newMetroHealthCampus.jpg

In this architect's rendering of a re-imagined MetroHealth campus, separate, glass-surfaced buildings interspersed with broad green spaces and mixed-use areas take the place of the dense masonry you see today. The circular images show the types of atmosphere the architects of HKS Inc. hope to create within discrete pockets of the redesigned complex. In this rendering, north is toward your right; you are looking west from above Riverside Cemetery.

(HKS)

CLEVELAND, Ohio—During four days in early January, when the "polar vortex" drove temperatures in Northeast Ohio down to 10 below zero, MetroHealth Medical Center was nearly evacuated — twice — as the health system's aging infrastructure buckled under the extreme cold. Pipes froze and burst, patient rooms flooded, toilets blew their tops and the hospital's limping steam heat system nearly failed.

MetroHealth CEO Dr. Akram Boutros knew from the day of his arrival in Cleveland last May that the county health system’s main campus on West 25th Street was badly in need of an overhaul. It wasn’t until this winter, however, that it became clear just how dire the situation was.

Boutros told the story to more than 500 people Friday morning at the health system’s Annual Stakeholder’s meeting, held for the first time at the Convention Center in a bid to involve more of the community in the public hospital’s internal planning process.

“It was like Niagara Falls,” Boutros told the Plain Dealer in a meeting last week, describing how water fell from one floor to the next. “That brought home the urgency of this for us. We must begin replacing these buildings — they’re completely outdated.”

In the end, 200 rooms were flooded, from intensive care units to maternity suites. The old research building, which houses about 80 employees, was evacuated. The staffing, repairs and cleanup cost $1 million.

“That’s $250,000 a day we didn’t need to spend and that would have been better spent elsewhere,” Boutros said.

And that may be best argument in favor of a campus transformation plan that will likely take more than five years and cost hundreds of millions of dollars: the alternative — doing nothing — would be even more expensive, and put patients at Cleveland's safety net hospital at an unacceptable level of risk.

We've broken the rest of this story into the following chapters, so you can read the entire piece or click on the parts that pique your interest.

Plans not new, stronger leadership and finances are

Plans to revamp large portions of MetroHealth’s main campus aren’t new—they were under discussion as early as 2010, when hospital officials hired consulting firms, architects and engineers to assess the system’s current facilities, create plans to update the main campus towers, and find ways to draw more patients to the system’s current health centers.

In 2011, then CEO Mark Moran called for the demolition of the campus' iconic Manning Towers and the construction of a new, smaller facility to replace them. The health system's financial status at the time was shaky, however, and the health system cut staff, missed budget projections and faced questions from the County Council about spending on consultants.

Hospital officials at the time were reluctant to put a price tag on the project or elaborate on a funding plan, and the discussion seemed premature given the health system’s recent rocky financial history.

After projecting steep losses in 2008, when Moran was hired, MetroHealth broke even. The following two years brought steady growth (audited net incomes of $58.3 million in 2009 and $26.6 million in 2010, with operating incomes of $37.7 million and $23.8 million, respectively). The improvement was mostly thanks to layoffs, attrition, leaving vacant positions unfilled, and closing the 144-bed skilled nursing unit at the former Deaconess Hospital in Old Brooklyn. In 2011, though, the hospital reported operating profits of only $3.4 million and a net loss of $2.7 million, necessitating further cuts.

Today, MetroHealth's financial status, though still tenuous, feels somewhat more secure. The health system reported operating profits of $10.3 million in 2012, and net earnings of $13.9 million. Last year, which began with a disastrous loss of $6.5 million in the first quarter, has also ended in the black; the CEO announced today unaudited operating income of $18.9 million for 2013 and net profit of $32.7 million.

The reasons for this relatively swift turnaround, Boutros told The Plain Dealer, are a 16 percent boost in outpatient visits last year, lower healthcare costs per patient, and a highly engaged, efficient and invested workforce -- a workforce that grew by 150 full time equivalents in 2013.

“It’s a focus on better efficiency, less waste, and 6,800 people doing their job better,” he said. “Our values are completely set in stone. Nobody gets to compromise them, and that gives people significant pride in what they’re doing.”

Stabilizing the health system’s finances, he said, has allowed hospital executives and the 10-member Board of Trustees to focus on the physical state of the main campus.

