Warnings in the Huron consulting report

Huron Consulting, retained by the city of Lakewood in June to study the Cleveland Clinic letter of intent and related issues, submitted its final report in August. Some important points to hang onto, as the debate over Lakewood Hospital proceeds to its next phase:

The 89-page presentation is, judged as a whole, painstakingly noncommittal. Its authors emphasize that they do not provide investment or legal advice (pp. 4, 52), and explicitly caution that they considered neither “the impact on employment in the City” nor Lakewood’s share of responsibility for maintaining acute care services in the community. Reasons for Lakewood Hospitals’s decline in patient volume receive a cursory examination, as well.

Given this context, however, readers should be all the more concerned by problems that Huron identifies with the management of Lakewood Hospital and proposals for its future.

Huron’s review of the search for alternative hospital partners is particularly troubling. From page 43: “It is our understanding that a release from Cleveland Clinic regarding potential tortious interference claims was not obtained upon the initial marketing of the Hospital. We would generally not conduct a sales process in such a circumstance without first obtaining a release (or permission) from the company managing or operating the hospital. [Emphasis added] It is not known if the lack of such a release impacted interest among potential buyers.”

The same section notes that the hospital was not marketed to entire categories of possible buyers; while Huron suggests that any one organization within these groups would be an unlikely partner, the total number of institutions overlooked suggests a search process abandoned well short of completion.

Regarding potential costs to maintain Lakewood Hospital facilities in a competitive state, page 60 of the report observes that “[Lakewood Hospital] Capital expenditures were generally on par with industry norms until the 2013 and 2014 period, when they dropped to 2.5% and 1.6% of net revenue, respectively. The recent levels are well below the levels necessary to maintain the facility in good working order over the long-term.” On page 66 the authors add that “the current expenditure level will likely contribute to the deferred maintenance and hasten the obsolescence of the facility.”

In evaluating claims that inpatient hospital facilities are outdated and unnecessary, Huron warns that “there are potential drawbacks for communities that are either over-bedded or under-bedded” (p. 18). Elaborating on this, the report points out on page 34 that “the metrics utilized to support [claims by Subsidium of excess inpatient hospital beds in the region] do not factor in the potential inconvenience of Lakewood residents facing longer transit times to reach other hospitals, nor the potential impact on public health resulting from longer ambulance rides (assuming that EMTs divert to other hospitals).”

The report’s conclusions steer clear of recommending any particular course, but they describe two paths as “viable options” on page 71. “Continue operating under the current lease agreement, while also pursuing strategic initiatives and affiliation discussions”—the immediate recommendation of Save Lakewood Hospital—is among these. Along these lines, the report’s examination of physician recruitment is also significant; though advising that this could be a challenging issue for Lakewood Hospital, Huron suggests that further possibilities exist for Lakewood to explore during the balance of the current hospital lease. For example “organizations such as the Ohio Independent Collaborative, a statewide collaborative meant to help reduce costs for independent physician practices, could aid the situation if they are successful in their missions.” (Page 22)