Battle for Midway: Physicians unite to save a hospital

The president of a group that bought a former Tenet hospital discusses why they stepped in, and how doctors nationwide can keep struggling facilities alive.

By Katherine Vogt — Posted April 25, 2005

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On Dec. 1, 2004, Shahram F. Ravan, MD, a cardiologist, and six other physicians took over Midway Hospital Medical Center in Los Angeles and set out to find the kind of success at the general acute care hospital that seemed to elude one of the nation's largest hospital chains.

They invested some of their own money toward the roughly $10 million it took to buy the 220-bed hospital from Tenet Healthcare Corp.

In making the move, Dr. Ravan's group joined scores of other physicians nationwide who have taken over hospitals -- usually, ones the big for-profit chains or nonprofit systems don't want. And often, physicians struggle to keep these hospitals alive, as indicated by recent closings of physician-owned facilities in Philadelphia and Indianapolis.

Dr. Ravan and his colleagues are banking on their unique insights into health care delivery for a roadmap to success -- making enough money to keep the quality hospital viable for the long term. AMNews interviewed Dr. Ravan, president of the physician group that now owns the hospital, for his perspective on the pros and cons of physician ownership of acute care hospitals.

Question: What prompted you to buy the hospital?

Answer: A few years earlier we had seen an attempt to sell the hospital to another entity. The intention at that time was to turn the hospital into a rehabilitation facility, which almost destroyed the viability of the hospital. When Tenet announced their intention to divest [some of] their hospitals, we basically were faced with ... either getting involved and taking over the hospital and putting our money in there, or letting it go to an investor for real estate value, or closing the hospital, or allowing it to become a boarding care facility or rehab facility.

That was not attractive to us. The hospital plays a vital role in the health care of this community. We have a very active ER, and closure of the hospital would have meant a major disruption to health care in this area.

Q: What are the advantages of physician ownership?

A: The first advantage is that it brings the administration of the hospital in line with the physician medical staff. Traditionally, in the corporate model of health care, there's always been a divide between physicians and administration because their goals have been different. The corporate world looks for the bottom line and is responsible to Wall Street. Physicians are responsible to their patients and for the quality of care they deliver. Those have not always been aligned together. By physician ownership, we can align those two goals and hopefully deliver good care and still have a viable hospital.

Q: What are the disadvantages?

A: We haven't seen them. Some people have argued that physicians are not good businessmen and that physicians are not good operators of hospitals. But we, I think, have proven that to be wrong because we have been able to save a significant amount of money since we took over the operation. We brought up the quality of care at the facility, and we hired experts to run the facility.

Q: What challenges do you face in moving beyond the traditional role of a physician?

A: The biggest challenge has been devoting extra time to the operation of the hospital. Also, one challenge is to make our colleagues realize that they have to change their work styles in order to deliver better quality care and more cost-efficient care.

Q: Has the hospital been a good investment financially?

A: It's too early to tell. We certainly hope that it will become one. But our ownership is not just purely financial. When we own the hospital, we are also owning a great deal of responsibility in providing quality care to the community, so I think that's been our biggest challenge and has been at the forefront of the picture.

Q: This hospital lost money in the past. What makes you think you can beat history?

A: Having been involved in the hospital for 20 years, we have identified a number of inefficiencies in the system that we are confident we can correct and cut some of the losses of the hospital. We also feel we could gather much better support for the facility in networking with our friends. ... Also, we have brought in new services to the facility, which are going to help the bottom line of the hospital.

Q: Were your expectations of running a hospital any different than the reality?

A: The time constraint has been significant. I probably underestimated it initially. But the challenge has been quite rewarding. When you work in a hospital for 20 years and you make suggestions and give ideas and you deal with problems but you don't see any improvements, you become really frustrated and you might give up. But as an owner, as somebody who has some control as to how things are done, you can suddenly see changes happen that you have wanted for many years.

Q: Any words of wisdom for other physicians who may be considering a similar investment?

A: Physicians have to become more involved in delivery of health care because they are ultimately responsible for the care of the community and they need to be empowered to create solutions for the problems of the health care system. However, I think doing what we did is not an easy task and should be done by people who do have some expertise in management of businesses and also are involved to some degree with management of hospitals and quality control of the hospital.

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