Letter to the editor: My concern about Saint Francis Hospital sale - Evanston RoundTable (2024)

I urge all Evanstonians to pay close attention to the change of ownership of Saint Francis Hospital from Ascension Health to Prime Healthcare. This proposed change has the potential to seriously harm the delivery of hospital and health care to our community. Through this change of ownership, Saint Francis will move from one of the country’s largest, most sophisticated and strongest health care systems to a much weaker owner/operator that has been accused of (and settled litigation involving) serious violations of federal and state law, and had significant labor unrest at various of its institutions.

1. Let’s be clear about what’s happening here: Ascension is “offloading” its underperforming Illinois hospitals to a for-profit operator. A legitimate question may be asked: if one of the largest and strongest health systems in the country can’t make Saint Francis successful while keeping true to its charitable mission, how is Prime going to be able to do so?
2. There are a limited number of ways to increase hospital profits:
   1. Grow market share: Highly unlikely, given the dominance and reputation of Evanston Hospital.
   2. Cut costs: Unlikely that there is much left to cut without causing serious harm to patient care, as Ascension already pursued this route.
   3. Raise prices: This is really not a possible option, as prices are largely set by insurance companies, and Prime will not have the market clout, with its bundle of hospitals, to strongly push back on inpatient and outpatient rates.
   4. Reduce service mix and intensity: This strategy is the one most likely to be pursued, with “unprofitable” services targeted for reduction or elimination.
3. Prime has a record of serious violations of federal and state law. Google “Prime Healthcare and fraud” and scroll through to learn the details, but significant settlements involving the company and its owner, Dr. Prem Reddy, for intentional Medicare fraud, violations of California state anti-health care fraud laws and Pennsylvania health care fraud laws call into question how Prime will be operating Saint Francis.¹
4. Prime will point to the fact that Saint Francis, unlike its other proposed Illinois hospital acquisitions, will maintain its not-for-profit status. This ownership status is irrelevant, as Saint Francis will be managed just like all the other Prime hospitals.
5. The $250 million (total) of capital Prime is injecting into all of the hospitals and other sites it is purchasing sounds like a lot of money, but it isn’t: we don’t know how much is allocated for Saint Francis, and for what. A reasonable assumption is that much, if not most, of this money promised is for delayed capital expenditures not made by Ascension as it began planning for the sale, not equipment and services designed to expand hospital and outpatient offerings. And, of course, hospitals are businesses: there is no such thing as free money – any capital that Saint Francis receives it will need to pay back to “corporate.”

Illinois law requires Ascension and Prime to secure the approval of the Illinois Health Facilities and Services Review Board, and the attorney general, for this transaction to proceed. As part of this review, community feedback is sought. I ask all of us to pay close attention to this proposed ownership transfer, and urge our elected officials prior to approving any transfer of ownership to secure enforceable promises from Prime with respect to service mix and intensity, the provision of charity care, accessibility of services, minimum annual capital expenditures and retention of other community benefits currently provided by Saint Francis to the City of Evanston and its residents.

Larry Singer, longtime Evanstonian and retired director of the health law program at Loyola University Chicago

Footnotes:

1.While the 2021 fraud settlement with the Department of Justice is more recent, the government’s 2016 complaint against Prime, quoted in industry newsletter Fierce Healthcare, is instructive: “Under the direction ofPresident and CEO Prem Reddy, M.D., Prime Healthcare – including 14 hospitals under the system’s ownership – deliberately targeted Medicare beneficiaries for hospital admissions “without regard to medical need,” the DOJ claims. Reddy allegedly urged physicians to factor in each patient’s insurance coverage when deciding whether to admit, and took steps to eliminate observation status for patients with Medicare coverage – even going so far as to remove “observation status” from admission forms.

The California-based system is also accused of instructing hospitals to set arbitrary inpatient admission quotas at 20-30%, and the DOJ says Reddypersonally reprimanded emergency department physicians who fell below those quotas or missed opportunities to admit Medicare beneficiaries, even for minor health issues likecolds, back pain, ear infectionsand urinary tract infections. Furthermore, Prime management altered industry guidelines for hospital admissions to reflect a more lenient standard, and passed them off to employees as unchanged, the complaint says. This case was settled by a $65 million payment by Prime and Dr. Reddy in 2018.