused care, 0% disparities, and 100% access. Profit margin is conspicuously missing.

"It's not like we're not interested in money, because we're providing $250 million for the uninsured," Dr. Gabow said. "We're paying the same for goods and services and personnel, and we have a much different payer mix. We have to worry about money more than anybody else. We just don't see money as our mission."

In 2003, Denver Health had to make tough choices to minimize losses. The hospital closed four clinics, laid off 122 employees and left an equal number of positions unfilled. When Dr. Gabow challenged departments to save money, almost 1,300 employees volunteered to take three weeks of unpaid leave.

Ivor Douglas, MD, ICU director, said hospital staff are motivated by a sense of mission. "We are shouldering a tremendous burden. The mesh of the safety net has been stretched to its limits. We can't stretch the mesh any more."

As a result, the physicians work on developing the best treatment protocols.

"These protocols allow you to treat a greater number of patients for the same amount of money with better outcomes," Dr. Smith said.

He attributes this clinical focus to Dr. Gabow's leadership. "A large part of that is she's a physician. When things are on the chopping block, the last thing on the list is clinical."

Last year, Dr. Gabow ushered in the hospital's first expansion since 1969, with no taxpayer help. In May 2003, Denver Health opened its $142 million addition, adding 52 private ICU beds, a new orthopedic ward and a secure facility for prisoners. That same month, Denver voters approved $148 million in bonds to add 100 patient rooms, nine ORs and a new outpatient facility.

"If there's a perfect storm in health in general, there's a level 5 hurricane for the public hospitals," Dr. Gabow said. "Our uninsured are growing, and all the revenues to support those are being cut because of the economy, at the same time that the cost of technology and pharmaceuticals and work force are going up."

That likely means more eyes on Denver Health.

Suburb: Offering the best in care, comfort

Lone Tree, Colo. -- The new SkyRidge hospital in Douglas County, Colo., may be a little ahead of its time.

When Denver-based HealthOne's facility opened in August 2003, the hospital's chief of surgery, Brian D. Gill, MD, shocked photographers by sterilizing his hands and arms with a no-rinse foam.

For the cameramen, "I had to go back to the scrub sink, take the scrub brush out and pretend I was an old-fashioned surgeon scrubbing with water," he said.

SkyRidge, located in what the 2000 U.S. Census said is the fastest-growing county in the nation, is anything but old-fashioned. It is modern, luxurious and reminiscent of a Colorado ski lodge or luxury spa. The word "institution" hardly seems to apply.

Patients enter the hospital by bridge into a three-story atrium with a café below. Visitors wait in leather chairs before roaring two-story fireplaces. Walls are painted with soothing, natural Colorado tones. Floors are slate tile. And every room is flush with natural light.

"One concept is to try to make all nonclinical areas feel very warm and inviting," said SkyRidge CEO Maureen Tarrant. "Hospitals are very intimidating environments, and people are anxious enough as it is. When you're in parts of the hospital like the lobby or our SkyRidge café, you really wouldn't know you're in a hospital."

Patient rooms are equally luxurious. Each room is private and has a pull-out futon so family members can make full use of the 24/7 visiting hours. Patients order room service with such choices as grilled portobello mushroom sandwiches or roasted sea bass with citrus chutney. Patients who can afford it can opt for luxurious amenity suites, with hotel-style lavender soaps, bathrobes and Jacuzzi tubs in massive, tile-laden bathrooms. The suites are wired for high-speed Internet access and have a dedicated chef.

But it's the clinical capabilities that physicians praise.

"SkyRidge was created from a blank slate to meet the changing needs of patients in the 21st century," said Stephen M. Heinz, MD, medical staff president and emergency department chair. "We brought together elements for the most advanced and most compassionate care -- from the latest diagnostic equipment and high-tech operating rooms, to experienced staff and a scientifically based design for an effective healing environment."

Operating rooms are outfitted with flat-screen monitors for video endoscopy and laparoscopy. Physicians can see digital x-rays, CT and MRI scans on computers anywhere in the building. A bar-coded medication administration system guards against errors and an infant abduction prevention system safeguards newborns.

Hospital floors were designed to make nurses' lives easier. Each room has a closet for supplies and nurse substations are located closer to the rooms. Nurses are issued cell phones and carts with laptop computers so they can reach doctors and get patient information bedside.

"The average nurse's age is 48, and the average miles they walked a day are 10," Tarrant said. "So part of our goal was to design it so they would have to take fewer steps."

Physicians are offered equal convenience with a 120,000 square foot, four-story office building connected to the hospital on three floors. Many doctors were able to align their offices with hospital units, so OBs could pass directly into the labor deck, and surgeons could cross directly to the surgical facilities.

A second office building set to open in May will include an ambulatory surgical center, providing physicians an additional practice setting and an investment option.

"A lot of them were looking for those investment opportunities, and I'm sure would have found an investment partner a mile away," Tarrant said. "Our feeling was, let's do that here on our campus."

But most of all, SkyRidge fills the need for a hospital in Douglas County, home of 240,000 people with another 100,000 just across its northern border. The $147 million facility is the first hospital to be built in the Denver area since 1988. A burst of construction will add six more this year.

All that new construction just underscores how primed SkyRidge is for success.

"You have the stars aligned," Tarrant said. "You have an underserved community, it's a well-educated population, and a community that often the docs are already serving in other offices,"

SkyRidge now brings in two-thirds of its revenues from private managed care. Only 17% of the hospital's funding comes from Medicare or Medicaid, and even that figure was higher than parent HealthOne had expected. Tarrant said the best indicator of the hospital's financial future is that more than 1,000 doctors have applied for privileges.

SkyRidge is poised to accommodate them. The hospital can expand to 335 beds and can add multiple office buildings and outpatient facilities.

"We've had doctors come here who've said they couldn't handle it at this other hospital because patients couldn't park easily and were always 20 minutes late for their doctor's office appointment," Tarrant said. "So we bought enough land, and we're going to buy even more land."

In the meantime, SkyRidge is still ironing out the wrinkles that come with opening new facilities. But Dr. Gill said the surroundings themselves have been energizing for the staff.

"Health care gets so muddy and routine, and you get established patterns, and it's hard to break out of them," he said. "This was an exciting fresh new start, and I think everybody who came here in some small sense feels that."

At SkyRidge, it's hard to feel anything else.

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