Well, I mean, that's quite dramatic. I appreciate the offer. I'm not in the hospital business. If that was a serious and legitimate offer, I assume that you're having conversations with people who are 169 2/12/04 - COMMERCE - RES. 040046 in the healthcare business for the City of Philadelphia. But that was a decision that was made, sir, I think when I was in high school. So I don't know that we're going to go back into the hospital business. But as far as I can tell, you are in the hospital business, and I think we do have a right to expect that you would operate a hospital. I'm not going to comment on whether it's competency or incompetency. I may not even be in a position to make that evaluation. But someone in the company made the decision to buy that hospital and seven others and try to run them because they thought they could make money. There's nothing wrong with that. This is America. We're now here at this particular decision. We have not had any extensive conversation or testimony about the operations of that particular hospital. You had the medical school people at least make an opinion about how it ran. So now I'll ask you the same question. What is your professional opinion about the management and operations about the 170 2/12/04 - COMMERCE - RES. 040046 MCP Hospital?
This hospital was operated by competent individuals under the direction of a hospital management company which does have the expertise to run hospitals, and we have made a decision that this hospital is not viable. And I can be criticized for the timing --
You made a business decision because it's affecting your finances that it's not viable. That has nothing to do with need of service.
But you just finished telling me that there's nothing wrong with making a profit. We are a hospital management company and we have deemed this hospital to not be viable, no different than the people who own St. Agnes have deemed their hospital not to be viable and it should be merged with another hospital or that the people who ran other hospitals.
You use the example St. Agnes having a conversation. (Applause.) 171 2/12/04 - COMMERCE - RES. 040046
We didn't have that opportunity. As I stated million. We 4 didn't have all this jumping around and 5 hollering and screaming a couple years ago on 6 City Avenue because there was a different 7 mindset and there were a different group of 8 people who took that situation and handled in a different fashion. And I'm not saying that there wouldn't be some consternation or some disruption in the community about a subsequent decision after a legitimate process in the MCP situation. It's not like people had a parade down City Avenue when the hospital closed, but they at least understood what was going on. We saw alternatives. The company actually -- and I've said this a hundred times and I'll say it here today -- the company actually did the right thing through a process and even through disposition. Because I know they could have sold it at a higher price or for some other use that was totally against the community's interest. They did not, and ultimately sold it back to the people who had it. 172 2/12/04 - COMMERCE - RES. 040046 So there are ways to do things. And we don't need to go back over a lot of that territory back from the first hearing. But, you know, you can't complain about our response to this, given that you put yourself in the jackpot. This is a self-inflicted wound here.
Don't offer me a hospital. I don't need a hospital. I need healthcare. It's like you offer me more combs and brushes for my hair. I don't need it.
Let's be clear about the problem we're talking about. The problem in healthcare in this country begins with the fact that $44 million people are uninsured. That's not a City problem. That's not a State problem. That's a federal problem. We need universal insurance. When people don't have insurance, they seek their medical care at the emergency room. MCP receives 60 percent of its patients at the emergency room. They are the people that don't have insurance. That's a national problem. You can't solve it. Tenet 173 2/12/04 - COMMERCE - RES. 040046 can't solve it. And beating up Tenet because of a national problem doesn't advance the ball.
I appreciate that. But part of this conversation that has come out over the past couple weeks has also gotten into the issue of what are the doctors doing; how was the hospital being run; what were the facilities and services available; who's referring who, where? I think somewhere in this arrangement there must be some ability to effect what the mix is of the different patients and how are the doctors referring their patients and what's going on on the medical school side and what's going on on the hospital side. You're absolutely right about who has insurance and who doesn't, and the company has an excellent charity care policy. I say that knowing what it is because I helped develop it. But that's beside the point. The issue here is how do these two institutions work together for the betterment of healthcare in the City. And at times, over the past couple weeks, there has seemingly been a 174 2/12/04 - COMMERCE - RES. 040046 disconnect between who does what with whom. So we do have some concerns about how the hospital was operated and what are the doctors doing and who controls what and decisions that were made about investment and operations. And those are some very serious issues that Tenet does have some ability to control either with their partner at Drexel, and Drexel with their partner at Tenet. That's what we're talking about here. And the last part of this is, other than offering me a site that I don't necessarily know that the City of Philadelphia or the Commonwealth of Pennsylvania are going to step up and run, what else are you prepared to do? What else are you prepared to offer? Because we have been asking that question for the past few weeks, and I don't have a particularly good answer on that.
