Ascension Health announced it would close its Bedford hospital only days after posting a fiscal year, system-wide loss of $1.8 billion that came largely as a result of investment losses that exceeded $1 billion.
While a hospital industry spokesman said the Bedford hospital’s closure was prompted, at least in part, by a tight labor market, a health care industry critic and some community members laid at least part of the blame at Ascension’s feet, saying the Catholic nonprofit failed to make proper investments and cared more about money than mission.
Ascension, based in St. Louis, declined requests for interviews to discuss why it decided to close St. Vincent Dunn Hospital, which formerly served as the county hospital and dates back to 1941.
The health system in September said it lost $1.8 billion for the year that ended June 30, compared to a profit of nearly $5.7 billion the prior year. Ascension lost nearly $900 million from its health care operations, in part because wages and salaries rose by $1.2 billion from the prior year. However, the health system also saw a roughly $7 billion swing in its non health care-related investments: Ascension lost about $1 billion on its investments this year. Last year, the investments generated a profit of nearly $6 billion.
Put another way: Ascension in the last year lost more money on investments than on its health care operations.
Ascension facilities closing after loss
The chain has reacted by closing hospitals and clinics in Indiana and elsewhere. It said this year that it was closing its children’s intensive care unit in Tulsa, Oklahoma. It announced in June that it was closing 11 immediate care clinics in Indiana. It closed a children’s cancer center in Detroit in October.
In response to inquiries from The Herald-Times, Lauren Nelson, Ascension Indiana’s senior director of marketing and communications, recently emailed a months-old statement that said the Catholic nonprofit made the decision to close the Bedford hospital after a “thorough assessment of the hospitals’ current operating environment and the healthcare landscape.”
Nelson did not respond to follow-up emails and phone messages.
Leaders of the Bedford hospital were not in the facility on a recent afternoon and they did not respond to phone inquiries. Employees in the hospital and others working in nearby Ascension-affiliated offices said they could not talk because they had signed non-disclosure agreements and risked losing their severance pay.
'An accident of history'
Brian Tabor, president of the Indiana Hospital Association, said he was not surprised to hear about the hospital closing, in part because Bedford is one of a few communities — and perhaps the only one — in the country with two Critical Access hospitals, which serve as outposts of care in rural communities. Federal rules limit such hospitals to 25 beds and require that the facilities be at least 35 miles from the nearest acute care hospital.
Tabor said Indiana has 35 such facilities and it was “a bit of an accident of history” that two such hospitals serve Lawrence County.
Running a hospital with around-the-clock emergency care in a small, rural community — much less two facilities — was challenging before the pandemic, Tabor said. Sharply rising staffing costs made those challenges even bigger.
He said that in a recent survey by the IHA, Indiana hospitals reported wage costs were rising up to 30%, and cash balances for many hospitals were declining, constraining their ability to obtain financing.
“Hospitals are definitely feeling some real financial headwinds,” Tabor said. “I am concerned that could lead to closures.”
Tabor said Ascension’s statement also hinted that its cross-town rival, Indiana University Health Bedford, had captured a greater share of the market, making operations for St. Vincent Dunn even more challenging.
Ascension said in its statement that it explored other options but concluded “other providers with a larger presence in the region are better positioned to efficiently serve the residents of Bedford and neighboring communities.”
Indeed, IRS records show that while St. Vincent Dunn was in the black, the IU Health hospital has generated far more profits in the last decade.
Bedford hospital posted a profit in 2020
According to reports Ascension filed with the Indiana State Department of Health, St. Vincent Dunn produced a profit of $2.4 million for the year ended June 30. It had a profit of $1.4 million the prior year. According to Internal Revenue Service records and filings with the Indiana State Department of Health, the hospital was profitable most years and in the last three years generated a combined profit of nearly $8 million.
However, IRS records show that IU Health Bedford in 2020 had a profit of nearly $21 million, roughly equaling the combined profits St. Vincent Dunn has generated in the last decade.
