A renowned medical facilities consultant has recommended to the UT Board of Regents that UTMB’s inpatient hospital in Galveston—which was hit hard by Hurricane Ike— be mostly relocated to League City where it would be both easier to rebuild and more financially viable.
Under this proposal, one of three options presented to the regents by Kurt Salmon Associates, the only inpatient facility that would remain on the island would serve inmates from the Texas Department of Criminal Justice. “This option provides the best opportunity for UTMB to achieve greater financial self-sufficiency and is the most capital efficient,” the report advised.
The report noted that, even before the devastation caused by Ike, UTMB required “high levels of extramural support” to finance large operating losses due its declining base of paying patients. The island location does not invite use by insured Houstonians, the report noted. Given Galveston’s declining—and poor—population, UTMB now serves 60 percent Medicaid and uninsured patients, guaranteeing operating losses in the $15 million to $40 million per month range.
The report is significant because of its subtext: The rumored political support to create a medical school in Austin, which would be feasible only if Galveston’s was shuttered. Last month, Senate Finance Chair Steve Ogden complained to Texas Monthly that the UT regents were using the hurricane as an excuse to do what they had already planned: to shut down the school.
Perhaps not surprisingly, Galveston’s own Craig Eiland believes the Salmon report is based on flawed assumptions: It fails to take into account $600 million available though FEMA for reconstruction, as well as $20 to $30 million provided annually by the local Sealy & Smith Foundation.
Eiland’s big complaint, however, is that UTMB draws some $90 million a year from the federal government for treating the indigent—which is swept into state General Revenue. He spent most of last session trying to reverse that policy, to no avail. Ironically, the Salmon report cautions the regents from assuming national health care reform would help UTMB financially since reform would be accompanied in a loss of federal funds “realized by the State of Texas and generated by UTMB.” (It should be noted that UTMB has a total annual budget of $1.5 billion.)
Eiland has proposed that Galveston establish a hospital district , but that would likely generate a small sum—about $15 million annually. But he notes other reasons for the state to continue supporting UTMB on the island, mainly, its uninsured sick people will become a burden to other institutions in the Houston metro region. “UTMB actually wants them and it can provide research and medical education and training,” he said.
Who gets to decide UTMB’s future? Eiland hopes that decision will occur in a two-step process: first, secure funding to guarantee its survival, and then decide whether to keep it on the island or “aggressively expand” on the mainland—a scenario which likely would draw fire from Houston medical institutions wary of new competition.
Just one more issue to keep UT regents in a now-familiar position this session: the hot seat.