Thank you, Mr. Leonard. The Chair recognizes Councilman 175 2/12/04 - COMMERCE - RES. 040046 Rizzo, very briefly; Representative Manderino, very briefly; Senator Hughes, very briefly; and then we're going to have a five-minute recess.
I think I'm not the only one confused about the relationship between Tenet and Drexel. You made a statement that for five years you tried to turn a hospital around. You heard the testimony where they hired a doctor -- and I don't know what the financial consequences were in bringing a doctor from South Philadelphia, believing that his patients would follow. How did you try to turn around a hospital -- did you have any input on that? You indicate you're trying to turn a place around. With a decision like that, that's stupid.
I do not know the specifics of this particular example. But I think we may be blowing this out of proportion from the following perspective. During any given day, any given week, there has always been dialog between Tenet and 176 2/12/04 - COMMERCE - RES. 040046 Drexel about physician recruitment, physician needs, clinical programs. This goes on in every hospital, every day, whether they are in partnership with Tenet or whether they are freestanding institutions. I am assuming that in this particular case, in order to meet a clinical need that was identified at MCP, one of the alternatives was to try to recruit someone that is not on the MCP staff. And all parties were lead to believe that this individual could, in fact, provide the necessary services at MCP because he felt that he could bring his patients to that facility, as well as provide clinical services there. Was it the right decision? Was it a well thought out decision? I don't know. But it is but one of many of those type of interactions that take place in any hospital.
But you can understand me, as a Member of this Committee, hearing an example like that, thinking there must be others, maybe dozens of others or hundreds of other decisions like that. How can you turn around an institution if it doesn't 177 2/12/04 - COMMERCE - RES. 040046 appear to be managed well?
Well, in this particular case, it sounds as though it didn't work. For example, in the area of neurosurgery, the recruitment of that physician appears to have been very successful. So some of these things work out and some of these things don't.
Again, I think there's a big difference between a person that has a life-threatening issue to deal with. You'll go to China if you need to get treatment, or wherever in the world. But when you're talking about the kind of care that that doctor from South Philadelphia provided, you do have a choice.
I don't disagree with you. I think it was probably not the best decision.
I'd just be curious what you paid that doctor to end that 178 2/12/04 - COMMERCE - RES. 040046 relationship, or Drexel University.
But you made the statement that you tried to turn this place around. How are you going to turn a place around if you don't have the ability to have some oversight of that?
Well, we work with our partner. We work with private physicians. We try to, in a sense, market our hospital to physicians who would want to use it. Our partner tries to help out by recruiting physicians as part of their faculty, filling clinical positions that are appropriate, and in the process here, hoping to strengthen the facility.
To me, it sounds like part of the failure of that facility is what we're hearing today. It doesn't appear that Drexel and Tenet are working together. It sounds like it was doomed for failure based on this description of the way it's run.
Honestly, sir, I 179 2/12/04 - COMMERCE - RES. 040046 think this hospital was doomed for failure a decade ago. It has been on life support since then. I think everyone can go back through all the records available in this community, this hospital has been not viable for a very long time.
