News & Events

Hard calls for hospitals

By Steven Syre, Globe Columnist

Boston Medical Center and Cambridge Health Alliance, two big hospital groups that treat lots of poor patients, are struggling in the age of health care reform.

In fact, all Massachusetts hospitals that treat a large share of poor patients rightly feel they got the short end of the stick in the state’s closely watched experiment to insure the health of almost everyone. Public financial support for those hospitals suffered when money was redirected toward other reform priorities.

Hospital executives in Boston and Cambridge have adopted radically different strategies to deal with the money squeeze. The question: Who got it right?

Boston Medical Center responded aggressively from the start. It sued state officials last year, arguing they had illegally cut payments for treating poor patients. An unusually personal animus developed between Governor Deval Patrick and the medical center’s previous president, Elaine Ullian.

Last week, Boston Medical Center said it would cut 119 jobs and take other austerity steps or it would otherwise end the fiscal year on Sept. 30 with a $170 million loss, which would put the institution in technical default of debt covenants. The hospital, which employs about 6,000 and has an annual budget of $1 billion, warned it would run out of money without more funding by next summer, a kind of financial brinksmanship it also employed in the lawsuit.

Yet Boston Medical and some other hospitals will probably benefit soon from a special Medicaid payment that state officials requested from the federal government. Boston Medical would receive $90 million, and Cambridge Health would get about $85 million. That would reduce, but not eliminate, the Boston hospital’s deficit.

In a staff memo last week, Boston Medical’s new chief executive, Kate Walsh wrote in detail about budget pressure but took a firm stand on the medical center’s services. “All our work is to fulfill BMC’s mission,’’ she said. “We are not cutting services. We have no plans to do so.’’

The story is much different on the other side of the Charles River. Cambridge Health Alliance, which operates Cambridge Hospital, Somerville Hospital, and Whidden Memorial Hospital in Everett, did not take the state to court. Pound for pound, it cut much deeper into the workforce and other operations. Then the hospital group started to look for a merger partner.

Cambridge Health Alliance cut about 450 jobs, reducing its workforce to about 3,000, and looked elsewhere to save money. It tried to impose a 40 percent cut in retiree health benefits for nurses, action the state Employment Relations Board later found to be illegal.

The hospital group also cut services. It closed six of its 26 health centers and stopped offering in-patient addiction treatment. It phased out some of its beds for psychiatric patients.

Now Cambridge Health Alliance is seeking a merger or some kind of alliance with a larger health care provider, such as Caritas Christi Health Care, one possible partner.

Boston Medical Center and Cambridge Health Alliance did not simply come to different opinions about how to deal with a big financial problem. Despite the pending loss, Boston Medical can afford to hold its ground. The Cambridge hospitals were in a deep financial hole and in no position to push back.

“They are very different and what they did, to their credit, was right for them but not necessarily right for BMC,’’ says Thomas Traylor, a vice president at Boston Medical.

But state officials clearly liked the hard-nosed analysis in Cambridge. They showed it this summer in a separate request they made for additional federal Medicaid money to hospitals that serve large numbers of poor patients, beginning in the fall of 2011.

The state will require hospitals that want this money to “undergo an analysis and reconfiguration akin to what Cambridge Health Alliance is going through.’’

The money is supposed to help hospitals adapt to a new way of paying for health care. Hard decisions about budgets and services are going to be part of the discussion.

Boston Medical Center may be following the right strategy for itself in the age of health care reform. But most hospitals that treat a big share of the state’s poor patients more resemble Cambridge Health than Boston Medical.

Hard decisions are in their future.

Steven Syre is a Globe columnist. He can be reached at