Management Problem     12

Dimension Healthcare Systems

 Management Problems with Dimensions Healthcare Systems: A Review

Background Information

Over the years, Prince Georges Hospital Center in Cheverly, Maryland has suffered financial crisis, multiple times.  The Washington Post article, “Board of Hospital Operator Ousts Johnson Critic County Executive's Allies Retain Seats as Battle Continues to Determine Future of Troubled Facilities” by Ovetta Wiggins written on September 14, 2007, details the accounts of hostile takeover of the local hospital board in an effort to gain control of  or solution of the financial crisis (Appendix 3). The hospital costs the county an enormous amount of money to operate in the red.  The saga continues.

Dimensions versus Jack Johnson

October 8, 2009  the Washington Business Journal writer Tierney Plumb wrote the article, Prince George’s County hospital workers rally” (Appendix 2) stating that over 100 PGHC employees rallied outside the county administrator Jack Johnson’s office to get the $3 million he  promised after removal of Calvin Brown from the hospital board and fell under county control (2009). The state cut funds to Prince Georges County. The county had to cut the budget in specific areas. The biggest cut was the hospital funding already withheld.

The Contingency Management Theory applies to Dimensions Healthcare System, made clear further in the reading. Although not agreeing with the method Jack Johnson sought control over the hospital, something drastic needed doing. This did not sit well with the citizens of the county.  Johnson instead sought to sell off the system the county residents highly depended upon.  Jack Johnson’s motivation is to save resources. In an effort to salvage resources, Johnson put the system up for sale. Eight of the bidders are not able to purchase the entire operating system. The current management company has said they were willing to take the entire system.

Biting off more than chewed is a descriptor of Prince Georges Hospital Center (PGHC) in Cheverly, Maryland.  Dimensions Healthcare System released a 39 page Stabilization Task Plan in 2007 to improve the health system (Implementing the strategic mission, 2007). For more than a decade, the county owned hospital system has had money problems. Dimensions Healthcare Systems, a management company operates all the facilities. The hesitation of financing the overburdened system stems from multi-factorial issues that are applicable to Contingency Theory. Examples listed in the plan as internal factor includes lack of staffing direct care workers, the census of indigent patients is 50%. (Implementing the strategic mission, 2007) An example of external factor is the location is a poor community (2007). The management company is in constant financial turmoil with these constraints. The 2007 plan created uproar after requesting additional funds from the county.

The reputation of PGHC is widely known in the District of Columbia metropolitan region as a hospital with a yearly financial crises threatening closure. The facility has a level one-trauma center. The reputation is so extreme that hospitals in the Southern Maryland region will not transfer trauma patients to Prince Georges Trauma Unit.  PGHC may be closer, than the Shock Trauma Center at the University of Maryland in relation to the southern Maryland counties however, those facilities opt to send patients to either George Washington Hospital in the District of Columbia, or Shock Trauma in Baltimore.   The location of the hospital is in a poor urban area with at least 50% of the patients are indigent care (Implementing the strategic mission, 2007). Solvency is a reason the county contracted with Dimensions Healthcare System years ago when the problems persisted then that still exists today.

Other state operated facilities such as University of Maryland receives a disproportionately higher amount of money. University of Maryland receives the most money $217 million annually and “$224 million for emergency medical systems also receive for operating expenses” (Appendix 1) compared to Prince Gorges Hospital receiving $ 20 million (Helderman, 2007).  John Hopkins was second, and PGHC listed third.

Prince Georges County Executor, Jack Johnson is at the center of the controversy, which battled for control of the hospital board.   Known for his charisma normally, Jack Johnson feuded with Dimensions Healthcare Systems head chair Calvin Brown. According to the Washington Post writer Ovetta Wiggins, Johnson withheld releasing three million dollars until his plan to take over the hospital board came to completion (Wiggins, 2007).   Johnson blamed the situation on mismanagement and sought to oust the Calvin Brown, the board chair (Wiggins, 2007). Johnson replaced two members “aligned with the county executive” to take over the hospital operations (Wiggins, 2007). The final part of Johnson’s plan was to have four members to resign seats of the board (Wiggins, 2007). Martin O’Malley the governor of the state of Maryland drafted legislation offering a bailout in exchange of state control of the system. Wiggins stated, 

…offered to pay $175 million over eight years to provide financial stability to the hospital system if the county provided $229 million. O'Malley's offer was contingent on the General Assembly passing a bill to create a state-appointed authority to oversee a change in hospital management. The authority would negotiate with companies interested in buying the system. Council leaders said the deal was "flawed.” and talks broke down at the end of the 90-day legislative session in April (2007).

