Taylor Manor spared by takeover

Sheppard Pratt steps in

troubled hospital feels `a weight being lifted'

May 04, 2002|By M. William Salganik | M. William Salganik,SUN STAFF

Sheppard Pratt Health System will take over financially troubled Taylor Manor Hospital, the two hospitals announced yesterday.

Taylor Manor, a 94-year-old hospital in Ellicott City that has been operated since 1939 by the Taylor family, has been saying for two years that financial problems might lead to its closing.

"It's a weight being lifted," said Dr. Bruce Taylor, chief executive and medical director of Taylor Manor and the third generation of Taylors to head the institution. "This gives us assurance that we can continue what our family has worked on."

Dr. Steven S. Sharfstein, president and CEO of Sheppard Pratt, said the acquisition of Taylor Manor's programs "makes us stronger. We can combine resources and become more efficient. We don't have a big presence in Howard County, and our strategy is to become a regional resource."

Sharfstein said Sheppard Pratt will maintain inpatient and outpatient programs at the Taylor Manor campus, although the programs might change. He said he hopes to retain all of Taylor Manor's 295 employees in Ellicott City or in other Sheppard Pratt programs, but that the hospitals had not had time to work out details of programs and staffing.

He said Taylor will remain as medical director of the Taylor Manor campus.

Terms of the transaction were not disclosed. The two hospitals said they expect the deal to close July 1.

Taylor Manor will continue to own its campus and buildings, and will lease space to Sheppard Pratt, which will operate the programs. The arrangement requires approval by state regulators, Sharfstein said.

In Maryland and nationally, psychiatric hospitals have been under financial pressures for a decade.

"It's been much more difficult for hospitals to survive with managed care decreasing inpatient stays," said Dr. Dina Sokal, president of the Maryland Psychiatric Society.

Nationally, the average inpatient stay dropped from 23 days in 1991 to 10 days in 2000, according to a survey by the National Association of Psychiatric Health Systems.

Taylor Manor has declined from more than 200 inpatient beds to 75, and "we're running at 50 to 60 percent of capacity," Taylor said.

Reimbursement rates for the patients were also an issue. Taylor Manor stopped taking Medicare patients two years ago, and sharply restricted new Medicaid patients this year. Taylor said the hospital was losing up to $200 a day on those patients at government reimbursement levels.

In Maryland over the past few years, two psychiatric hospitals have filed for bankruptcy and a third was acquired, Sharfstein said.

"Everybody seems to be hurting," said John Blamphin, a spokesman for the American Psychiatric Association.

Sharfstein said Sheppard Pratt has "survived by steady growth off campus and diversifying its products and services."

With outpatient and other programs in 11 Maryland counties, Sheppard Pratt gets 35 percent of its revenue from inpatient care on its Towson campus. It gets nearly as much, 30 percent, from its three schools for emotionally disturbed children.

The new strategy has put Sheppard Pratt back in the black. Helped by positive adjustment to prior-year Medicare and Medicaid reimbursements, it made $2.3 million in the fiscal year that ended June 30, on $110 million in revenue. The year before, it lost $2.4 million.

Taylor Manor had an operating loss of $1.1 million on $15.8 million in revenue for calendar year 2000, Taylor said.

"I feel anxious but good" about the Sheppard Pratt deal, he said.

"It's been a struggle to maintain our facility and our staff and our payroll in these tumultuous times."

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