Representative Manderino. REPRESENTATIVE MANDERINO: Thank you, Mr. Chairman. I'm just a lowly public service servant with a five figure income, so every time somebody throws around these eight figure dollar amounts, it makes my head pound a little bit. So I may be remembering dollar numbers inaccurately. I'm trying not to. But I've heard $20 million to $35 million, $30 million to $50 million in so many different contexts that -- I don't think I'm mixing them up, but if I am, I'm sure you will correct me. You said several times in this last exchange MCP is no longer a viable acute care 180 2/12/04 - COMMERCE - RES. 040046 facility. MCP is no longer a viable hospital. And I guess I would agree with you if you would have finished it, "as far as Tenet is concerned." But I guess I can't agree yet that it would not have been viable for anyone because of some unanswered questions. When we were in the Governor's Office a couple of weeks ago, I remember the question being put to Tenet about what would take -- there's all this significant capital improvement that needs to be done to this hospital to make it viable, what would it take. And I remember a figure of $35 to $50 million. Now I find out that we weren't willing to offer the $35 and $50 million for either ourself or for someone else to bring it up, but we're willing to spend $35 to $50 million to shut it down so that the community doesn't have healthcare and there's not a competitor in that piece of the market. That upsets me. I keep hearing about what an intake we had of all these uninsured people, and then I hear that we basically have no social work department operating at the hospital that would 181 2/12/04 - COMMERCE - RES. 040046 use Pennsylvania's mechanism for getting uninsured people's coverage by getting them signed up for the Medical Assistance Spend Down Program, where our other urban hospitals in Philadelphia do that very aggressively and bring significant MA dollars into their hospitals. So I guess what I want to ask is two questions. One, can you enlighten me, if I am incorrect, about the status of the social work department at MCP? And the reason that I'm asking that is because, again, that's one of those factors I think that go into the equation of, if we can find someone else interested in operating it. That's an important piece of information to know about whether that was something that was even attempted. And my second question was, what were the capital estimates in terms of infusion of dollars for capital to bring that facility to the point where you thought it needed it for operating? My third question finally is, is the obligation, the financial obligation that you 182 2/12/04 - COMMERCE - RES. 040046 now owe to Drexel, whether it's $20 million or $30 million or $50 million or, God forbid, more than that because of the operating agreement and the shut down, is that obligation on your behalf and that debt on Drexel's behalf unsecured debt?
I'll answer it in reverse order. It is part of a contract, an agreement, so that is what governs that issue. REPRESENTATIVE MANDERINO: And there's no collateral for that agreement.
No. 14 REPRESENTATIVE MANDERINO: So, God forbid, it's $50 million and Tenet doesn't have $50 million dollars, and all of a sudden Tenet is in bankruptcy court, Drexel is standing in line as an unsecured creditor, or unsecured -- am I using the term right, unsecured debt? SENATOR HUGHES: They're owed money. REPRESENTATIVE MANDERINO: They're owed money. Thank you, Senator Hughes. They're owed money and they have no 25 security to assure that money will come to 183 2/12/04 - COMMERCE - RES. 040046 them?
I can't respond to a hypothetical. REPRESENTATIVE MANDERINO: There is no collateral security in this agreement, There's just a promissory obligation to pay costs, so therefore they would stand in line like any other creditor? There's nothing in this agreement that puts them first in line or anything like that?
That is correct. Your second to last question was we estimated that currently there is probably around $40 to $45 million in capital needs for that building to be brought up to reasonable standards that would have to be spent probably over a three-year period. In regards to your first question, I don't know where that information is coming from, but we do have someone who can address the entire process, hopefully, to the satisfaction of everyone.
My name is Jack Highsmith. I'm the Regional Director for 184 2/12/04 - COMMERCE - RES. 040046 Patient Financial Services for the Pennsylvania market, Tenet Healthcare. REPRESENTATIVE MANDERINO: And I guess to rephrase or restate the question for you, my concern was with regard to MCP under Tenet's management, particularly in the last two years, which was testimony we received last week of where the significant loss of revenue occurred, in the past two years. What was the status of a social work department or whatever equivalent you might call it, but people who would work with people who came into the hospital that didn't have insurance to try to get the paperwork done and follow it through to qualify them for the State Medical Assistance Spend On Program and have the hospital bills covered. MR HIGHSMITH: Since 11/11/98, all Tenet market facilities have had a Medicaid eligible program called the Medical Eligibility Program, which is consistent with our policies for all hospitals throughout the country. The day of acquisition, staff were in place to begin the entitlement process. The gentleman 185 2/12/04 - COMMERCE - RES. 040046 who is sitting over here, Mr. Anthony Lewkowitz (ph), is the regional manager of that program. People started performing that service Day One at all Tenet facilities and have consistently done so since Day One. REPRESENTATIVE MANDERINO: So there was somebody that did that at the Tenet MCP facility? Was it one person or a department? And do you have any statistics on your rate of -- I don't know what you call it. I'm not using the right industry jargon. Whether it's rate of recovery or rate of reimbursement, whatever.
