Dr. Joseph E. Saul

Dr. Saul’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 spent periods of time in the IRMC Emergency Department in support of patients who were being treated there. While there, I had the opportunity to discuss the Emergency Department with the Department’s physicians, nurses, aides and even administrators. What I learned was enlightening, but discouraging. The long Emergency Department waits are attributable, in large part, to shortages of available beds in the hospital. Because census numbers are so low, this can only mean that the hospital is either insufficiently or improperly staffed. Another large contributing factor to Emergency Department backup is the failure of on-call physicians to respond to calls from the hospital when the Emergency Department backs up. This is attributable to IRMC management’s failure to discipline physicians for failure to respond to these calls.

 I spend time every month at community meetings in Gifford, and speak regularly with members of that community. I have become familiar with the life situations of the less-fortunate members of our community. I have learned how great an impact a change in tax policy of only a fraction of a mill can have on a homeowner who is in a precarious circumstance. At the same time, I have learned of the importance of the programs supported by the IRCHD in the lives of our community’s otherwise uninsured residents. IRCHD cares for people who fall outside of the Medicaid and Medicare programs, but have no access to other forms of insurance, including the Affordable Care Act (“Obamacare”). Florida’s Legislature has chosen to place responsibility for this category of beneficiary on the state’s counties. In Indian River County, that need is met through the IRCHD. These good people have medical needs, and deserve to receive high-quality modern medical care. IRCHD meets these needs without fail. There is no excuse for any other approach.”

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?

“On a purely theoretical level, the more healthcare that is available in the county, the healthier the county will be.

 But more specifically, SRMC entering into the OB/GYN business will eventually have a financial impact on the Partners in Women’s Health program. The Partners program guides mothers from prenatal care through postpartum care, in part with a significant grant from IRCHD. Currently, every child born in the county is born at IRMC. That includes a mix of Medicaid patients, indigent cases paid for by IRCHD, and private insurance/private payor cases. The private insurance/private payor cases are the financial prize. Once SRMC ramps up its practice, it will concentrate on the private cases, and will therefore become a financial success. These cases comprise less than one-third of the births in the county in any given year. Assuming that IRMC will be able to retain some of the private cases, it will not be able to significantly cut the overhead on the Partners program. However, IRMC will experience a significant decrease in its income on the program, and SRMC’s entry into the OB/GYN business will therefore have a major negative impact on IRMC’s balance sheet. IRMC emphasizes that it is a corporate entity separate and apart from the IRCHD whenever IRCHD asks IRMC for information. That attitude should also obtain when IRMC has financial problems.”

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?

“I am familiar with the District’s Vision, Mission and Strategic Plan. I tentatively support the transition from ‘Hospital District’ to ‘Health District,’ although I believe that it somewhat strains the mandate of the Special Act under which the IRCHD was created. Expansion into the role of a Health District is uncharted waters, and must be undertaken slowly and carefully. The members of the District Board are known as ‘Trustees.’ They hold the Trust of the residents of the county. They are responsible for collecting and spending tax dollars appropriately. Many residents can barely afford those tax dollars. Therefore, before a new program can be supported, it must be vetted and shown to be successful in other venues, whether here in Florida or elsewhere. Because Indian River County is new to the ‘Health District’ model, and because it is predominantly a poor county with a wealthy enclave, this cannot be a county that experiments with new programs. Rather, this must be a county that adopts proven programs that serve what we know to be our demonstrated needs.”

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?

“There is a need for a new Health Needs Assessment because the current Assessment being utilized is deficient in precisely the manner posed by the question. Over one-half of all healthcare in the county is provided by for-profit entities. It is therefore impossible to assess the quantity and quality of healthcare in the county without input from for-profits. With its new expansion, SBRMC is the largest hospital in the county, yet the Health Needs Assessment ignores it. Further, how can a Health Needs Assessment be accurate without input from the county’s physicians, who presumptively know the needs of more patients more accurately than any other source in the county? Obviously, it cannot.”

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?

“Right now, the hospital is owned by the IRCHD Trustees, in trust for the residents of Indian River County. IRCHD leases the hospital, rent-free, to IRMC, on condition that IRMC maintain an Indigent Care Agreement with IRCHD and also that IRMC be transparent with IRCHD regarding its finances. Especially considering that the lease is rent-free, the Indigent Care Agreement is at a fairly high cost of service to IRCHD and the taxpayers. With that said, IRMC has been rather opaque regarding information. We have yet to see financial results regarding the new Scully-Welsh Cancer Center. According to the pro forma financials circulated by IRMC at the time the Cancer Center was approved by IRCHD, the Cancer Center should be breaking even by now. We have never seen the Duke contracts for either the Heart or Cancer affiliations. We never saw the Apollo Atlanta paperwork. The case of former IRMC COO Mr. Salyer is still clouded in mystery. IRMC admits that it cannot successfully negotiate insurance reimbursement contracts. At the same August meeting, Mr. Gardner also acknowledged that unlike neighboring hospitals, IRMC was unable to negotiate long-term agreements with seasonal ‘snowbird’ nurses, and was forced to hire much more expensive contract nurses. It seems the seasonal nurses did not wish to work for this management group. This question proposes as an answer selling the hospital. That would require termination of the current lease. That in turn would require a very different set of Trustees, without ties to IRMC management or to the IRMC Foundation. Were the hospital to be sold, it is unquestionably true that there would be a multimillion dollar windfall that would inure to the benefit of the healthcare of the county, and at the same time a multi-year tax cut heading the way of the county’s taxpayers.”

