The Custody Battle at Brackenridge

The afternoon of Oct. 29 was not one of Patricia Hayes' more satisfying moments at the helm of the Seton Healthcare Network. Two weeks earlier, Seton had touched off shock waves of anger over its plans to pull out of the city-owned Children's Hospital, a division of Brackenridge, and build a new, privately owned pediatric facility in North Austin. Although it has since backed down a bit, Seton initially wanted to alter its lease with the city and abandon pediatric care altogether at Brack -- effectively privatizing that profitable service by moving it to Seton's own facility.

And now Hayes, as Seton's interim president and chief executive, was being called upon to explain the hospital's position to a roomful of rankled community leaders -- her peers on a steering committee working toward the creation of a publicly funded hospital district.

Though the committee had been meeting since July, neither Hayes nor any other Seton representative in the group had breathed a word about replacing the relatively profitable -- yet increasingly overcrowded -- Children's Hospital with a Seton-owned facility. When Seton did disclose its plans on Oct. 17, many on the committee were furious and feared that the politically delicate job of selling voters on a taxpayer-funded health care system would be undermined without Children's Hospital in the equation.

Travis County Probate Judge Guy Herman, an outspoken advocate for a countywide hospital district, was -- and is -- particularly perturbed and expressed his dismay over Seton's "lack of candor" at the table. Even Seton's boosters privately admit that the Catholic-run outfit showed poor judgment on two counts: by staying mum on the subject during discussions of a hospital district and by unilaterally deciding the fate of a public facility without public input. Though some people believe a few city higher-ups had known for months about Seton's plans but opted to sit on their hands, the off-the-record line from one city official is, "We're all pretty mad about this." Yet the city, for one reason or another, has never wanted to play hardball with Seton, and doesn't appear willing to do so in this case. It was Seton, after all, that in 1995 relieved the city of a long-standing financial albatross -- Brackenridge -- after a series of accounting errors caused a $21 million shortfall at the hospital. It seems as if the financial stability Seton brought to Brack outweighs the other strains of an ill-suited marriage.

The Children's Hospital dustup arrives quickly on the heels of another Seton controversy: the Catholic Church's edict, earlier this year, prohibiting Seton from providing birth control services at Brackenridge, resolved temporarily by a plan for a segregated "reproductive services" floor at the hospital. Now, in an apparent attempt at damage control over the reaction to Seton's new hospital plans, the health care provider has tried to overcome its public relations blunder by running full-page ads in the Statesman proclaiming its commitment to children and charity work (see the little tyke in "Keeping Our Promise to Children," p.30). If Seton is lucky, the campaign may strike a positive chord with the community at large -- but it's not likely to make much of a dent in the custody battle over Children's.

In other strategic moves, the health care provider has since withdrawn its original request of the city to amend its lease agreement to eliminate the requirement that Seton provide pediatric care at the current Children's facility, located on the grounds of the city-owned Brackenridge Hospital, which Seton leases and manages. And they've agreed to continue providing children's trauma and other services at the Children's Brackenridge site after the new hospital opens in 2007. Local pediatricians would prefer to have all children's services under one roof, so it's uncertain how long this arrangement will last. The offer also apparently presumes that the proposed new hospital is a done deal, and there is nothing the city can -- or will -- do about it.

If there is agreement on one thing, it's that no one wants to see Children's at Brack become solely the indigent hospital. "It's very important not to split this up any more than is necessary," said Dr. Richard Holt, a pediatrician at Children's. "We don't want to create a two-tiered service, where all the poor kids go to the old hospital and the rich kids go to the new hospital. We want to provide all levels of service to all children." But not everyone agrees on how that should be accomplished.

