The private management company that fired 615 workers at three Prince George's County hospitals last week has set other controversial policies for the financially ailing public health system that will affect thousands of poor patients who rely on county facilities for treatment.
The hospitals, with physician approval, will now "defer the admission" of patients needing nonemergency treatment until they "prove" they can pay their bills, according to Winfield Kelly, who chairs the board of directors of Community Hospital and Health Care Systems Inc. (CHHCS), the nonprofit corporation that controls the hospital and hired Hospital Corp. of America in June to manage the facilities. The hospitals also will require payment "up front" for some charges not covered by insurance.
"Nobody will be denied an admission if it is an emergency. It's just an effort on our part to tighten up administration," he said.
HCA, which instituted the firings and policy changes less than three months after being brought in, is known for the tough management style that it used to build a worldwide health care empire with $3.5 billion in revenues.
In 1982, it was named one of the best managed companies in the country by Dun's Business Month Magazine, and is now the world's largest private health care company.
The aggressive management style of HCA and other private health care companies has turned around money-losing hospitals across the country, at the same time fueling a debate over the effect such bottom-line management has on the quality of health care and the treatment of indigent patients.
Five years ago, for example, Quincy (Mass.) City Hospital had a $2.4 million deficit and hired HCA. The company's five-member management team produced a $1 million surplus the next year, said hospital spokesman William F. Henderson.
But the hospital and HCA have critics. "Although they are making it well financially . . . people are not happy with the care," said Joanne P. Condon, Quincy City Council member. "They really haven't been as accountable as they might have been."
Nurses have staged a sick-out and often picket the hospital on their lunch hours over alleged understaffing and the use of temporary employes to fill nursing positions, she said.
In Prince George's County, HCA also came into a troubled system. The nonprofit health care corporation was created in 1983 to run the Prince George's General Hospital, Greater Laurel-Beltsville Hospital and the Bowie Medical Center. But after a nurses' strike, cash flow problems and repeated allegations of mismanagement, it hired HCA.
Corbett A. Price, an HCA vice president who is overseeing the transition at the hospitals in Prince George's, said in an interview that massive staff reductions were not anticipated when the company took over, but the system's "deteriorating" financial condition demanded radical action immediately.
Price called the system "grossly overstaffed." Using what he said was a standard industry measurement, he said Prince George's General was 33 percent overstaffed while Laurel-Beltsville was 37 percent overstaffed.
The hospital system lost between $2 million and $3 million during the fiscal year that ended in June, and would have lost more this year without changes in hospital operations, he said.
The staff reduction is expected to save $3 million.
In another move designed to shore up revenues, Price said next week he will ask the county to renegotiate its $2 million-a-year lease with CHHCS. The financial concessions and other lease changes he hopes to get from County Executive Parris N. Glendening will serve as a show of support for the embattled system, he said.
Glendening already has agreed to provide $2.7 million to cover some of the hospitals' bad debts, even though the move has troubled some County Council members.
The two policy changes are significant because the 550-bed Prince George's General Hospital is considered the principal source of health care for most county residents. More than 40 percent of the county's poor go there for treatment, according to officials. Under the deferred admission policy, patients without insurance who cannot pay their bills will be sent to social service agencies for help.
The CHHCS board of directors endorsed both changes, which were recommended by HCA, at its meeting last week.
Corbett said the hospital system is owed $33 million in back payments from patients, a figure that is way over the industry average, and $2 million from the state in Medicaid and Medicare reimbursements. He said it takes the system 140 days to collect an account compared to 65 for the industry as a whole.
HCA officials and some in the industry say stringent steps are necessary if the hospital system hopes to survive in the rapidly changing health care industry.
"They definitely went in with a meat ax, but in this case a meat ax was necessary," said Thomas G. Goodwin, a spokesman for the Federation of American Hospitals, an industry trade group.
Many of the problems facing the Prince George's system are evident nationwide. Occupancy rates have dropped to 67 percent nationally and 70 percent in Maryland. Those who do check in stay for shorter periods. And, tougher Medicare and Medicaid regulations and competition from health maintenance organizations and clinics have also slashed hospital revenues.
Charitable contributions, meanwhile, fell from 21 percent of hospital income in 1968 to 4 percent in 1983, while goverment funding fell from 23 percent of income to 12 percent, according to the American Hospital Association.
At the same time, the federal government, state regulators and major insurance companies have been increasing the pressure to keep hospital costs down, said Goodwin.
Hospital Corp. of America was formed in 1968 by Thomas F. First, his son, Thomas Jr., both doctors, and Jack C. Massey, a business executive. It bought 10 hospitals the same year and now owns more than 200 worldwide. In the mid-1970s it started a management company and now manages 195 hospitals for nonprofit groups.
At HCA-managed hospitals, the company follows a fairly set pattern to cut costs. It reduces staff, cuts inventories, buys supplies through a companywide purchasing system, and introduces productivity standards and better financial controls.
In 1981, the publicly owned Ellis Hospital in Schenectady, N.Y., had an $8.1 million deficit, but within a year HCA had generated a small surplus, said spokesman Andrew A. Foster. About 20 hospital workers were laid off in addition to cuts through attrition, and now, "We're on the verge of a building campaign," he said.
Some rival hospitals charge that HCA also raises costs. A 1984 study by the Hospital Alliance of Tennessee, which represents public hospitals, found that privately owned or managed hospitals in the state cost patients more for services than nonprofit hospitals.
A similar study of hospitals in Florida, conducted by two Vanderbilt University professors with the aid of HCA found that for-profit hospitals were on par with public hospitals in costs and charitable work.