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Regents resolve to rebuild UTMB on the island
By Laura Elder
The Daily News
Published March 11, 2009
GALVESTON Delivering some of the most promising news to the island since Hurricane Ike, the University of Texas System Board of Regents agreed Tuesday to work with the medical branch to restore the storm-damaged John Sealy Hospital, reopen a trauma center and build a new surgical tower all in Galveston.
Regents, won over by a unified effort by residents and stakeholders to keep the hospital on the island, tossed aside a controversial recommendation by consultants to move most of the University of Texas Medical Branchs hospital and clinical enterprises to League City.
News that regents essentially adopted what is now being dubbed the Eiland plan named for state Rep. Craig Eiland, D-Galveston sparked widespread rejoicing on an island still staggering from Hurricane Ike, which stuck Sept. 13, badly damaging John Sealy Hospital.
With the medical branchs main source of income down, regents in November approved layoffs of thousands of employees and hardened many islanders suspicion that the board was indifferent to the Galveston institution.
In resolving to support a clinical strategy on the island, the regents rejected a recommendation issued last month by consultant Kurt Salmon Associates arguing the most economically viable plan for the medical branch was to move most hospital services to League City.
While the island mood was celebratory Tuesday, there was much work to do, officials cautioned.
Committed To UTMB
Regents, who have also been criticized by some influential lawmakers for not fighting hard enough in seeking state support for the battered medical branch before approving job cuts, agreed to rebuild clinical operations on the island.
But although the UT System board, which governs nine universities and six health institutions, has clout in the Legislature, it cant by itself wrangle funding for restoration of John Sealy Hospital and a new surgical tower.
The board of regents and the UT System remain committed to
UTMBs future, said board Chairman H. Scott Caven Jr.
The board cannot accomplish the ultimate goal of sustaining UTMBs future alone, and it is important to note the shared responsibility that must exist with the board; the Legislature, local and federal offices; and the philanthropic community; and the necessity for a reliable, long-term source of operating funds from these extramural sources.
528 beds
Financing the renovations and storm-hardening of the former 550-bed John Sealy Hospital wont come without obstacles nor will it be immediate, officials say.
It could take five years and $266 million to get all of the 214 beds for the general public and another 100 for Texas Department of Criminal Justice inmates, who the medical branch treats through a state contract, officials said.
The surgical tower, which would provide another 214 modern rooms in which to teach medical students, would cost $438 million to build about $2 million per bed and also depends on financial commitments from state and federal governments and philanthropic organizations.
To get to 528 beds, the surgical tower is necessary. Storm surge swamped the first floor of John Sealy, knocking out the blood bank, pharmacy and other services. Renovating calls for moving services to higher floors, leaving less room for beds.
Restoring Trauma Services
The medical branch plans to restore trauma services at John Sealy in late June or early July.
But the new surgical tower, which could take several years to develop, would include a trauma center. Eventually, the medical branch intends to reopen a Level 1 trauma center, the highest designation, because all surgical specialties are on call, said medical branch President Dr. David Callender.
The islands elite trauma center has been closed since the storm, an issue worrisome to locals and posing a burden to Houston trauma centers, which are seeing an increase of patients. But immediate medical branch plans call for opening a Level 2 or 3 trauma center.
Its hard for me to promise a Level 1 trauma center in a certain amount of time, Callender said.
Plans also call for a commitment by local governments to help create a steady source of revenue, including the creation of hospital district that would tax residents, a prospect that wont be an easy sell.
But Eiland, who some island residents were praising Tuesday, said the first hurdle would be securing state funding.
Definitely A Victory
I think it was definitely a victory, Eiland said. But obviously, if the Legislature doesnt fund the plan, were back to square one. Ill be happy in May to get funding for the construction and operations, which is the key to the plan laid out and the regents resolution.
Convincing island or county residents to support hospital district would take a concerted effort.
Lets not worry about that until June, said Eiland, who, as speaker pro tempore, is in the second highest leadership post in the Texas House.
The plans hinge on coming up with anywhere from $60 million to $100 million a year in new operating revenue from federal, state and local sources. That amount would give the medical branch a 1 percent operating margin that is, put its revenues about 1 percent ahead of expenses, which is about half the margin a well funded not-for-profit hospital would have.
State Match
Funding the plan requires lawmakers to match federal dollars, and to also hold the medical branch harmless in the general revenue appropriations, an infusion of $140 million. In other words, lawmakers wouldnt punish the medical branch by cutting funding for services stopped after the hurricane.