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The Best-Laid Plans

Under other circumstances, Seton's commitment to raise $200 million to build a state-of-the-art pediatric hospital would have won warm and fuzzy endorsements all around. But that hardly describes the opinions aired and disseminated almost daily via the famously extensive e-mail directory maintained by Texas Monthly publisher Mike Levy, who opposes Seton's plans and offers regular unsolicited counsel to City Manager Toby Futrell: "At some point," he wrote to her, "the city needs to recognize that Seton's motives ... may have less to do with children ... and more to do with power and competitive economic advantage against other players in Austin's health care market." It's not the first time ill motives have been suspected of those who say they're helping Brackenridge. In 1994, when then-Mayor Bruce Todd charged ex-City Manager Camille Barnett with mismanaging Brack, there was widespread suspicion that the charges were at least in part motivated by the desire to privatize local health care.

In the minds of those committed to creating a hospital district -- one that would have included Children's as its most valuable asset -- Seton's actions effectively constitute a hostile takeover. The pediatric facility, which treats both insured and uninsured patients, is the biggest money-making offspring of Brackenridge, a beloved -- yet historically underfunded -- public icon that has provided health care for the region's poor (and the rest of us) since 1884. Neither the city nor the steering committee has yet determined the financial impact of Brackenridge minus Children's -- but the logical presumption is that the loss would be dramatic. Without a reliable revenue stream from Children's helping to offset Brackenridge's losses from indigent care, a tax increase may be inevitable.

It's also uncertain how the financial loss of Children's will impact funding for the proposed hospital district. While other urban areas in Texas have had such systems in place for 30 and 40 years, Travis County is the only large metropolitan area in the state without a hospital district. Had things gone as Judge Herman hoped when he raised the issue earlier this year, Travis County would have by now voted on a district which, under state law, would have granted the county automatic oversight. But the county has little experience in that area, and the city is reluctant to relinquish control of Brackenridge. Community leaders convinced Herman to hold off another year to allow time for a steering committee to draw up legislation granting joint city-county oversight.

"We have been involved in public health care for 100 years," said City Council Member Betty Dunkerley, who helped craft the city's original 1995 lease agreement with Seton and serves as a council representative on the steering committee. "We want to have legislation to allow for some changes in governance and to include the option for regional participation." Indeed, many of Brack's most needy patients come from neighboring counties (although the exact numbers are debatable) so that even a Travis County district would absorb a much broader demand for health care. Under the current system, the city carries the heavier load of the county's health care costs, with its residents paying a nickel (four cents to the city and one cent to the county) and county residents kicking in a penny. If county residents paid an additional four cents, according to some estimates, the medical care fund would be about $6 million healthier. More money in the local system could provide more and better-funded health care resources and improved trauma care, and might help unclog emergency rooms, which treat a large share of uninsured persons who have nowhere else to go for non-emergency ailments.

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Collision Course

In an attempt to get a handle on how Seton's plans will affect the hospital district efforts, Clarke Heidrick, an easygoing lawyer who co-chairs the hospital district steering committee with former City Council member and UT regent Lowell Lebermann, called a special meeting of the steering committee for Oct. 29. The co-chairs had hoped to convince Seton officials to delay further action on Children's Hospital until a countywide district is in place, assuming voters approve the measure in November 2003. They felt that any future decision-making regarding Children's expansion needs should include input from the hospital district's board of trustees, Seton, pediatric physicians, and other stakeholders. In other words, they said, the overall state of Travis County's health care crisis -- from emergency rooms, to trauma units, to clinics -- bears out the need for a hospital district to be the No. 1 community priority.

Heidrick insisted that the meeting be private -- meaning no media allowed -- so that committee members would feel comfortable having an "open and frank discussion." As it turned out, "open and frank" was putting it mildly. By many accounts, the mood in the packed meeting room that day was, as one committee member put it, "raw, edgy, and emotional." Hayes had brought along backup -- pediatricians and other Seton staff members -- as reinforcements. "It was a compelling, dramatic moment," the committee member recalled. "Imagine two trains coming from opposite directions toward each other. Would they collide? Or would there be a last-minute switch to a second track? I think some believe the trains did not derail ... others would claim [they witnessed] a huge train wreck."