And while the financial state of the health system has improved over the past two years, the 30 county-owned buildings that make up the main campus have continued to deteriorate.

The Manning Towers, built in the early 1970s, are out of date. They are licensed to provide 731 beds but on a daily basis only about 400 are in use. The towers were built in an open circular design to aid lines of sight from central nursing stations, and patient rooms were built for two. MetroHealth was forced to add walls to accommodate modern privacy and infection control regulations.

In 2011, VFA, a national facilities asset management group hired by MetroHealth, reported that the health system’s buildings — many of which are 30 to 40 years old — were safe but would need about $418 million in repairs over the next five years to stay functional. Much of that cost is at the main campus.

“That’s not gotten any better,” MetroHealth board Chairman Tom McDonald said. The polar vortex “brought it to a head, but we’ve been planning this for quite a while.”

Cuyahoga County Executive Ed FitzGerald, who has been in close conversation with the health system about the plans for the main campus, said the need for the overhaul is clear.

“As these facilities continue to age, they get less and less viable as medical facilities for the 21st century,” he said.

“You eventually reach a tipping point where maintaining outdated buildings is not worth the cost,” FitzGerald said, comparing it to the common decision of springing for a new car when repairs on an old clunker become too frequent and expensive. “I can’t say for sure they’re at that point right now, but if they’re not they’re very, very close.”

The Vision for a new MetroHealth

MetroHealth officials estimate 75 percent of the main campus will need to be rebuilt or renovated, Boutros told The Plain Dealer. The health system would keep the $71 million, 150,000-square-foot Critical Care Pavilion, which opened in 2004, most of the Cancer Care Pavilion and the Rammelkamp Research Center.

Boutros told attendees Friday morning that MetroHealth hopes to know specifics on the number of beds, size of the campus and funding by the end of the year, to begin construction by 2016, and to have the majority of the campus complete by 2020.

The health system has retained an architectural firm, HKS, to guide discussions on the campus renovation and to eventually create conceptual drawings. HKS' previous projects include University of Michigan C.S. Mott Children's Hospital and Von Voigtlander Women's Hospital, the University of Texas MD Anderson Cancer Center Alkek Tower expansion and a 1.1 million-square-foot new construction/55,000-square-foot renovation at Parkview Regional Medical Center in Fort Wayne, Indiana.

MetroHealth officials emphasize that they are very early in the process, and are seeking public input to mold the look and function of the new campus. The hospital will be gathering ideas and opinions at metrohealth.org/transformation and will also showcase different plans for patient rooms and other aspects of the campus rebuild in its space at the Global Center for Health Innovation.

A map showing the current MetroHealth campus, with north oriented to the right, the same way as in the architect's renderings, shown above.

There is one non-negotiable, however: MetroHealth will remain in its current location on West 25th Street.

“We’re not going anywhere,” Boutros said. Staying put will likely require a complicated plan to rebuild in phases, moving patients from old facilities to new as they are constructed.

The new main campus would likely be smaller and easier to navigate, with fewer inpatient beds and more accessible parking, and would hopefully feel more fully integrated into the West Side community that it occupies, he said.

The CEO envisions an area where hospital employees are comfortable working, eating, and living.

“We will go from what looks like a compound to a neighborhood,” he told The Plain Dealer. “We want to be much more embracing the community.”

Boutros also feels the health system has an economic responsibility to the surrounding community, and is seeking input from businesses and residents in the area to see how MetroHealth’s transformation might be harnessed to improve the neighborhood.

“We used to spend [our money] without any real consideration of its impact on the immediate community,” he said. “We’re spending our money much differently today. We’re thinking of how we impact and bring investment to the area.”

For now, MetroHealth’s plans for the main campus are sketchy at best, but that’s by design, officials have said. Over the next year, they’d like to gather input from as many neighbors, patients, business owners, philanthropists, and members of Cleveland’s healthcare community as possible, before setting anything in stone.

“Right now we have some ideas about a more open campus,” board Chairman McDonald said. “By the end of the year we might have a better idea of what that’s going to look like.”

The county is listening, weekly, to MetroHealth’s ideas, and FitzGerald said that both he and County Council members he’s spoken with agree with the need for a plan. The details, however, remain to be sorted out.