Eiland said he also hopes lawmakers approve a funding formula for John Sealy Hospital, which has reopened in a diminished capacity, that would help pay for indigent care. State support for indigent care at the island institution has dwindled as medical inflation has risen.
Also to help fund Eilands plan, lawmakers would have to allow the medical branch to keep the $90 million it earns in the federal Disproportionate Share Hospital Program, but which the state currently keeps.
On Feb. 20, four regents, part of a special task force, traveled to the island for a public hearing about the Kurt Salmon Report and the medical branchs future. About 600 people attended the three-hour public hearing, marking a rare show of unity in their disdain for the consultants report.
Incredibly Supportive
Task force members Tuesday told the full board they were impressed by the support for the medical branch both by thoughtful pleas and in numbers.
Some members of the task force also expressed surprise by how much local financial support organizations offer the medical branch, particularly the 87-year-old Sealy & Smith Foundation, which has given the island hospital more than $600 million since its inception. The foundations charter require that it fund hospital initiatives on the island.
The regents decision to move ahead with restoration of John Sealy hospital and a new surgical tower marked one of brightest days for the island institution since the storm, Callender said.
They were incredibly supportive of UTMB, Callender said. Everyone has worked so hard.
+++
FEMA Support: $599.2 Million Net Of Insurance
($ millions); Cumulative FY10-FY19
John Sealy modernization/repairs (214 beds); $ (266.0)
Sealy & Smith Foundation; 77.0
FEMA reimbursement; 130.0
FEMA state match; 46.0
State capital support; 9.0
Other donors; 4.0
Jennie Sealy replacement (214 beds); (438.0)
Sealy & Smith Foundation; 75.0
State capital support; 141.0
UTMB debt; 172.0
TDCJ Hosp. mitigation/repairs (100 beds); (1.0)
UTMB debt; 1.0
Trauma Ctr. Equip. mitigation/repairs; (8.0)
FEMA reimbursement; 8.0
Other FEMA capital expenditures; (483.0)
Other FEMA reimbursement; 311.4
Other FEMA proceeds (state match); 103.8
Insurance proceeds ($67.8 recd. in FY09); --
Other projected capital expenditures; (1,008.7)
Net cash flows from (for) capital; $ (1,126.5)
SOURCE: University of Texas System Board of Regents
By Laura Elder
The Daily News
Published March 11, 2009
GALVESTON Delivering some of the most promising news to the island since Hurricane Ike, the University of Texas System Board of Regents agreed Tuesday to work with the medical branch to restore the storm-damaged John Sealy Hospital, reopen a trauma center and build a new surgical tower all in Galveston.
Regents, won over by a unified effort by residents and stakeholders to keep the hospital on the island, tossed aside a controversial recommendation by consultants to move most of the University of Texas Medical Branchs hospital and clinical enterprises to League City.
News that regents essentially adopted what is now being dubbed the Eiland plan named for state Rep. Craig Eiland, D-Galveston sparked widespread rejoicing on an island still staggering from Hurricane Ike, which stuck Sept. 13, badly damaging John Sealy Hospital.
With the medical branchs main source of income down, regents in November approved layoffs of thousands of employees and hardened many islanders suspicion that the board was indifferent to the Galveston institution.
In resolving to support a clinical strategy on the island, the regents rejected a recommendation issued last month by consultant Kurt Salmon Associates arguing the most economically viable plan for the medical branch was to move most hospital services to League City.
While the island mood was celebratory Tuesday, there was much work to do, officials cautioned.
Committed To UTMB
Regents, who have also been criticized by some influential lawmakers for not fighting hard enough in seeking state support for the battered medical branch before approving job cuts, agreed to rebuild clinical operations on the island.
But although the UT System board, which governs nine universities and six health institutions, has clout in the Legislature, it cant by itself wrangle funding for restoration of John Sealy Hospital and a new surgical tower.
The board of regents and the UT System remain committed to
UTMBs future, said board Chairman H. Scott Caven Jr.
The board cannot accomplish the ultimate goal of sustaining UTMBs future alone, and it is important to note the shared responsibility that must exist with the board; the Legislature, local and federal offices; and the philanthropic community; and the necessity for a reliable, long-term source of operating funds from these extramural sources.
528 beds
Financing the renovations and storm-hardening of the former 550-bed John Sealy Hospital wont come without obstacles nor will it be immediate, officials say.
It could take five years and $266 million to get all of the 214 beds for the general public and another 100 for Texas Department of Criminal Justice inmates, who the medical branch treats through a state contract, officials said.
