By Mike Shields
KHI News Service
TOPEKA, March 8
It”s not yet included in the House GOP health care reform plan, but a bill that would allow sale of the University of Kansas Hospital could come in handy, House Speaker Melvin Neufeld said Thursday.
“The fact they introduced that bill in Appropriations kind of surprised me,” the Ingalls Republican said. “I didn”t know that was coming.but if we”re in a scenario where they”re ready to throw the KU hospital overboard, maybe it”s best. I personally don”t think we”ll let them do that. But you need to have a provision for protecting the state”s assets.”
If they”re going to strike an affiliation deal that will undermine the hospital”s value then maybe “it”s time to dump it.”
A House version of a bill first introduced in the Senate by Wyandotte County Democrat Chris Steineger has been introduced in the House Appropriations Committee. The bill would allow but not require sale of the university hospital. Sen. Dwayne Umbarger, R-Thayer, chairman of the Senate Ways and Means Committee said he doubted the Senate version of the bill would get a hearing in the upper chamber.
But the idea has been more warmly received in the House, where introduction of the bill came during a week that both Senate and House committees have been hearing testimony from the respective heads of the KU hospital and medical center. The two institutions are at loggerheads over proposed affiliations with St. Luke”s hospital in Kansas City, Mo, the major competitor of the university hospital, which is in Kansas City, Kan.
Barbara Atkinson, dean of the KU Medical Center, told lawmakers the St. Luke”s affiliation would help secure millions of dollars in philanthropic support over the next 10 years from leading Kansas City-based corporations and foundations keen on making the city a national player in life sciences research. That financial aid would bolster the university”s bid to gain federal designation as a national cancer institute, thereby strengthening the medical center and the hospital and improving cancer care statewide.
But Irene Cumming, CEO of the hospital, said the affiliation with St. Luke”s, if not done properly, more likely would mean setbacks for the KU hospital, which has made a dramatic turnaround since 1998 when the Legislature granted the hospital unprecedented independence under governance of its own board.
“So on October 1, 1998, we were given a check for 10 days worth of operating revenue, no endowment or state funds and asked to do the best we can,” Cumming told members of the Senate Health and Public Welfare Committee on Thursday, reminding them of what”s happened the last few years at the hospital. “Quite frankly, the hospital was falling apart financially and physically.”
Since then, the KU hospital has rebounded in nearly every way, treating more patients, leaving more of them satisfied, and boosting revenues from less than $200 million a year to almost $600 million. And since 1998, it has spent millions marketing itself. Its carefully nurtured “brand” would be diminished, if St. Luke”s were allowed through affiliation to glom onto KU Medical Center and hospital prestige, Cumming said. Affiliation negotiators for the medical center and the hospital were aiming for agreement by March 31 but high centered Tuesday. One of the key remaining concerns for the hospital was the “branding” issue.
“We have spent millions and millions on developing our branding,” Cumming told members of the Senate Committee.
A number of legislators, particularly in the House, also have been concerned that KU Medical Center is being lured into a pact with St. Luke”s that does more to meet the goals of Kansas City business and civic leaders than it does to serve the interests of the state.
“I and other people I talk to have some discomfort that we”re being pressured by money from out of state to make a decision in a short time and we really don”t know where we”re going,” Rep. Arlen Siegfreid, R-Olathe, told Atkinson on Thursday when she testified to the House Government Efficiency and Technology Committee. The committee, which is chaired by Rep. Jim Morrison, a Colby optometrist, has held hearings every day this week on the affiliation issue.
Neufeld said it was Morrison”s idea to hold the hearings, but that he considered them appropriate.
“I”m the weakest speaker in history,” he said. “I give away power to the committee chairmen. I did not ask Morrison to do those hearings. I didn”t orchestrate that. But it certainly is (an issue) within the purview of that committee on government efficiency. Obviously, it involves a major structural change in Kansas government.”
When House Republicans on Monday rolled out their plan for health-care reform one of the provisions called for creating a trust fund to be financed by one-time windfalls such as “the sale of non-profits.” The KU hospital is a non-profit and depending upon which House Republican you talk to might be worth as little as $400 million or as much as $1.5 billion. The Senate bill wouldn”t allow the hospital to be sold for less than $800 million. But Neufeld said he thought current market conditions made it worth about $400 million.
“I”ve talked to a number of consultants around the country,” he said. “Remember 12 years ago it was essentially (a valueless asset). Now it”s increased significantly. There are different formulas (for calculating a hospital”s worth). Best I can determineright now it”s about $400 million. Obviously, St. Luke”s would like to buy it. But they don”t want to pay anything for it. They want to steal it. They don”t want to do anything that would increase its value.”
Full details of that House GOP health-care plan won”t be available until writing of the proposed legislation is finished, probably next week. The plan wasn”t crafted with the sale of the hospital specifically in mind, Neufeld said, but the bill allowing the sale might be pulled into that plan, if the affiliation talks don”t turn out in the best interest of Kansas.
“That”s a wait-to-see, a little bit,” Neufeld said.
But it”s also clear that many, if not most, legislators wouldn”t abide the sale of the hospital.
“Thank you for being in my district,” Rep. Louis Ruiz, D-Kansas City, told Atkinson when she spoke to Morrison”s committee. “If I see a For Sale sign go up, as recommended by a colleague in the Senate, I”ll personally take it down for you.”
In an interview with KHI News Service, Atkinson said selling the university hospital was a bad idea.
“I think it would not be good for the school at all,” she said.
Asked her view, Cumming said: “I think it is clearly the right of the Legislature to decide. My job is to manage the asset and participate in any evaluations they might request.”
-Mike Shields is a staff writer for KHI News Service, which specializes in coverage of health issues facing Kansans. He can be reached at
mshields@khi.org
or at 785-233-5443, ext. 123.