Byline: Josh Goldstein
Aug. 2--Joseph W. Marshall 3d, chairman and CEO of Temple University Health System, says he is proud that Temple's solution to its financial troubles was 'very different from the standard response of closing hospitals and laying off workers.'
The Temple University Health System unveiled yesterday the new Episcopal Hospital, a milestone in the network's two-year effort to reconfigure health services among its North Philadelphia hospitals.
Episcopal, a 150-year-old community hospital in the city's Kensington neighborhood, was transformed from a 285-bed general hospital into a 114-bed behavioral health center. With a bustling full-service emergency room, an active school of nursing, and ambulatory care services, the Episcopal campus is busier than it has been in years.
Following the same strategy, Neumann Medical Center in Fishtown has gotten out of acute care and houses an adult day-care center and doctors' offices. It soon will open subsidized housing for the elderly.
Admissions figures from the state suggest that many of the patients who would have gone to Episcopal or Neumann are now being treated at Temple University Hospital on North Broad Street, or at Northeastern Hospital in the city's Port Richmond section. That is an early indication that Temple's reconfiguration strategy is working.
'We realized that we had a delivery system made up of a collection of facilities that could not be sustained financially,' said Joseph W. 'Chip' Marshall 3d, the Temple system's chairman and chief executive officer.
With four hospitals plus the newly constructed Temple University Children's Medical Center in a relatively small area between Broad Street and the Delaware River, the system's facilities were essentially competing against each other for the same patients.
'Redundancy is something that can kill you in this business,' Marshall said in an interview at Episcopal yesterday.
'We are very proud of the fact that in the face of significant financial challenges two years ago, the Temple solution was very different from the standard response of closing hospitals and laying off workers,' Marshall said. 'We found a way to keep [Episcopal] open and functioning as an economic engine in this community.'
Episcopal now has about 220 more full-time employees than it had before the changes.
'When you have an unregulated competitive market, as we do, it is up to the health systems to organize and rationalize services in a way that meets the needs of the community and provides care in a financially viable way,' Daniel M. Grauman, a health-care consultant in Bala Cynwyd, said.
Also, because the hospitals were so close to each other, Temple has been able to make the changes without losing patients.
Since 1998, admissions at Temple University Hospital have grown by nearly 19 percent to 24,853 in the year that ended June 30, 2001, according to state data. Over the same period, Northeastern's admissions have gone from 6,336 to 10,176.
The system also improved its finances over that time with patient revenue increasing nearly 30 percent to $676 million, while expenses rose at a more modest 18.5 percent.
Still, the Temple system faces daunting financial challenges.
As with other hospitals in the region, labor costs are rising at Temple. So are the costs of new drugs and medical technologies as well as medical-malpractice insurance.
The same geography that allowed Temple to reconfigure its hospital and keep patients also adds to the system's financial difficulties.
'The challenge that they will always have is directly a function of that fact that many of their patients are either uninsured or covered by the Medicaid program, which pays at the lowest level,' Grauman said.
Uncompensated and undercompensated care provided by Temple costs the system about $65 million a year.
The Temple system also includes Jeanes Hospital in Fox Chase and a single suburban facility, Lower Bucks Hospital.
But Temple recently has loosened its ties with Lower Bucks Hospital, which has a heavy debt load and had negative operating margins in each of the last five years.
Marshall remains on the Lower Bucks board of directors, which is now dominated by community leaders. He said the change 'reflects my view that we have to be more focused.'
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(c) 2002, The Philadelphia Inquirer. Distributed by Knight Ridder/Tribune Business News.
