Dr. Val Zudans

Dr. Zudan’s answers to 10 community questions posed by Vero Communiqué.

1. Have you ever spent any time at the health care providers funded by the Indian River County Hospital District (IRCHD) to observe how their facilities work (e.g. spent a day in the Indian River Medical Center [IRMC] emergency room) and have you ever met with any indigent members of the community to understand their life situations?  If so, generally speaking, what have you learned?

“I have had personal experience over ten years ago delivering care in both the IRMC emergency room and inpatient as an on-call consultant.  More recently my practice has been limited to outpatient clinic visits and ambulatory surgery in private practice.  Within the last year, my experience at IRMC is limited to personal experiences with one of my children in the emergency room and my mother-in-law having elective inpatient surgery followed by an inpatient stay.  My experiences were that there are many excellent doctors, nurses, and ancillary staff at IRMC who very much want to help their patients.  I have also communicated with nurses and fellow doctors who currently work at IRMC as well as my patients’ experiences at the hospital.  The common themes identified are that we have many great providers, but there are concerns about too many bosses and not enough workers, poor ER experiences, poor relationships between hospital management and community physicians, and room for improvement with cleanliness. 

 With regard to other funded agencies, I have delivered volunteer cataract surgery and laser procedures through the Health Department affiliated We Care program.   With We Care, the delivery system is different.  Some patients are seen at the We Care clinic at Gifford health center (which is very nice, clean, and efficient), but most are seen by private physicians for free in their offices and outpatient ASCs.  For indigent patients that I see through We Care, they are seen in my private office and treated in my outpatient surgery center along with all of my other patients.  There is no distinction in their treatment from my paying patients.”

2. Are you concerned about the adverse impact of Sebastian River Medical Center’s (SRMC) $64 million expansion may have on any of the health care providers supported by IRCHD? Would you be in favor any opportunities for the IRCHD to partner with SRMC to better serve the county’s underserved populations?

“SRMC’s expansion does not impact the current relationship between the District and the non-profit providers because the District is reimbursing indigent care only.  It is my understanding that SRMC’s expansion is targeted at a different patient population.  As far as the District working with SRMC to take care of indigent patients, it would be the duty of a trustee to consider which providers can deliver indigent care services at the highest quality with the least taxpayer cost.  

 Currently, most often, the most cost effective provider is outpatient care at Treasure Coast Community Health.  It is less expensive to provide outpatient care than emergency room care.  In addition, TCCH receives some of its funding from federal sources, so that local taxpayers have less of a burden.  If SRMC presented an opportunity to care for qualified indigent patients at lower taxpayer costs than current providers it would be appropriate to consider that option.”

3. Are you familiar with the District’s Vision, Mission and Strategic Plan recently developed and approved by the Trustees? Do you support the IRCHD transitioning from a “Hospital” to a “Health” District? Additionally, if IRCHD is to become a “Health” District what other organizations, would you like to support?

“There are some objectively proven programs that improve measurable health outcomes in other communities.  I agree with the mission to improve the health of our community and believe that there is a limited role for the IRCHD to get significant return on investments through program funding.  The transition to a ‘health district’ simultaneously involves much peril.  Once a program is started it develops a life of its own.  It seems that government programs have insatiable appetites for growth.  I fought to limit the size of this program, especially in its first year.  The initial proposed budget was a maximum of $1,000,000 in new programs.  My proposal to start smaller at $250,000 was supported only by Dr. Michael Weiss.  The final amount approved by the majority of IRCHD Trustees was $550,000; with an additional $250,000 in reserves for a total of $800,00 in potential new programs in next year’s budget.  Dr. Michael Weiss and Dr. Tom Spackman voted with me to not have the additional $250,000 in reserves.   The majority of the IRCHD trustees, however, felt that up to $800,000 was insignificant compared to the total program expenditures.  Dr. Weiss and I were in the minority in thinking that giving the IRCHD trustees the opportunity to approve spending up to $800,000 in new programs in the first year was irresponsible to the taxpayers.

 I did fight successfully to require that no program could be approved unless it had been previously shown to have measurable improvements in health outcomes in a program in another community.  The initial language allowed for funding for programs that the trustees believed had a significant chance of success and gave preference to programs with a proven track records.  The changes to require a proven prior track record of measurable improvement of health outcomes for all approved programs gives some limited protection to taxpayers.

 As far as potential programs to support, I am familiar with a couple programs at the IRC Health Department that likely qualify under the above criteria.  Much of this ‘Health District’ concept fits with what the Health Department already does to improve community health, but they could always use more funding from the IRCHD.  A Health Department, by its nature, has the expertise and resources to determine how to best improve the greatest health needs of a community. 

