Children's Hospital plans to add a nursing home 136-bed facility viewed as source of much-needed revenue

January 16, 1996|By M. William Salganik | M. William Salganik,SUN STAFF

Children's Hospital plans to build an $8 million, 136-bed nursing home on its Greenspring Avenue campus, hospital President Robert A. Chrzan announced yesterday.

The hospital will seek approval from the state agency that reviews health facilities and from city planning officials. If all goes smoothly, construction could begin by late spring, and the nursing home would open a year later.

Children's announcement represents an example of a hospital with a low and declining inpatient census' reaching out to attract people and revenue in other ways.

A specialty hospital providing orthopedics, rehabilitation and plastic surgery -- mostly to adults -- Children's is licensed for 76 beds, but is generally staffed for 20 to 25 and, on an average day, serves perhaps 15, Mr. Chrzan said.

The hospital sees the nursing home "as a way of developing stronger ties and relationships" with patients and doctors, potentially helping to fill vacant hospital beds, according to Mr. Chrzan.

Also, he said, "insurers are reluctant to pay for rehabilitation in a hospital setting, but would pay for it in a long-term care facility" such as a nursing home. Plans call for the nursing home to include, in addition to rehabilitation, services for patients with Alzheimer's disease and "subacute" care, a level of care more intensive than usually available at a regular nursing home but less intensive than provided by a hospital.

"In order to survive in a managed-care environment, hospitals need to have a lower-cost nursing home facility," said Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management. "It makes them more price-competitive."

As insurers seek to deliver care at the most cost-effective level, -- more and more services are being provided to outpatients, through home care or in nursing homes.

At Children's the trend has been particularly pronounced: Five years ago, Mr. Chrzan said, about three-quarters of the people it treated were in inpatient care; now, three-quarters are served as outpatients.

For the fiscal year that ended June 30, the hospital reported 2,435 outpatient cases and 1,035 inpatient admissions -- down from 2,149 five years earlier.

In response to such shifts, Dr. Anderson said, "hospitals are trying to gather as many patients as possible under their umbrella" by offering outpatient and nursing home services.

"Increasingly, hospitals are becoming part of health care systems rather than stand-alone facilities," he said.

There is particular interest in the elderly -- a rapidly growing segment of the population. Several area hospitals operate or are planning nursing homes or assisted-living facilities. Harbor Hospital in South Baltimore announced a month ago a plan for elderly housing and other facilities to be developed at a cost of $16 million to $20 million.

Children's Hospital's move into nursing care follows a period of financial troubles.

According to figures from the state Health Services Cost Review Commission (HSCRC), which sets hospital rates, Children's has posted operating losses in each of the past five years, ranging from about half a million dollars to nearly $2 million on an operating budget of $16 million. To help cover the losses, it has been drawing from its endowment at the rate of about $300,000 a year.

On the other hand, the hospital has no current debt, and its endowment still stands at about $13 million, according to the HSCRC.

The hospital began 86 years ago, treating children with chronic diseases, such as polio. The children might stay in the hospital for periods ranging from a year to 10 years, according to Agnes P. Nicholas, the hospital's director of development.

When polio and other childhood diseases were controlled, the hospital turned its attention to orthopedic and rehabilitation patients, and developed a specialty in sports medicine. In 1980, it changed its name to Children's Hospital and Center for Reconstructive Surgery.

It changed its name yet again, for its 85th anniversary, to the New Children's Hospital.

In addition to a shift to outpatient services, length of stay for inpatients has been declining dramatically, largely under pressure from insurers controlling costs. While the average inpatient rehabilitation stay at Children's is about 14 days, it was double that 10 years ago, Mr. Chrzan said. For a hip replacement -- Children's most common procedure -- patients now stay five or six days, but stayed twice as long just six years ago, he said.

In doing strategic planning to cope with the changes in the health system, Mr. Chrzan said, the hospital saw its 45-acre campus, on Greenspring Avenue south of Cold Spring Lane, as an asset. In recent years, it has added a building for doctors' offices and the state-of-the-art Bennett Institute for Health and Fitness.

The 6-year-old, 40,000-square-foot Bennett includes specialized equipment for rehabilitation patients and handicapped children, but its pools, stair machines and stationary bicycles are also open as a general health club.

Reflecting its connection with sports medicine, Bennett includes "hall of fame" wall with autographed photos of Orioles and other athletes who have used the facility.

The latest addition to the campus, the nursing home, would be located near the doctors' office building. The $8 million cost would be financed with tax-exempt bonds that would be paid off from nursing home revenue, Mr. Chrzan said. The two-story, 57,818-square-foot building will create 125 permanent professional and nonprofessional jobs, the hospital said. It will be owned by Children's and operated by Concord Health Group, Inc.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.