The deal did not benefit Prince Georges County enough to make the offer feasible. Jack Johnson is from this situation not viewed in a positive light. From personal experience, another for-profit hospital in the county seeks to gain financially with PGHC closure.  Dr. Francis Chiaramonte, owner and CEO of Southern Maryland Hospital Center Provided heavy support in favor of  Jack Johnson prior to the election, an inserted a letter in paycheck envelopes of all the employees asking for support of Jack Johnson.

Conclusion

The problem with Dimensions Healthcare system is widely known. Something drastic needed doing and Jack Johnson assumed the role and then was the bad person. The bad person withheld funds needed until the board chair and four its members resigned and replaced two aligned with Johnson. The role here with Jack Johnson as a manager is hard to describe. This manager took no prisoners under the guise of fixing it, only to dump the system. From the managerial aspect, he did the right thing. He dumped the entity that was bleeding funds. Johnson under minded his role as a leader with the process chosen. The model Contingency Theory fits for   both entities. The situation did not leave room for compromise. The county will continue to have these facilities. It will take major cuts, and major amounts of money to fix the current situation. The Task plan of 2007 seemed sound as a plan. Look what happened as a result. To date Dimensions Healthcare System is set to assume under a new entity instead of a management company to become a hospital system. Dimensions looks like the front-runner of the facility owners. No decisions are decided.

  

References

Helderman, R. S. (2007, March 8). A checkup of hospital parent's finances - study finds lack of funds. Retrieved October 14, 2009, from Washington Post: http://www.washingtonpost.com/wp-dyn/content/article/2007/03/07/AR2007030701185.html

Implementing the strategic mission. (2007, August). Retrieved October 14, 2009, from Dimension Healthcare: http://www.dimensionshealth.org/website/downloads/StabilizationTaskPlan.pdf

Plumb, T. (2009, 10 8). Prince george's county hospital workers rally. Retrieved October 10, 2009, from Washington Business Journal: http://washington.bizjournals.com/washington/stories/2009/10/05/daily82.html

Wiggins, O. (2007, September 14). Board of hospital operator ousts johnson critic - county executive's allies retain seats as battle continues to determine future of troubled facilities. Retrieved October 14, 2009, from Washington Post: http://www.washingtonpost.com/wp-dyn/content/article/2007/09/13/AR2007091302501.html

  

Appendix 1

A Checkup of Hospital Parent's Finances

By Rosalind S. Helderman

Washington Post Staff Writer 
Thursday, March 8, 2007

Ahealth-care consulting company has been brought in by the county to examine finances at Dimensions Healthcare System, the not-for-profit company that runs the county's hospital system.

The county required Dimensions to allow New York-based Kurron Shares of America Inc. and its chief executive, Corbett A. Price, full access to county-owned facilities and company records under the terms of a $5 million bailout that kept the hospitals' doors open last month.

When the County Council and Executive Jack B. Johnson (D) asked Dimensions' board of directors to give Kurron access, Price and his company had no formal association with either the hospital or the county.

That has now changed.

Kurron and the county signed a contract Feb. 2. The contract states that the county will pay the company as much as $100,000 for its work from Dec. 20 until June 30.

The company is supposed "to help identify and solicit" parties interested in buying the system from Dimensions, "assist the county in structuring a sale or transfer" of the system and "assess the current financial environment of Dimensions Healthcare's operation of the health system."

For these services, Kurron will be paid hourly wages for its associates, from $90 to $650.

Suzanne Almalel, a Dimensions spokeswoman, said Kurron employees have set up shop in a conference room at Prince George's Hospital Center in Cheverly and have been examining records. M elissa Krantz, a spokeswoman for Price, also confirmed that the company has started work. She said, however, that Price is not leading the team. That task has been assigned to Maryland-based principal Elizabeth F. Norton.

Hospital union members have been wary about Kurron's involvement. The union, which represents nurses and support staff, has clashed with Price elsewhere over his cost-cutting techniques. In addition, as a vice president at the Nashville-based Hospital Corporation of America, Price fired more than 600 Prince George's workers in the mid-1980s.

But his company has received high marks from other analysts for its work in bringing some New York hospitals out of bankruptcy.

Johnson and members of the County Council have stressed that Kurron's analysis will help reveal the state of the hospital system's finances. What is unclear is when such a report would be released. At a forum organized by the community group Progressive Cheverly last week, Chief of Staff Michael D. Herman announced that Johnson was in secret negotiations with a company interested in buying the system and hoped to announce a deal within seven to 10 days.