Another participant recalled how some of the committee members -- powerful pillars of the community -- gave Seton a diplomatic dressing-down, something along the lines of, "We like you, we admire you, but you are wrong." Others skipped the diplomacy and went straight for the heart. "The testosterone level was really high," one witness recalled. "And [Hayes] didn't help matters any by saying she was surprised by other people's surprise. The whole scene was absolutely amazing."

Through it all, Hayes, a former nun with stellar credentials in business and political circles, remained characteristically unruffled and on-message. In a recent interview, Hayes said she had no idea Seton's plans for a new hospital would cause such turmoil. "It was not my intent to surprise people," she said. "I respect the fact that it was distressing, and we tried to do what we could to respond to that. I was not prepared for people to say this will come at odds with the hospital district."

For now, she continued, "we're going to let the hospital district discussions go on, and [we'll] stay out of the way."

After the meeting, Hayes went into another huddle, a smaller one with key players, to determine Seton's options for an immediate course of action that might ameliorate some of the damage. In due course, Seton decided to withdraw its requested lease amendment, keep current plans on track for the new hospital, and announce that even when the new hospital is completed, they'll continue operating the existing Children's Hospital on a modified basis, providing trauma, emergency care, and some amount of inpatient and outpatient care. The neonatal intensive care unit will remain at Brackenridge, Hayes said, although an additional unit will be included in the new hospital. Late last week, Hayes announced the appointment of Dr. Robert I. Bonar as president and CEO of Children's. Bonar, president and CEO of a children's hospital in Norfolk, Va., will also oversee the new hospital project. Meanwhile, Seton Healthcare Network is undergoing its own reorganization: Hayes is returning to her former post as vice-president, and former CEO Charles Barnett is resuming that position (see Naked City, p.15).

But Hayes also indicated that Seton might at some point renew its original request to change the lease agreement. If that doesn't work, she said, Seton would continue honoring the contract at Children's Brackenridge location. Yet even with some functions left in place at Children's, the concerns now center on what can be done to "backfill" the financial hole caused by the transfer of the more profitable operations to the new hospital.

There are other concerns, too. "What we need to do now," said Heidrick, "is move forward in planning a hospital district focusing on trauma and emergency care. The process we have now is not the script we would have written, but right now there's no time for hard feelings."

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A Growing Crisis

It could be said that the growth and economic success of Children's Hospital is due in part to the very nature of its business -- kids. The hospital has been a local treasure since opening its doors in 1988, the outgrowth of an idea that a group of pediatric physicians pitched to the city a few years earlier, and the city delivered. As Central Texas grew, the hospital grew with it, blossoming into the kind of magnet facility that attracts good doctors.

The major drawback to this success, however, is that Children's has hit its capacity levels, and the pediatric physicians -- who no doubt hold a good deal of sway at Seton -- say it's time to move beyond short-term fixes. They make a compelling argument. During peak respiratory season, usually beginning in November and lasting through March, Children's is filled to capacity with wheezing babies. If a child needs to be admitted, it's not uncommon for her to spend two to eight hours on a gurney until a bed -- plus another bed for a parent -- becomes available, said Children's Dr. Richard Holt. For the short term, Children's is expected to pick up an additional 20 beds in an expansion this year. "We'll be able to get by this winter," he said, "but what do we do next year?" And, he said, the space problem limits the hospital's ability to broaden its scope of health care to meet growing demand for more specialized services. The absence of these services forces families to seek treatment outside of Austin.

In an Oct. 14 letter to Pat Hayes and City Manager Futrell, two pediatricians, Dr. Maie Killian and Dr. Patrick Connolly, chief of staff at Children's, laid out the arguments for a new facility. They cited a 75% projected growth increase in Central Texas over the next 20 years and noted that demand for Children's health care services is growing at a rate 28% faster than the population.