 I am very concerned that future IRCHD trustees may not be sufficiently constrained on what they have the opportunity to fund through this program.  I am also concerned that this program creates an environment that is conducive to potential conflicts of interest between trustees and their acquaintances at organizations seeking grants.”

4. In the strategic plan it says that: “By November 1, 2016, staff will recommend method for utilizing the Health Needs Assessment data in all District communications.” Is there a need for a new Health Needs Assessment to collect data from for-profit health care providers such as private practitioners and even SRMC itself, rather than only the not-for-profit organizations that were included in the current assessment?

“I would have liked private practitioners and SRMC to have been included in the Health Needs Assessment, but I think that it is unlikely the Assessment would have been much different if they had been included. The greatest health needs of their patients are likely the same as the other organizations (but to a lesser degree).  That said, if they are willing to participate, they should be included in the next health needs assessment.  In the meantime, there is no reason that they should not be considered as participants when the IRCHD is considering solutions to the health needs of our community (the private practice physicians are already onboard providing pro bono health care of over $1,000,000 per year to the community’s indigent through the We Care program and members of the dental community have expressed interest in joining this effort).”

5. On August 18, 2016 IRMC CFO Greg Gardner spoke before the IRCHD Trustees and projected a breakeven operation for the fiscal year ending 09/30/16. When asked why the Sebastian River Medical Center, with the same demographics, makes money and we don’t, Mr. Gardner said it was due to the “egregious” disparity in private payer rates between what IRMC, LRMC and SRMC are paid for the same services. With Blue Cross, for example, SRMC is paid twice what IRMC is paid and Lawnwood Regional Medical Center (LRMC) is paid three times as much for the same services. This speaks to different contracts between the hospitals and the private payers. SRMC is owned by Community Health Systems (CMS), who owns 200 hospitals. Mr. Gardner said if IRMC was paid the same rates by Blue Cross as SRMC, it would bring $50 million to IRMC’s bottom line. Obviously an organization like CMS has more leverage. Do you support the IRCHD taking the necessary steps to sell IRMC to organizations like CMS to gain leverage to bring more to the bottom line?

“The short answer is that there are three potential solutions to the severe financial underperformance of IRMC relative to area for-profit systems.  I have written an open letter to IRMC Board Chairman that outlines potential solutions.  The letter is available at zudans.com and other locations.”

6. Hospitals that are not part of a university, a health system or a chain of private hospitals are often called “community hospitals.” A regional hospital is a hospital that serves a larger area than a local hospital. On its website, IRMC indicates that “in late 2006, to reflect the transition from a good community hospital to a top-quality medical center, the hospital changed its name from Indian River Memorial Hospital to Indian River Medical Center. Indian River Medical Center is focused on providing quality healthcare to Indian River, St. Lucie, Martin, Okeechobee, Orange, Osceola, Polk, Brevard and Seminole counties in Florida. Counties.” So is IRMC a community hospital and what would be the difference if IRMC became part of a chain of private hospitals?

“The primary difference from better negotiated contracts would be the much improved reimbursement for private insurance services.  IRMC would make $55-$90 million dollars per year if run by a for-profit chain according to the IRMC CFO’s reported reimbursement rates of area for-profits.  The result of that is that taxpayers would no longer have to support the hospital.  This would save $7-8 million dollars in property taxes per year.  The foundation would be unnecessary and philanthropy could go to other community projects including environmental issues, arts, and education.  The taxpayer could see a payout of over $200,000,000 in the sale that could be put in trust for community health improvement.  There could be ongoing property tax revenue to local government of over $2,000,000 per year.  On the other hand, a sale to a for-profit chain may also upset local residents who built this hospital over many years and feel that it should stay community owned.  Before there is any consideration of a sale it is essential that the public understand what that means and are on board with the concept.  If an opportunity actually arises to get a fair price for the hospital, the community should first have the final say in a referendum on whether an option like this should be explored.  I would respect the will of the community whether it was for a sale or against it.  There are also viable alternatives for improving IRMC reimbursement without sale to a for-profit system (although less financially rewarding to taxpayers); see my open letter zudans.com .”

7. There has been a lot of community discussion that IRMC is not transparent to the IRCHD with its financial data surrounding personnel issues, other subjects including financial details on IRMC’s Heart and Cancer Center, affiliations with Duke University’s programs and why, for cancer, IRMC chose Duke rather than the Moffitt Cancer Center; as well as, whether or not the private practices acquired by IRMC are making or losing money. In accordance with the IRCHD lease with IRMC, Section 9.f.i. b, “with reasonable promptness such other financial data requested by Lessor (IRCHD) as may be demonstrated to be necessary to protect the interests of the Lessor” shall be furnished to IRCHD.  Additionally, two IRCHD trustees sit on the IRMC Finance Committee.  With this background, why can’t these transparency issues be resolved as a duty to the Indian River County taxpayers who support the IRMC?