There are four people performing services at MCP Hospital and formally the EPPY (ph) campus combined. There are also support personnel that assist those individuals. If you would like to get into the specifics of that process, the screening process both at bedside and throughout the registration process, Mr. Lewkowitz can comment on that. REPRESENTATIVE MANDERINO: That's not necessary. I appreciate that, and I take 186 2/12/04 - COMMERCE - RES. 040046 your word what you said, and I obviously either had incomplete or inaccurate information with regard to that point. Thank you, Mr. Chairman.
Thank you, Representative. Senator Hughes. SENATOR HUGHES: Thank you, Mr. Chairman. I just want everybody to be clear about why we're here and why this is an issue for the City, State and federal government to address. I'm not here and this Committee is not here to beat up on Tenet. However, they deserve a little butt spanking. All right? And I want to be clear about that, Mr. Leonard, because you said we shouldn't be beating up on Tenet. We clearly know the larger policy issues about uninsured. That issue was raised when we started off this hearing a couple weeks ago. I specifically spoke about that. I know very well about the issues in the Commonwealth of Pennsylvania and about the issues of the 187 2/12/04 - COMMERCE - RES. 040046 uninsured. We are here to deal with that, to deal with the fact that this corporation which you represent handled this piss poorly and would not have to be in this situation if they did something a little bit different. And consequently, created a significant amount of bad will in a community. They destroyed the good will that they had in one act. That's why we are here. Because this company nationally is going down the tubes. ) SENATOR HUGHES: No applause. This company nationally is going down the tubes. This company owns about five or six other facilities in this region. We are here asking probing questions, finding out about $50 million that's owed to Drexel University, getting all of those other issues out on the table because they deserve to be out on the table because the healthcare future of the City of Philadelphia is on the line. I personally don't believe that Drexel University is going to get a dime of that money. Because I believe when it comes 188 2/12/04 - COMMERCE - RES. 040046 time to collect, that Tenet is going to go under. And then they're going to put that note on some kind of receivable way further down the line and Drexel will never get paid. But it's our responsibility to raise these issues and to ask these questions because, because, because there's a significant amount of public dollars in the mix here. This private corporation makes its money off of public dollars and makes its money off of premiums in the private sector that a lot of people are finding hard to pay. So we have a responsibility to probe this issue and probe it as much as we can. There's significant players in this region. We've got to ask these questions. They're going down the tubes nationally. We have to ask these questions. If we're going to get to the issues, Mr. Leonard, that you raised about the issue of uninsured, these issues have to be brought up because we have to create a public climate to deal with that issue. And you know how this stuff works. We've got to push and push and push until we can get some resolve on that. So 189 2/12/04 - COMMERCE - RES. 040046 I don't have any problem asking him these questions. I think it's our responsibility to ask him these questions. They and their representatives should not mind answering these questions being asked because when they came to the table in 1998 looking to come in and save, they sure did come to the Commonwealth and to the City looking for a whole lot of money to come in. And now we're in a situation where they're on their way out after we put a whole lot of money into the mix. Our state tax dollars were put in. Your state dollars were put in the mix to help them out. And they're making money other places. But I bet a dollar right now Roxborough is next. Because when you put -- how many uninsured -- 30,000, 40,000, 50,000 uninsured that you service through your emergency room? When you put them out on the street, they're going someplace else. So we have a responsibility to ask those questions. And I have a problem with anybody asking me or asking this Committee, "Well, you 190 2/12/04 - COMMERCE - RES. " No. 3 This is our responsibility.
