Q&A with Johnese Spisso: Public hospitals can reach more than just the poor

Public hospitals have been closing at an alarming rate. Last month, the troubled Martin Luther King Jr. Medical Center in Los Angeles announced it was preparing to reopen after years of quality concerns, but it has lived on the precipice for more than two decades. Johnese Spisso runs a successful public health system ata time when other cities and counties have been forced to cut back or close their public hospitals. She is the Vice President for Medical Affairs at the University of Washington and helps oversee two hospitals, seven neighborhood clinics and an airlift system that brings in patients from a four-state region. We talked about what it takes for a public hospital to succeed. If you are attending the upcoming Association of Health Care Journalists conference in Seattle, you can hear Spisso speak on a panel April 17.

Here is a recap of our conversation, which has been edited for space and clarity:

Q: New York City's public hospital system last month cut 400 jobs and closed pharmacies, clinics and some children's mental-health programs. Those moves affect more than 11,000 patients. Most major urban centers have lost public hospitals in the past 10 years. What are some of the fundamental changes going on that are driving so many of these public hospitals to close?

A: Obviously the biggest change is the rising number of uninsured, and it's only getting worse. Now that we are in a state of real economic turmoil nationally and globally we are seeing more people coming to public hospitals for care. We need to really step back and say, "How do we make our public teaching hospitals viable for the future?" We are the safety net. We provide the lion's share of care to the underserved.

Q: Unlike a lot of public hospitals, UW's system is typically making money, albeit narrowly, most years. How is that?

A: We are one of the few systems that has been able to maintain financial viability and weather certain economic storms like the one we are in now. We are struggling right now like everyone else. But we have a different setup than many of the public hospital systems. We have a 1% operating margin at Harborview, which is where we see most of the uninsured patients. We have a 2% to 3% margin for the University of Washington hospital. Most others expect margins of 5% or higher.

Q: How are you able to keep things going on a 1% to 3% margin?

A: We have positioned ourselves as more than just a county hospital. We run Harborview in partnership with King County, and we bring in world class faculty and staff. We have built strong programs so that patients from all walks of life want to get their care there. It's not a county hospital of last resort. We also work hard to make sure we are not duplicating services. Harborview does all trauma, burn and neurosciences. UW does all the obstetrics, cardiac care and transplant care.

Q: It sounds like Harborview has all the money losing business, though. What helps it make up for all that trauma care, which usually operates at a loss?

A: If we can maintain a patient mix where 40% or more have commercial insurance, we can maintain viability. Neurosciences is a very strong program that helps make up some of the difference. And, actually, trauma is very strong. We get all of the critical trauma patients regardless of their ability to pay or not pay. So even though only about 40% of our patients have private insurance, the ones who can pay make up the difference.

Q: What about the rest of the 60% of patients who don't have private insurance?

A: About 25% of them have Medicare and about 25% have Medicaid. The rest are self-pay patients, which means a lot of them don't pay. In 2008, Harborview provided $120 million in charity care. Already, because of the economic crisis, we know that in 2009 we will probably finish the year at $150 million in charity care.

Q: If you are providing $150 million in free care every year and your revenues are usually around $550 million, how are you making it work?

A: We have to compete hard with other hospitals for the patients who have insurance. We have to work really hard on customer service and on high quality. We have the latest and greatest in technology and improved outcomes, so we let people know that. We also work hard to reduce waste. We use Rapid Process Improvement, like Toyota does with cars. We push for $20 million to $30 million in savings every year.

Q: What have you been able to cut out?

A: We standardized supplies. That means everyone at every site uses the same brand of catheter. We changed our radiology imaging system and saved $1 million a year just by not having to use film.

Q: So you have you had to have any big layoffs in recent years?

A: No. But we don't fill some positions. Over about a year, we have been able to reduce our staff of about 15,000 by 200 positions just by not filling positions, reducing overtime and cutting back on outside labor, without doing active layoffs.

Q: The quality of care at public hospitals has come under attack in recent years. Martin Luther King Jr. Medical Center in Los Angeles has been on the verge of being shut down because of patient safety concerns for years. Atlanta's public hospital, Grady Medical Center, has ranked near the bottom for heart care and other conditions. The New York Times wrote an excellent piece about problems there. Why do public hospitals so often fall behind?

A: They are relying on city budgets to keep them afloat. You have to look at creating a model that can be as self-sustaining as possible. Although Harborview is a county hospital, we receive no operating funds from King County. What it does allow us to do, though, is go to voters for bond issues. About once every 10 years we can ask voters to fund a new building through an increase in property taxes.

Q: But public hospitals everywhere have that same ability.

A: But they are only caring for the underserved. As city budgets become stretched their funds keep getting cut, and they keep reducing resources. That's a vicious cycle. The public will not tolerate bad outcomes. When Martin Luther King was shut down, people were like, "Shut that place down because what is going on there is wrong." By investing in high quality medical staff and services so everyone wants to come to your hospital, not just the people who have no other choice, you have the best chance of getting financial viability. We are second only to Harvard in the number of NIH studies done at our university. That shows people that we are serious about making advances.

Q: In the past emergency room care has been seen as a gateway to the hospital, a way for a hospital to lock in a future customer. More and more, though, it has become the primary care for the uninsured and a costly drag on what might otherwise be a successful hospital. How does UW see its emergency rooms?

A: At each of our emergency rooms we lose money. That is not where elective patients come in. But because we have some of these key services like trauma and burn we can get enough patients through here that we can see the entire hospital stay viable. We have had the issues with overcrowding that you have had in Los Angeles. What we have tried to do is route people to our neighborhood clinics to keep them healthy. If they are not truly in an emergency situation, we want them to go to one of our fast track clinics, our after hour clinics and our weekend clinics. We also operate a 24-hour nurse advice line. Sometimes if people can get an answer to their question, they don't need to come to the hospital at all.

Q: Harborview is the only level one trauma center for Washington, Alaska, Idaho and Montana. It treats more than 75,000 ER patients each year. And yet 10% of the country's high-level trauma hospitals have had to cut back or simply close over the past decade. What are you doing that works?

A: We have a very inclusive system in Washington. It is a very rural state. There are these little clinics out in places like Friday Harbor, and we want them networked in. If someone calls 911 in Friday Harbor, we want these clinics to open an airway and give them an IV. Then we will get them airlifted to our hospital. It has worked very well in getting the right patient to the right hospital at the right time. We're also protective of that system. When we have another hospital that wants to become a level one or a level two trauma center in our area, we oppose that. It dilutes expertise and adds cost to the system and prevents hospitals like Harborview that have that safety net responsibility from staying viable.