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Clinical Depression

University Hospital abruptly pulls its money out of clinics that treat the poor.

January 15 was a big day at the Salud Family Health Center in Commerce City, one of the government-funded, front-line primary-care clinics that treat more than a third of the state's poor and indigent medical patients. After months of planning, the clinic was opening a new office.

The expansion, which effectively doubled Salud's size and capacity, had been paid for by University Hospital. The hospital had also promised Salud several hundred thousand dollars a year to help get the new site on its feet. The clinic had already hired three new physicians in anticipation of additional patients.

But two days later, on January 17, without any warning, University pulled out. "Now we're going to have to figure out how we're going to maintain this," says Jerry Brasher, Salud's director. University's action, he adds, "really took us by surprise. We thought we had a longer-term commitment."

Salud isn't alone in being left in the lurch by University. The same thing happened to two other metro-area clinics serving the poor and indigent: Clinica Campesina Family Health Service in Thornton and Metropolitan Denver Provider Network in Aurora. Both community health organizations recently built and opened new facilities with a promise from University that it would help pay to maintain them through their growth phase. Both are getting slammed by the hospital's decision to bail out of the deal.

One clinic already has been forced to shut down. In all, the clinics say, they will lose about two dozen doctors, nurses and support staff. Peter Leibig, who directs Clinica Campesina, estimates that University's sudden cutbacks mean that tens of thousands of poor patients who would have been treated at the community clinics will be turned away in the next year.

University's retreat from supporting the community health clinics is the hospital's quietest--though perhaps the most damaging to the Denver metro area--in a recent series of cost-cutting measures. Some have been relatively minor: Late last month, after discovering that the hospital was operating on a much slimmer margin than previously thought, administrators announced they could no longer afford to serve breakfast in the cafeteria and that some employees would have to work a 36-hour week instead of a 40-hour one. Other employees will see a reduction in the amount of extra money they earn for working nights and weekends.

Yet some of the hospital's belt-tightening will have a wider impact, particularly on Colorado's poorest patients. The biggest cost-containment changes, for instance, are aimed at slowing the bleeding the hospital has sustained from treating indigent and other non-paying patients.

While University Hospital's mission since its founding has been to provide medical care for the down and out, officials there say that they have become overwhelmed. Last year the Denver hospital gave away $63 million worth of free care, an all-time high. Traditionally, University has made up the loss through cost-shifting--charging its paying patients enough to cover the costs of everyone. But now administrators say such accounting is not enough; they need to cut services.

On January 28 the hospital's board of directors voted to close one of the hospital's two outpatient pharmacies and to scale back the CU Care Clinic, a two-year-old project created to serve the poor and uninsured. According to spokeswoman Barbara Barrow, the primary-care clinic now sees five times as many patients as it did when it opened. In addition, because many of the patients were transient, the clinic wasn't seeing any of the cost benefits of managed preventive care.

Still, over the past several weeks the hospital has soft-pedaled the moves, issuing a flurry of press releases pointing out that University is still committed to treating the poor and that its cost-cutting measures have resulted in the layoff of only seven employees. "It's really no big deal," insists Barrow.

That's proving a hard sell at the suburban community health clinics that had counted on University Hospital to live up to its promise to help fund their expansions.

The foundation of the deal between University and the clinics was laid about three years ago. In 1994, in response to a state money-saving plan to place Colorado's Medicaid patients into managed-care plans, directors from several of the community health centers around the state (there are fourteen in all) decided to form their own HMO that would cater strictly to Colorado's poorest patients.

The founders quickly learned that they needed more money than they had, however, so the clinics approached University and Children's hospitals and Denver's Department of Health and Hospitals, asking them to sign on. The result was a new Medicaid-only HMO called Colorado Access. It started signing up patients in 1995.

Leibig, Clinica Campesina's director, recalls that the new HMO determined that its success would come from signing up as many patients as possible. Thanks to new federal reimbursement rules that guaranteed higher payments, Medicaid patients, the clinics' bread-and-butter, have gone from being an undesirable drain on health-care companies to a lucrative slice of the health-care pie.

Adding more patients meant that the clinics themselves would need to expand. So University Hospital agreed to pour almost $4 million into capital improvements for the Denver-area clinics and another $2.4 million a year over the next three years to get them on their feet. The hospital hoped to cash in on its investment when the community clinics began referring their new patients to University and, more generally, by strengthening Colorado Access, in which University was now a major partner.

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