The surgical tower, which would provide another 214 modern rooms in which to teach medical students, would cost $438 million to build about $2 million per bed and also depends on financial commitments from state and federal governments and philanthropic organizations.
To get to 528 beds, the surgical tower is necessary. Storm surge swamped the first floor of John Sealy, knocking out the blood bank, pharmacy and other services. Renovating calls for moving services to higher floors, leaving less room for beds.
Restoring Trauma Services
The medical branch plans to restore trauma services at John Sealy in late June or early July.
But the new surgical tower, which could take several years to develop, would include a trauma center. Eventually, the medical branch intends to reopen a Level 1 trauma center, the highest designation, because all surgical specialties are on call, said medical branch President Dr. David Callender.
The islands elite trauma center has been closed since the storm, an issue worrisome to locals and posing a burden to Houston trauma centers, which are seeing an increase of patients. But immediate medical branch plans call for opening a Level 2 or 3 trauma center.
Its hard for me to promise a Level 1 trauma center in a certain amount of time, Callender said.
Plans also call for a commitment by local governments to help create a steady source of revenue, including the creation of hospital district that would tax residents, a prospect that wont be an easy sell.
But Eiland, who some island residents were praising Tuesday, said the first hurdle would be securing state funding.
Definitely A Victory
I think it was definitely a victory, Eiland said. But obviously, if the Legislature doesnt fund the plan, were back to square one. Ill be happy in May to get funding for the construction and operations, which is the key to the plan laid out and the regents resolution.
Convincing island or county residents to support hospital district would take a concerted effort.
Lets not worry about that until June, said Eiland, who, as speaker pro tempore, is in the second highest leadership post in the Texas House.
The plans hinge on coming up with anywhere from $60 million to $100 million a year in new operating revenue from federal, state and local sources. That amount would give the medical branch a 1 percent operating margin that is, put its revenues about 1 percent ahead of expenses, which is about half the margin a well funded not-for-profit hospital would have.
State Match
Funding the plan requires lawmakers to match federal dollars, and to also hold the medical branch harmless in the general revenue appropriations, an infusion of $140 million. In other words, lawmakers wouldnt punish the medical branch by cutting funding for services stopped after the hurricane.
Eiland said he also hopes lawmakers approve a funding formula for John Sealy Hospital, which has reopened in a diminished capacity, that would help pay for indigent care. State support for indigent care at the island institution has dwindled as medical inflation has risen.
Also to help fund Eilands plan, lawmakers would have to allow the medical branch to keep the $90 million it earns in the federal Disproportionate Share Hospital Program, but which the state currently keeps.
On Feb. 20, four regents, part of a special task force, traveled to the island for a public hearing about the Kurt Salmon Report and the medical branchs future. About 600 people attended the three-hour public hearing, marking a rare show of unity in their disdain for the consultants report.
Incredibly Supportive
Task force members Tuesday told the full board they were impressed by the support for the medical branch both by thoughtful pleas and in numbers.
Some members of the task force also expressed surprise by how much local financial support organizations offer the medical branch, particularly the 87-year-old Sealy & Smith Foundation, which has given the island hospital more than $600 million since its inception. The foundations charter require that it fund hospital initiatives on the island.
The regents decision to move ahead with restoration of John Sealy hospital and a new surgical tower marked one of brightest days for the island institution since the storm, Callender said.
They were incredibly supportive of UTMB, Callender said. Everyone has worked so hard.
+++
FEMA Support: $599.2 Million Net Of Insurance
($ millions); Cumulative FY10-FY19
John Sealy modernization/repairs (214 beds); $ (266.0)
Sealy & Smith Foundation; 77.0
FEMA reimbursement; 130.0
FEMA state match; 46.0
State capital support; 9.0
Other donors; 4.0
Jennie Sealy replacement (214 beds); (438.0)
Sealy & Smith Foundation; 75.0
State capital support; 141.0
UTMB debt; 172.0
TDCJ Hosp. mitigation/repairs (100 beds); (1.0)
UTMB debt; 1.0
Trauma Ctr. Equip. mitigation/repairs; (8.0)
FEMA reimbursement; 8.0
Other FEMA capital expenditures; (483.0)
Other FEMA reimbursement; 311.4
Other FEMA proceeds (state match); 103.8
Insurance proceeds ($67.8 recd. in FY09); --
Other projected capital expenditures; (1,008.7)
Net cash flows from (for) capital; $ (1,126.5)
SOURCE: University of Texas System Board of Regents