No such announcement had been made as of press time Tuesday.

(Author insert- Article Continued)

A Checkup of Hospital Parent's Finances

Study Finds Lack of Funds
For years, Prince George's officials have complained about how little money the county's financially ailing hospital system gets from the state in comparison with Baltimore-based hospitals.

Now, there are numbers to support the charges.

According to a study by the state's Department of Legislative Services at the end of January, $19 million of the $370 million the state has put into capital expenditures in the past 32 years came to Prince George's. And $10.8 million of the $399 million spent to help hospitals with yearly operating expenses during that period came to the county.

County Council members have said the report, written by an Annapolis analyst at the request of a delegate, proves that the state has been biased toward Baltimore for many years. They think it is time for the state to step up and provide the funds necessary to keep the hospital system running. Dimensions officials have said the hospitals will run out of money at the end of this month and will need $14 million more to stay open through June.

"Health care is the obligation of the state, not the county," council Chairman Camille Exum (D-Seat Pleasant) said at a council meeting last week.

Still, she said, in the past four years, the county has given close to $50 million in operating funds for the hospital system.

The study also shows that the vast majority of hospital funding in Maryland in the past few decades has gone to the University of Maryland Medical System. The academic institution received $217 million, or 59 percent, of all capital dollars expended by the state since 1975. UMMS and its emergency medical systems also received $224 million for operating expenses.

The close to $20 million Prince George's Hospital Center and Laurel Regional Hospital received in capital funding ranked third in the state after UMMS and the Johns Hopkins medical system. The next best funded was the Sheppard Pratt Health System, which operates mental health facilities in 12 Maryland counties and received $8.1 million. Other hospitals received less or none.

Prince George's is also the only system other than UMMS to receive any operating funds from the state since 1987.

 Appendix 2

Thursday, October 8, 2009

Prince George’s County hospital workers rally

Washington Business Journal - by Tierney Plumb Staff Reporter

More than 100 Prince George’s hospital system health care workers will rally outside Prince George’s County Executive Jack Johnson’s office on Thursday, demanding he release $3 million in committed funding for the hospitals.

SEIU 1199, the union that represents hospital system’s workers, will launch a series of week-long radio ads starting Friday, calling on Johnson to fund the hospitals as he committed to do in 2008.

The ads, paid for by the union, will air on WTOP, WHUR, WMMJ, WPRS, WPGC, and WKYS.

The hospital system’s nurses and service workers participated in the hour-long rally outside Johnson’s office at 14741 Governor Oden Bowie Drive in Upper Marlboro.

The issue stemmed from Johnson’s agreement with Maryland during the 2008 legislative session, in which the county said it would financially support the system while a new operator was sought by the Prince George’s Hospital Authority.

“It’s funding they already committed a year and a half ago, to keep hospitals open while another buyer is found,” said Stacey Mink, spokeswoman for SEIU 1199.

The system is currently run by Dimensions Healthcare System.

But as a result of the $22.7 million that was cut from the county by the state, that funding plan has changed.

“We had to make additional cuts to our budget -- part of those cuts was the $3 million that was originally going to go to Dimensions Healthcare,” said John Erzen, a spokesman for Johnson.

The county and state have spend more than a year trying to find a buyer for the ailing hospital system, which includes Prince George’s Hospital Center, Laurel Regional Hospital, a free-standing emergency care center called the Bowie Health Center and Gladys Spellman Nursing Center in Cheverly.

There is no set date for when the authority will announce the winning bidders, and the authority is remaining mum about who those bidders are at this point.

Through the rally and the ads, workers are asking the county to dip into its rainy day fund of more than $180 million to fund the critical health care provided by the county hospitals.

“If we all of a sudden come up with $3 million, I can’t speak to that one way or another,” said Erzen. “As it stands now, it has been cut.”

Erzen does not expect anyone from the county executive’s office to respond to and speak at the rally, saying those conversations would take place with union officials and Dimensions.

“When you look at the economic climate we are in, this is a difficult time. It’s forcing us to make some very difficult decisions. When you look at how everything’s been spread around, employees have had to bear the brunt of this fairly significantly,” said Erzen.

He notes the county has had two straight years of hiring freezes and 10-day furloughs and 50 people were recently laid off across the county government.

He points out that over the seven years that Johnson has been county executive, he has committed $80 million to the Prince George’s hospital system -- which is more than his predecessors have.

