El Paso Times
Sunday, February 5, 2012
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Larry Duncan can hardly wait for Valentine’s Day.
That’s when he and several hundred others will have their hearts, minds and bodies focused on some special loved ones — children. More specifically, they’ll be focusing on the children who will become the first patients at what Duncan and others bill as El Paso’s first full-fledged children’s hospital.
Duncan, 47, moved from Milwaukee in the summer of 2010 to become the first chief executive officer of the recently completed 122-bed, not-for-profit El Paso Children’s Hospital, which will open Feb. 14, on the University Medical Center campus.
A ribbon-cutting ceremony and public tours are set for Saturday.
The hospital will see patients generally from birth to 18 years old, with some exceptions.
Duncan, who has years of senior management experience at children’s hospitals in Milwaukee and Philadelphia, expects that the new hospital will start making money within its first two years of operation.
John Harris said he welcomes thenew hospital even though it will bring competition to his company, which operates a children’s hospital within Providence Memorial Hospital.
“I think there is plenty of room for everyone,” said Harris, president and CEO of Sierra Providence Health Network. “We’re not concerned about competing with them.”
But it bothers Harris when he hears people refer to the new hospital as El Paso’s first, free-standing children’s hospital.
“It’s no more free-standing than the children’s hospital at Providence,” Harris said.
The 148-bed Regional Children’s Hospital at Providence, opened in 1995, is mostly housed on two floors inside the much larger, almost 60-year-old Providence hospital. Some of the children’s hospital functions also are in other parts of Providence.
The new El Paso Children’s Hospital is mostly housed on six floors of a recently completed 10-story, $223 million tower next to county-operated UMC’s hospital.
Three floors in the tower house UMC’s new Women’s Pavilion, where UMC is relocating its labor and delivery department, baby nursery and other women’s health-care services. UMC also has its new outpatient center, including a large diagnostic area, on the tower’s first floor, where the children’s hospital has its separate diagnostic department.
The children’s hospital also has its pediatric emergency room inside UMC, next to the county hospital’s emergency room.
The children’s hospital cost about $120 million, paid by property-tax-supported bonds approved in 2007 by El Paso voters. The Women’s Pavilion and outpatient center cost $103 million.
Duncan said it’s not unusual to see a children’s hospital and adult hospital “partner around maternal-fetal medicine.”
It makes sense because if a baby has a problem after birth, or even while in the womb, the children’s hospital is only an elevator ride away, he said.
The children’s hospital also shares support services, including housekeeping, maintenance, and information technology, with UMC to reduce costs, Duncan said.
Even with some UMC services inside the children’s hospital tower, it’s still much different from what Providence operates, he said.
“The other (children’s) hospital is part of an adult hospital. We have our own board and we are separately licensed,” Duncan said. “We make all decisions based on what is the best care for children.” Sierra Providence has to consider other parts of its hospital in decisions about its children’s hospital, he said.
Dr. Joseph Segapeli, 56, a long-time El Paso pediatrician at El Paso Pediatric Associates, one of El Paso’s largest and oldest pediatrician groups, said that even though some UMC services are inside the new hospital, he, too, views it as a free-standing children’s hospital.
“It’s a building dedicated to the care of children,” Segapeli said. It’s improved children’s health-care even before it opens, he said.
“They (Sierra Providence) did some things to upgrade their (pediatric) services, and I think they were done because of development of the new hospital,” Segapeli said. “It will be good to have two hospitals. I think there are enough patients for both.”
Segapeli’s group will use both Providence and El Paso Children’s based on a patient’s needs, parents’ wishes and insurance options, he said.
“I think both hospitals will be great for the kids of El Paso,” Segapeli said. “We still are not where we need to be. We need a few more (pediatric) sub-specialists” in El Paso, he said.
Harris said that about five years ago, he talked to El Paso pediatricians and came up with a plan for further development of the children’s hospital inside Providence.