But for proponents of a hospital district, it's not the content of the letter they dispute, it's the fact that the wheels were already greased for a new hospital before the letter was even written. Indeed, some people cite the letter as a setup, in effect to cover the fact that the new hospital was already a done deal. Rumors of Seton's plans first surfaced last spring. When the Chronicle inquired about the whispers in late August, Seton officials said there were no immediate plans to build a new hospital and speculated that an ongoing expansion of Children's emergency room might have played a role in fueling the rumors. It now appears that the meaning of "no immediate plans" depends greatly on the definition of "immediate."

No one doubts the problems of overcrowding at Children's, but public health care advocates argue that the county's entire health care system is at stake -- from public to private hospitals, emergency rooms, the Brackenridge trauma center, and mental health services. People without insurance end up at the Brack emergency room, where they may wait several hours, and smaller health care providers, like People's Community Clinic, don't have the resources to serve everyone who walks through the door. Clinic Executive Director Roseanna Szilak says the clinic is forced to turn away an average of 2,000 people every month, including 184 to 210 women a month who seek prenatal care. "This is the reason emergency rooms get larger and larger," said Szilak. "Not because there's more emergencies, but because all the people that we and everyone else have to turn away end up in the emergency room because [the uninsured] have nowhere else to go." Over 23% of Travis County residents are uninsured, and that dire figure includes more than 43,000 children.

As the county's probate judge, Herman presides over mental health cases, a job made much more difficult by the lack of locally available mental health beds. More often than not, Travis County is using 100% of its allotted beds at the Austin State Hospital. This bleak picture is the original reason Herman embarked on his mission to bring a hospital district to Travis County. Recently, he said, State Hospital officials instructed his court to send any child in need of inpatient mental health services to Harlingen or Wichita Falls. "It's unbelievably wrong to have to ship our citizens and our children to public hospitals far away from their families, when other counties have these facilities because they have a hospital district to fund them." And this isn't just a problem for people without insurance, he said. "I originally came at this from the mental health side -- I've been troubled by this for the past two years and the circumstances have grown worse," he said. "But the whole system of health care is underfunded in Travis County."

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Mixed Messages

Not everyone agrees on how a hospital district should function. "I think," said Hayes, "the district could get the greatest mileage by supplementing the current provider care that goes to the uninsured -- not just at Seton's, but at St. David's and People's [Community Clinic] and in physicians' offices. I've always envisioned the hospital district as providing incremental assistance, which would allow our community to do this less expensively than other communities but would recognize that right now we're way, way, way below the public contribution of other communities." Herman's view is somewhat different. While the hospital district needs to be aware of the obligations of other local hospitals, he said, "The district [would be], by law, the primary entity responsible for health care. Any thought that the hospital district should supplement the local private hospitals' efforts is ludicrous in the face of the several serious unmet health care needs. ... Until and unless all of these unmet needs of the community are addressed," he said, "there is no ability for 'supplementation' of effort."

Beyond the concerns of how a hospital district would be impacted by Seton's new hospital, a tougher question is how to get around the obvious negative -- taxation -- to sell the district idea to voters. Other counties haven't had to grapple recently with this question because their districts have been in place for decades. And given this season's adamant campaign promises from legislators of "no new taxes," how can district supporters -- themselves currently at angry odds -- hope to convince the Todd Baxters of the newly Republican House and Senate to vote for such legislation?

This is the question folks are asking themselves over at City Hall, where the relationship with the Legislature is not exactly cozy. And the city and county have always had problems trying to find middle ground with one another, even on things they both want to achieve, like a hospital district.

"At some point we need to translate health care into the same kind of baseline service as police and fire and EMS," said County Commissioner Karen Sonleitner, who serves on the steering committee. "We pay for those services because those are part of our responsibilities as citizens. We may not always use them, but we know if we need them they're available. The same should apply to health care." Sonleitner says she's not sure what effect the children's hospital, or lack thereof, will have on the committee's ability to move ahead in its hospital district efforts. "This is a strange dilemma to be in," she said. "I had anticipated that we'd have a bill ready to file by mid-November. I think we are further behind now than we were when we got underway.

"It's as if we have to go back to ground zero and start again."