Funding from the government will eventually flow into the hospital system. Both the county and the state have pledged $75 million a piece to the entity that comes in as a purchaser of the system.

The system could be broken up, with multiple buyers taking different portions of the system. The county executive is for that possibility, says Erzen, “provided that it wouldn’t be sold off in pieces at several times. He wants it to be the same time, even if it’s multiple buyers.”

The goal has been for the hospital authority to make a presentation to the state and county by the 2010 session of the General Assembly in January, on how it would like to proceed with a new entity running the system.

The $3 million payment was due to the hospitals on Oct. 1, said the union, adding that the money is needed to continue patient care at the three hospitals and associated facilities in the hospital system.

“We’ve been cut to the bone and we need that money to survive,” says Elaine Dent, an insurance specialist at Prince George’s Hospital Center for the last six years. “We’re willing to keep up the fight and struggle to go on to be asset to our community and our patients, but we need this funding and the support of our leaders.”

Appendix 3

Board of Hospital Operator Ousts Johnson Critic

County Executive's Allies Retain Seats as Battle Continues to Determine Future of Troubled Facilities

By Ovetta Wiggins

Washington Post Staff Writer 
Friday, September 14, 2007

The board that oversees the Prince George's hospital system voted yesterday to oust its longtime chairman and reappoint two members aligned with County Executive Jack B. Johnson, a move that could help Johnson wrest control of the troubled system and determine its future.

After three votes, the board of the Dimensions Healthcare System kicked Calvin Brown, a Johnson critic, off the panel and retained Alvin J. Biagas Jr. and Lindberg Bing. Biagas and Bing, board members since 2003 and contributors to Johnson's campaigns, were nominated by the county executive's chief of staff, Michael D. Herman.

Brown, who has served on the board for eight years, including five as chairman, attributed his ouster partly to "politicking."

The board also appointed Del. Barbara A. Frush (D-Prince George's), a Johnson critic, and chose William F. Williams as chairman. Williams, a retired government worker, has served on the board since 2004.

Brown said Johnson and the County Council appeared to want him gone. But the vote yesterday did not spell victory for Johnson, Brown said, because "Mr. Williams is a strong leader."

Frush was nominated by Brown, who has criticized the way Johnson (D) and the council have dealt with the health-care system, which serves 180,000 patients a year, many of them poor and uninsured.

The Dimensions board has 11 members. Six seats are occupied by doctors working in the system, and five are filled with members elected by the independent boards of the system's three main facilities -- the Prince George's Hospital Center in Cheverly, Laurel Regional Hospital and Bowie Health Campus.

In June, Johnson held up county funds to the system, alleging board mismanagement. A month later, he suggested restructuring the board. He said the money would be released only if four board members stepped down.

Dimensions sued the county over the funding issue but has yet to receive any money through the lawsuit.

"The county executive wanted a reconstituted board; he now has that," said Del. Tawanna P. Gaines (D-Prince George's), who failed in her bid to win a seat on the board. "My expectation is that he will release all funds appropriated in his '08 budget."

Dimensions officials said yesterday that they were pleased Williams was named chairman of the board.

"Mr. Williams has the same philosophy as Mr. Brown," said Suzanne Almalel, a spokeswoman for the system. "All of our board members are committed to the system. At this point, we don't know what it means. . . . It's too early to tell."

The Prince George's hospital system has been struggling and has survived only through bailouts from the state and the county. State leaders set up a funding package to stabilize the hospital system, but the County Council would not sign off on the proposal.

Gov. Martin O'Malley (D) offered to pay $175 million over eight years to provide financial stability to the hospital system if the county provided $229 million.

O'Malley's offer was contingent on the General Assembly passing a bill to create a state-appointed authority to oversee a change in hospital management. The authority would negotiate with companies interested in buying the system. Council leaders said the deal was "flawed," and talks broke down at the end of the 90-day legislative session in April.

Gaines and Frush said they worked well with Johnson during the negotiations. Still, they have criticized the way he and the County Council have dealt with the system.

Brown had nominated Gaines and Frush, saying he thought they would bring "fresh ideas, fresh views."

"I just thought it was important for them to participate in that process," he said.

Johnson has held two meetings in the past week with two groups of doctors who work at Dimensions-operated county facilities. After one of the meetings, he said he increasingly thinks the hospital system should be run by doctors. Johnson has also met with others interested in operating the system. An executive with Providence Hospital in the District confirmed last month that a team of administrators toured Prince George's Hospital Center.