“It’s a county-owned facility and the county would have to be intimately involved with all of the details,” he said. “When it’s going to happen, how big it’s going to be, whether it’s done in stages, and whether it’s part of a larger economic development project for West 25th Street, and how it will be financed, those [details] are not set yet.”

Funding: tax increase not on the table

All these grand visions will remain only on paper, of course, unless the project is paid for. And public hospitals, which serve a higher proportion of Medicare, Medicaid and uninsured patients than the more profitable privately-insured ones, typically have to turn to taxpayers for some of the funding on projects of this size.

Last year, Boutros estimated a main campus overhaul would cost about $400 million, and was aiming to raise about $100 million from the community by launching an ambitious fundraising campaign. The campaign was postponed, but the health system still raised about $12 million in philanthropic donations last year without one, Boutros said.

“That’s what gives me the hubris to say that this is doable,” he said, “because everyone that I’ve met with has said ‘yes.’ That’s more money than we’ve ever raised as an organization.”

Today, MetroHealth won’t put a price tag on the overhaul, saying only that it will definitely cost “hundreds of millions of dollars.” Last year's $400 million estimate is likely low, board Chairman McDonald said.

“If I had to guess, and that’s what it would be at this point, I’d probably say it would be more than that when you take everything into consideration,” he said.

MetroHealth leaders say they their "fervent" goal is to avoid a tax increase, but Boutros added “it would be foolhardy for me to tell you that there’s not going to be public support for this — I just don’t know how much or how little.”

“We know that we can do some of this ourselves based on our balance sheet and based on our own cash flow,” Boutros said.

McDonald was more direct: “We believe we can continue to improve our performance. What we’re dedicated to is having this new campus rejuvenated without costing the taxpayers any more money, which means that the hospital has to generate profits.”

As a public hospital with county-owned facilities, MetroHealth already receives some annual taxpayer support. In December, County Council voted to increase the hospital’s funding, bringing the county’s annual subsidy to MetroHealth up to $40 million from $32 million. The subsidy, which comes from the county-wide Health and Human Services Levy, makes up about 5 percent of the health system’s annual budget.

Raising taxes to pay for the project is “not an assumption we’re operating under,” County Executive FitzGerald said. “We’ll have to look at what our abilities are to finance it from hospital revenues and county revenues, and there are some different options there.”

McDonald pointed to the example of central Indiana's Eskenazi Health (formerly Wishard Health Services), which completed on a new campus in 2013, as an example of a viable fundraising strategy.

The public health system, which services Indianapolis' Marion County, saved $150 million in cash reserves for the cost of the new hospital before going to voters to ask for approval of a bond issue, and set up the site wishardfacts.org to help answer questions about why the buildings needed to be replaced.

Voters overwhelmingly approved the issue in 2009, and the county hospital then completed a $356 million bond issuance in 2010 and raised more than $84 million in philanthropic donations, according to Eskenazi Health spokesman Todd Harper.

The final cost of the new hospital: $754 million.

“The way they raised money, the way they sold it to the community, they did a great job,” McDonald said. “We have to do the same kind of job. We understand that we’re going to have to earn a lot of philanthropic money. We understand we’re going to have to earn a return to contribute to the rejuvenation or rebuilding of the main campus, and we know we’re going to have to have the community’s help.”

Boutros was characteristically confident when presenting his vision to those gathered at the stakeholder's meeting.

He believes the success of the health system's $23 million Middleburg Heights November Family Health Center and steady expansion into the suburbs will continue to drive gains in outpatient revenue. The success of the Medicaid waiver program, MetroHealth Care Plus (which cared for 28,000 previously uninsured people last year), helped save the health system money by managing costly chronic conditions and cutting down on ER visits. School-based health clinics in the Cleveland Metropolitan School District, launched in two locations so far, have similarly provided easy access to preventive care for chronic illnesses such as diabetes and asthma.

“It seems the things that we’ve been doing are taking hold and we continue to outperform our expectations,” Boutros told the Plain Dealer.

“There will be a lot of skeptics who say ‘really, you think you can transform healthcare and the community, and the economics of the West Side?’

“I know they’re big, hairy, audacious goals,” he said, “but they’re absolutely doable.”