Matt Bell, chief policy strategist for Hoosiers for Affordable Health Care, acknowledged that hospitals, like other businesses in Indiana, are dealing with staffing challenges, but he said Ascension, despite its recent loss, still had significant financial resources.
The nonprofit’s most recent annual report shows long-term investment exceeding $22 billion. That’s enough, even without any investment return, to run St. Vincent Dunn Hospital for about 900 years.
“Given the large resources they have, it’s difficult for me to understand why there’s not a more concerted effort to provide quality care at an affordable price,” Bell said.
Hoosiers for Affordable Health Care advocates for policies that lower health care costs in Indiana. The organization says that Hoosiers pay between the fourth- and seventh-highest prices for hospital services in the country.
Community sees lack of investment
Ascension said in its statement that it conducted an “unsuccessful search” to find a buyer for its Bedford hospital, but some community members said the health care system did not try very hard and has, over the years, failed to make the kinds of investments that would make the hospital more competitive.
Dr. Deborah Craton, a family practitioner who retired from the hospital in July, said Ascension routinely failed to replace doctors who left the facility. She recalled a physician colleague who left during the pandemic who was not replaced. An internal medicine doctor retired this year and was not replaced. Another family doctor left and was not replaced.
Ascension never gave the hospital the resources necessary to offer all the services that were needed, especially in the last five years, Craton said.
“They never worked to make sure that we were viable,” she said.
Whenever physicians left the hospital, Craton said Ascension would tell staff that the doctors would be replaced, but they never were. She said when she challenged leaders on that point, she would be told they’re working on it.
Lawrence County Council member Janie Craig Chenault, a former hospital board member, said hospital operations began shrinking when Ascension took over. The hospital system failed to replace employees who left or were let go. It seemed every decision they made included fewer employees.
“And fewer. And fewer,” Chenault said.
She also said while IU Health Bedford took care of COVID patients and was allowed to exceed its 25-bed minimum, St. Vincent Dunn had to transfer COVID patients to other facilities, though she suspects that lack of equipment and negative pressure hospital rooms played a role.
Chenault said Ascension leaders also made too many wrong decisions from Indianapolis.
“They never understood southern Indiana,” she said.
Kierra Weaver, a manager at the Court Room Sports Grill, on the west side of the Lawrence County courthouse square, said from a sentimental perspective, the hospital means a lot to people. Weaver was born there, as were her two children.
But she said she’s not sorry to see the hospital close.
“It was kind of going downhill,” she said.
The hospital was not paying much and not paying much attention to staff, she said.
Weaver said she had a bad experience at the hospital a few years ago and has been going to the IU Health facility since.
John Crane, owner of Crane’s Leather & Shoe Shop, just off the square, said he “wasn’t surprised at all” when he heard the hospital was closing.
He noticed soon after St. Vincent took over the hospital the health system was making investments in other facilities, but not in Bedford, where doctors left but were not replaced.
“They weren’t making any improvements here,” he said.
Ascension has owned hospital since 2010
St. Vincent, which has been part of Ascension since 1999, bought the former community hospital in 2010 for $7 million. At the time of negotiations — Clarian, now IU Health, also was in the running to buy the facility — St. Vincent leaders promised great care at low prices.
“Our top priority is to serve the health care needs of Lawrence County residents,” Kevin Speer, chief strategy officer of St. Vincent Health, told the Bedford Times-Mail in 2010.
“Having an approach of partnerships, we look forward to working closely with local employers and schools to help lower their health care costs. Families should expect local health care from a community partner with the very best reputation,” Speer said.
With the facility closing in about a month, the opposite is likely to happen, according to Bell.
Ascension’s decision to close the Bedford hospital was “disappointing,” he said, and ultimately will cost Lawrence County patients more money.
“When we see competition disappear, we see higher prices,” he said.
Boris Ladwig can be reached at firstname.lastname@example.org.
This article originally appeared on The Herald-Times: Ascension closes Bedford hospital, limiting competition in region