“They remain issues because the lease provisions regarding Sunshine Law compliance are not being sufficiently enforced. It is my understanding that it is not just the Salyer issue, but also IRMC business related to practice and facility purchase negotiations, strategic planning activities, and communications among IRMC Board of Directors members are routinely conducted outside of the Sunshine Laws.  There is insufficient transparency and accountability in apparent violation of the lease terms.  If this assessment is accurate, it is not what the community agreed to when IRMC was set up and when the IRCHD agreed to lease the facilities and property to IRMC.”.

8. Do you feel that the IRCHD is over-reaching its duties by trying to run the IRMC rather than just fund it? Do you feel the IRCHD is trying to run it?  If not, should they pay more attention to doing so?

“I believe that one of the fundamental duties of a IRCHD Trustee is to be a trustee for the taxpayers.  The citizens own the hospital facilities.  If our hospital is missing out on $55-90 million per year in revenue while simultaneously taking $7-8 million dollars per year in taxpayer money, then the trustees need to hold the IRMC far more accountable.  The IRCHD does not and should not run day to day operations of the hospital, but the District should make sure that day to day operations are run in a way that looks out for the citizens’ best interest.  If there any lapses in performance, the IRCHD trustees should put public pressure on IRMC to meet performance goals both clinically and financially.  That is a trustee’s primary duty.  This may be frustrating or even sometimes embarrassing to hospital administration, but that transparency and accountability is what will force change for the better and improve the health of our community in the long run.  Trustees should also point out the successes of IRMC, such as meeting quality measures like excellent Leapfrog and U.S. News and World Report rankings as well as the success of our incredibly generous IRMC Foundation.”

9. Have you had any communications of any type with IRMC administration, any members of the IRMC Board of Directors, or any of the IRCHD funded organizations related to running for or serving on the IRCHD?  Do you have any personal relationship with any member of IRMC administration, members of the IRMC board of directors, or members in the same capacity of any IRCHD funded organizations? If yes to either, what was the content of those conversations about the IRCHD or nature of the personal relationship and how do you plan to avoid any perceived or real conflicts of interest?

“I have had no communications with IRMC, its administration or BOD members or any funded agencies about running for re-election to the District or my initial appointment to the District.   I have no personal relationships with the above mentioned entities.  I interact with many of these individuals on a professional level through my practice of ophthalmology and my duties as a current trustee.  The discussion and decision to run for re-election was made solely with my wife to try to improve the health of our community.”

10.”Please share your thoughts on how the Affordable Care Act (Obamacare) has affected our indigent population, IRMC, the health care providers IRCHD supports and the private practitioner community.”

“The ACA has resulted in many Indian River County residents who were previously qualified as indigent now being covered by ACA.  This was most noticeable at IRMC, where actual indigent care costs in the last year came in around $1,000,000 below budget.  This is the primary reason that the IRCHD property tax rate was significantly decreased for this next year (it would have been even greater if new spending programs had been more limited).  IRMC reports that they actually have less “bad debt” now compared to prior years and at least some of this improvement is likely due to ACA. 

 The local non-profit providers that the District funds also saw noticeable decreases in indigent service costs presumably due to new coverage by ACA.  The one large exception is dental services by TCCH that are up dramatically as the ACA does not cover dental services.  With regard to the private practitioner community, it is very unlikely that private practitioners even know who purchased their insurance through an ACA exchange with or without a subsidy or via other methods.  In our private practice we only see what insurance the patient has, not how they obtained it.  So, there has been no noticeable change since ACA was implemented.

 The reason that all of these seemingly positive local changes have occurred since ACA began, is that the tax burden to make this happen has been shifted from local taxpayers to the federal taxpayers and federal government borrowing.  There is no free lunch.  In addition, there are now serious questions about the sustainability of ACA.  Many large insurance companies are dropping out of ACA participation due to significant financial losses.  This creates further upward pressure on insurance premiums (and deductibles) and either requires even greater federal government subsidies; or it prices the middle class and small businesses out of the system.  The lack of participation by these younger, healthier patients results in an even less healthy group of ACA participants; progressively increasing costs, and a projected “death spiral” of premium increases.  There is a risk that if ACA does fail that there will be a wave of former ACA patients that become qualified indigent patients again.  In the event that that happens and IRMC is still a non-profit taxpayer owned hospital, that care will become a significant taxpayer burden.”