Major Chicago-Area Hospital to Close

Home

Written by Stephanie Wasek

Monday, 14 April 2008

Citing mounting financial losses and having exhausted all other options -- including giving the hospital away for free -- SSM Health Care recently announced that it will close St. Francis Hospital and Health Center, located in the Chicago suburb of Blue Island, Ill. The hospital will remain open until SSM receives necessary approvals for its plans from the Illinois Health Facilities Planning Board and the state Department of Health.

In a release, SSM Health Care says it has invested more than $75 million in St. Francis to make it a competitive, state-of-the-art facility, but lose millions annually despite the investments. Since 2002, St. Francis has lost $40 million; it is projected to lose $20 million this year alone.

Of interest to followers of the physician-ownership debate over whether physician-owned hospitals hurt the business and profitability of general hospitals, there are several points worth noting.

1. The closest physician owned hospital is about 30 miles away.

2. There are only two or three physician-owned hospitals in the state.

3. There are very few ASCs in the immediate catchment area of the hospital.

4. There are now as many ASCs as hospitals in the country.

5. Five percent of the nation's hospitals now have physician-owners.

In all, SSM discussed the sale of St. Francis with 28 potential buyers -- Catholic hospitals and other not-for-profit health systems in Chicago, as well as for-profit organizations in all parts of the country. Out of all of these, one final proposal was received, from Transition Healthcare Company, whose financial partner was Lincolnshire Equity Fund III. Lincolnshire withdrew from the transaction in March.

"All potential buyers said the same thing: No one could do a better job of operating this hospital than it is currently being operated," says Sister Mary Jean Ryan, FSM, president and CEO of SSM Health Care. "Unfortunately, in spite of St. Francis?s outstanding clinical reputation, reimbursement from commercial insurers could not cover the cost of providing care to the growing number of Medicaid and uninsured patients. Currently, one out of every two people who come to the emergency department and one of out four people who are admitted to the hospital either have no health insurance or are covered by Medicaid. Most of the people without insurance cannot afford to pay us anything, and Medicaid pays us less than what it costs us to provide care. No hospital can survive over the long term without being able to cover its costs."