“It was not done in anticipation of another hospital. We did it because it was the right thing to do for children,” Harris said. “I don’t think they have anything (services) there, we don’t have here.”
Sierra Providence also recruited the majority of new pediatric sub-specialists into El Paso in recent years, he said.
Duncan said the El Paso Children’s Hospital helped recruit about 25 new pediatric sub-specialists to El Paso, and interest from specialists moving here should only grow after the hospital opens, he said.
Many of the specialists tied to the hospital will teach at the Texas Tech University medical school across the street from the new hospital, he said.
Harris said more than half the children in El Paso who need pediatric hospital services now go to Providence. But the growth of the community should provide enough patients for both hospitals, he said. UMC, where the new hospital’s first patients will come, has been treating children for years.
Duncan expects the El Paso Children’s Hospital to open with 45 to 50 patients, who will move from UMC.
“We’re letting the kids pick their rooms the night before” the hospital opens, Duncan told a group of El Paso business people during a tour of the hospital last week.
UMC’s seventh-floor pediatric ward, its baby intensive-care unit, and other areas of the county hospital being vacated by the move of pediatric services to the children’s hospital, will be revamped and used for new, or expanded adult health-care services, a UMC official reported.
Duncan said the children’s hospital is projecting to break even in the first 18 to 20 months of operation, “and maintain a profit thereafter.” It will need to maintain an average daily census of around 60 patients to break even, he said.
The Children’s Hospital at Providence has a daily average census of about 75, Harris reported.
The El Paso Children’s Hospital, which will begin with an annual operating budget of about $65 million, will get no support from county taxpayers, as does county-operated UMC. Its revenues will come from patient insurance payments, donations and possibly grants, Duncan said.
Total revenue is projected to be $150 million in the first 12 months of operation.
The hospital’s profit margin will be 5 to 7 percent, compared with for-profit hospitals that usually have a 20 to 30 percent profit margin, Duncan said. Any profit goes back into the facility because, unlike a for-profit hospital, there are no shareholders to pay, he added.
One key to the hospital’s success will be getting the right mix of paying patients and indigent patients, as any hospital must do, Duncan said.
Harris said El Paso has a “very poor payer mix” for pediatric patients. It’s largely government-supported Medicaid insurance and a lot of indigent patients, he said. That’s why a truly free-standing children’s hospital can’t survive here, he said. An El Paso children’s hospital needs to share support services with another hospital to be successful, he said.
“Pediatrics is marginally profitable in any community,” Harris said.
Duncan said one thing that helps a children’s hospital is that it gets higher government-supported Medicaid insurance payments than does an adult hospital.
Besides getting the right mix of paying and non-paying patients, the El Paso Children’s Hospital must draw patients from a wide region — from the Midland-Odessa area to Southern New Mexico, and from Juárez — to be successful, Duncan said.
“We will be a regional referral center, based on ability, not just our name. Our first major donation came from Midland-Odessa, so they recognize the importance of us here,” Duncan said.
“We have a huge city right across the border. And everybody is concerned only the nonpaying patients (from Juárez) will come here. But there are paying patients in Juárez who are flying right by us to Dallas, San Antonio and Houston. And with our presence, they should and will come here.”
The new hospital doesn’t mean El Paso children won’t have to leave the city for some types of care. Children are often sent out of town for neuro surgery, heart surgery, transplants and burn treatments, Duncan said. The hospital is now trying to recruit a pediatric neurosurgeon to El Paso.
It isn’t likely to develop a heart surgery program, but it may partner with other, out-of-town children’s hospitals to do some heart care, Duncan said. It may develop transplant programs in the future. It won’t develop burn treatment programs — something most children’s hospitals don’t offer — he said.
The new hospital will employ 342 people when it opens, including 158 people who had worked at UMC, according to UMC information. It’s expected to employ 420 people by summer, Duncan said.
“We’re ready to go,” Duncan said last week. “I can’t wait until February 14 and we start doing what we get paid to do.”
Vic Kolenc may be reached at email@example.com, 546-6421.