Get the information out there so everybody can hear how this system works so we can respond to the larger problem. And if you guys had done it differently -- and, Mr. Leonard, you weren't here at the first hearing, but that was a tentative first hearing. If the corporation had done this whole thing differently, we wouldn't be having this right now. We wouldn't be going through all of this right now. We'd be going through, how do we solve, how do we save, how do we do that? That's the conversation we would be going through right now. You know that, Mr. Schaengold, because you and I had that back and forth three weeks ago. So we have got to get to the bottom line. We've got to understand what the numbers are. We've got to understand what all of this means. Because sure and behold, Councilman Nutter, Councilman Goode, Councilman Rizzo, 191 2/12/04 - COMMERCE - RES. 040046 Councilwoman Blondell Reynolds, all the rest of us in a couple months, you know what's going to happen, We got somebody to come in and rescue, but they need some State money to come in and rescue and they need some City money to come in and rescue and they need some federal money to come in and rescue. You know how that works. All right. Now we're better informed through this whole process about how to respond when they come to us looking for the money, because that's exactly what's going to happen. They're going to come to us looking for money. They're going to come and look for a bail-out here, a little money here, tweak this here, tweak that here. Everybody knows how this is going to play itself out. But if we don't understand what's going on here, if we don't understand how to protect the other institutions that you have in this City, if we don't raise these issues, if we don't go through all this laborious process to find out, then we're stuck with the same kind of deal that we were stuck with in 1998. We have 192 2/12/04 - COMMERCE - RES. 040046 to know. So that wasn't a question, Mr. Chairman. I'm just using my senatorial prerogative sitting at Councilman Nutter's desk to do what I got to do. )
Senator, do you want a response? SENATOR HUGHES: If the Chair will allow one, absolutely.
Actually, Mr. Leonard, I think that that was in response to your comments. We don't need a back-and-forth. What I'd like to do at this time is actually pose a few questions or raise a few issues with you. I think you need to have a separate conversation with Councilman Nutter about the confidentiality of the information you submitted, particularly the financial information. You agreed to do that in a clear-the-courtroom-type setting; is that correct? 193 2/12/04 - COMMERCE - RES. 040046
Yes. If he wants to have an additional conversation about that, we can do it on or off the record in some confidential setting.
Okay. I need you to get back to me directly on whether we're going to get a copy of the affiliation agreement or not, not within necessarily a specific time frame. Mr. Schaengold said he could do it within to 72 hours, so at some 18 point early next week, I really just need a 19 yes or no on whether we're going to get the 20 affiliation agreement or not. 21 Last time I asked you very directly 22 what your suggested next steps are outside of 23 the hearing process. 24
Well, I think realistically we move to a different forum next 194 2/12/04 - COMMERCE - RES. 040046 week. We have the court process restarting and the hearing on the injunctive relief that is sought by the Save the MCP Coalition will be going on. So probably by the end of next week or the beginning of the week after that, there will be a court decision that will be in place one way or the other. And that will inform what happens in these hearings to a large extent, I suspect. I think that at this point the City Council has to continue to work with the State, with the federal authorities and see what the options are. We're willing to continue to work with all of those entities to see if we can help develop some viable option. I guess we have to wait for the court to decide before you do anything else. It's your decision, obviously, but the hearings are next week.
Thank you, Mr. Leonard. This hearing will stand in recess for exactly five minutes. (Brief recess.) 195 2/12/04 - COMMERCE - RES. 040046
The Commerce and Economic Development Committee is back in session. I have one question for Mr. Leonard. Will your client submit an answer to the requests to the Committee?
Yes, the information requests and private session with Councilman Nutter. We will try to be responsive.
This Committee is recessed to the call of the Chair. (Council adjourned at 5:04 p.m.) 196 C E R T I F I C A T I O N I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of February 12, 2004, were reported fully and accurately by me, and that this is a correct transcript of the same. RE: COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT _________________________ Lisa C. Bradley, RPR