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 Special Act of the Florida Legislature that created the IRCHD enabled the IRCHD to operate a hospital for the use of the residents of the county. The Lease Agreement by and between IRCHD and IRMC specifies that IRMC is subject to the Special Act. Therefore, IRMC signed on to operate a hospital for the use of the residents of the county. When IRMC attempted to expand its scope beyond Indian River County, it also very arguably attempted to expand its scope beyond the terms of its Lease Agreement with IRCHD. However, only the Trustees of IRCHD as a group by majority vote can enforce such a violation of the Lease. As a Trustee, it would be my position that such a Lease violation should not be allowed. The hospital needs to concentrate its resources on creating the best possible county hospital for the residents of Indian River County. If IRMC were to desire to become part of a chain of private hospitals, it would, according to the terms of its Lease, need the permission of the IRCHD. Without seeing the specifics of a proposed chain of private hospitals, and the advantages and disadvantages of joining any particular such chain, I am unable to offer further comment.”

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?

“There are many questions and issues bundled together here, and I will do my best to address them all. First, in terms of personnel, is my understanding that the terms of the settlement of the Salyer lawsuit were sealed by the Federal District Court, and are therefore unobtainable. The amount paid in legal fees should be obtainable, but IRMC has been opaque as usual. Also, Mr. Salyer’s severance payments were not in any disclosures that I have seen, and I know of no reason for them being held in confidentiality. The Duke contracts should certainly have been disclosed by now. In part, IRMC has been able to keep these documents hidden because the IRCHD has not forced the issue. The choice of Duke Cancer over Moffitt was curious indeed, and reinforces the desire to see the Duke contracts. Every national ranking of Cancer Centers by efficacy that I have seen rates Moffitt much higher than Duke. As to the practices acquired by IRMC, Mr. Gardner has stated that IRMC is losing an average of $70,000 per practice per year. This is likely attributable to several issues. IRMC overpaid for most of the practices. Also, the physicians in question no longer have a profit motive, which will adversely affect productivity. Finally, it is true that two Trustees sit with the IRMC Finance Committee. However, I would advise against falling into the trap of making assumptions regarding what is substantively discussed at those meetings.

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?

“Far from trying to run IRMC, IRCHD is trying to find out what is going on there. IRCHD is seeking information to which it is entitled under the Lease Agreement and the Indigent Care Agreement. Where there should be transparency, IRMC has built a wall of secrecy and opacity. From the little information that does trickle out, it appears that IRMC spends exorbitantly on the Executive Suite and generally over-manages, leaving too little in the budget for staff so that there are not enough workers to do the actual work necessary to operate the hospital properly.”

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 am proud to be able to say that neither IRMC administration nor the IRMC Board of Directors have approached me relative to running for or serving on the IRCHD. I have no personal relationship with any member of the IRMC administration or its Board of Directors. I am confident in stating my opinion that IRMC management would be very happy if I were not running for this position.”

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 Affordable Care Act (Obamacare) has had a mixed effect on our indigent population. Indian River County has more people than ever with insurance. Unfortunately, those insured through the Obamacare Exchanges are finding it harder than ever to afford quality healthcare. The Exchange policies are written in such a way, due to overbearing federal regulations, that premiums are very expensive, deductibles are quite high, and co-pays are high. It is true that many of those who are insured in this way get help with their premiums from government programs. That does not help lower the deductible and co-pays, meaning out-of-pocket expenses remain high for those people with this type of insurance. The high cost factor keeps many people from seeking appropriate medical care.

 The effect on IRMC, IRCHD healthcare providers and the private practitioner community is a bit more subtle. IRMC, and all hospitals, practitioners, and providers across the region, state, and nation, are in the unenviable position of treating patients who believe that they are insured. The patients then find out about thousands of dollars in deductibles and co-payments that are owed to the hospitals, practitioners, or providers. The hospitals, practitioners, and providers, locally and nationally, have to try and collect from people who just do not have the money. Now, hospitals, physicians and practitioners have bills to pay and the right to earn a living, too. Uncollectable bills put a huge damper on all of that. Healthcare is approximately 1/6, or 17%, of the American economy. While there is a symbolic improvement in the system just by being able to say that more Americans now have insurance, when that insurance is illusory and leads to financial danger for so large segment of the economy, the underlying plan is not workable.”

My commentary:

“I have been quoted as saying that our hospital, Indian River Medical Center, is mismanaged. That quote is not inaccurate. Too much money is spent on the executive suite, with far too little return. The hospital has been losing market share for many years, to the point that Sebastian River Medical Center is now the larger hospital in the county (once its expansion is complete). Indian River Medical Center needs to return to its core function as a community hospital rather than expending exorbitant amounts of money to become a regional medical center in an area without a bus, train, or commercial air transportation hub, and without the population base required to support a large-scale medical center.”