Under new ownership, hospital turns a profit and opens new facilities as its physicians purchase ownership stakes

By Anastasia Ustinova


STEVE CAMPBELL: CHRONICLE
PROFITABLE PLACE: Jeff Jansen of Coastal Life Systems adjusts a Luminex Veinviewer that nurses use to insert an IV line into a 3-day-old boy born at St. Joseph Medical Center. The downtown hospital, owned by Charlotte, N.C.-based Hospital Partners of America, turned a profit for the last quarter of 2006.

St. Joseph Medical Center is looking up after new owners came in six months ago with a plan to partner with doctors.

Since Hospital Partners of America bought St. Joseph, it has invested more than $5 million in the downtown hospital.

It has started a wound care center, reopened a short-stay pediatric unit and added blood conservation services.

And the 792-bed downtown hospital turned a profit for the last three months of the year.

''All indications are we are doing very well," said Phil Robinson, chief executive of the hospital, which he said made a profit of about $8 million for the quarter that ended Dec. 31.

Hospital Partners of America, a for-profit company based in Charlotte, N.C., which also owns Twelve Oaks Medical Center, as well as hospitals in Austin and Redding, Calif., offers physicians a stake in all of them.

''Our physicians are now business partners, too. All our interests aligned, so it's a lot easier to have ideas, make changes, when you are all looking from the same perspective," Robinson added.

Christus, a Catholic nonprofit health system, said it decided to sell because it faced growing competition from the Texas Medical Center and a rise in charity care.

It also lacked funds to modernize the hospital's aging facilities.

Hospital Partners said that St. Joseph, which used to provide charity care to the uninsured for a variety of problems, now limits its indigent services to life-threatening illnesses and emergency treatment.

One local health care industry observer noted that with the new management, the 119-year-old hospital, known as ''Houston's birthplace" because so many babies were delivered there, is in a better position to compete with the nearby Texas Medical Center.

''I think St. Joseph has a good, strong inner-city relationship. They are geographically positioned for people in downtown," said Peggy Kircher, president of the Aspen Consulting Group in Houston.

Part of the deal
Physician ownership was one of St. Joseph's main criteria for a buyer when it put itself up for sale two years ago, said Patrick Carrier, region CEO of Christus Health.

The buyer would also have to invest in the facility.

''They are doing what we thought they would do," Carrier said.

''And those are two things that made some difference."

Seventy-seven out of 300 doctors have invested $3.8 million to acquire about 15 percent ownership. The rest belongs to Hospital Partners.

''There is a sense of belonging now," said Dr. Ryan Thai, a family medicine physician who has purchased eight units.

"I think it's a good opportunity. It gives doctors a vested interest in the hospital."

Unit value grows
The price of each ownership unit, which is based on an estimate of the current value of St. Joseph, has been rising, said Dr. John Bertini, chairman of the board of directors and chief of staff.

Each unit now costs $30,000.

So far the hospital has sold 152 of them, with room to add more.

''We want our majority partner to have good access to cash and good access to credit so we can put it into the capital investments that we need, " Bertini said.

The new management has worked on upgrading the clinical staff, a new CT scanner and renovations.

St. Joseph also invested $525,000 in a new advanced wound care center.

This year, the hospital is planning to bring in additional residency programs from local medical schools.

Bertini said as more St. Joseph doctors have become interested in the units, the hospital has created a waiting list.

''I think most physicians in many hospitals across the country are just users of the facility," Bertini said.

"We've changed that attitude by changing the reality."