Narrow victory in McAllen Holding on to a hospital By Bob Fatherree McAllen Voters in the Rio Grande Valley town of McAllen went to the polls January 19 to decide a proposed change in the city charter which would have allowed city fathers to sell McAllen General Hospitalthe only hospital in the town of 60,000 people. The vote, forced by a judge’s ruling that the city commission could not sell the hospital under the existing city charter, capped a lengthy, often-bitter campaign in which many of the complex issues involved in current debates over health care policy were aired. Although many publicly owned hospitals consistently lose money, McAllen General has just as consistently paid its own way. In 18 of the past 20 years, the hospital has shown a surplus, the largest being a $1.5 million surplus the hospital earned in 1978, the latest year for which complete figures are available. That surplus came despite the fact that, according to hospital records, more than $1.5 million worth of services were performed for people unable to pay. Located in Hidalgo County, which in recent Labor Department statistics ranked as the poorest metropolitan area in the state in terms of average family income, the hospital serves a larger-than-average number of indigent cases, many of whom are migrant farmworkers who winter in the sub-tropical area. Further straining McAllen General’s facilities are the roughly 80,000 people who live in surrounding smaller communities and often use the hospital. In addition, the warm winter weather of the area attracts thousands of “Winter Texans” who spend the colder months of the year here. McAllen General averaged 80 percent occupancy in 1979, but during the winter months when migrant farmworkers and Winter Texans are in residence, it is not uncommon for beds to be placed in halls to accommodate the patient load. One night this January, the hospital had to cancel elective surgery for nine patients for lack of space and facilities. Faced with this continuing pressure on the hospital’s capacity, city officials began evaluating options several years ago. They considered building a new hospital, adding on to the pres ent one, or building a small satellite hospital. But when costs were consideredMayor Othal Brand said at a public debate on the issue that the current cost of building and equipping a hospi tal is roughly $80,000 per bedit became apparent the city would have difficulty financing the venture. As one of the state’s most rapidly growing towns, McAllen has had to pass several bond issues in recent years to keep up with the growth in demand for city services. The additional $35 million in bonds which studies indicated would be needed to finance the desired 300-bed hospital would reach, if not exceed, the city’s bonding capacity. When word spread that the city was evaluating the future of the hospital, no less than eight private firms expressed interest in either managing or purchasing it. After negotiations, the city commission voted to approve a lease-sale agreement with Hos pital Corporation of America, a Nashville, Tennessee, company which is the largest private health care corporation in the world. The final contract called for HCA to pay $4.7 million initially and then pay $4.8 million in rent over the four-year period dur ing which a new hospital was to be constructed by HCA. At that point, two local doctors, Lauro Guerra and Ramiro Casso, filed suit in state district court to prevent the sale of the hospital. The doctors later said they had filed the suit to get more knowledge of the terms of the contract and because the city had not retained a consultant to help in the negotiations with HCA that established the purchase price. District Judge Joe Cisneros ruled in favor of the doctors, citing a state constitutional provision preventing the hospital’s lease or sale by the city without specific authorization. The city commission called an election to change the city charter to allow for the sale. In the most intense campaign over an issue in the city’s history, the city commission and the doctors and others claiming to represent poor Mexican-Americans took their arguments before every available forum. Their campaign culminated in a public debate two days before the election. Representatives of the city said that HCA would be required by contract to provide at’least the current level of indigent care, that the city would receive several million dollars outright, and that the new hospital, owned by a private corporation, would be both the city’s largest employer and its largest taxpayer. Only by selling the hospital, they argued, could the city become the home of a first-rate regional health care facility. In any event, if the city was unhappy with the way the hospital was run by HCA, the contract contained a buy-back clause which would allow the city to purchase the hospital HCA was to construct. The dissident doctors countered with several arguments. Of 88 HCA hospitals they studied, they said, most were in the top 10 percent in the nation in patient-per-day costs, while McAllen General ranks in the bottom 20 percent. They pointed out that despite what the city fathers said, HCA would “not have to provide one penny” of indigent care after an initial period of retiring certain obligations to the federal government. And they questioned the size of the purchase contract, pointing out that, while the core of McAllen General is over 50 years old, more than half of the hospital was built in the past 12 years. A consultant brought in by the two doctors estimated the replacement value of the hospital at between $16 million and $19 million and said it should not be sold for less than $25 million. Because the city had not retained a qualified consultant to help in the sale negotiations, Dr. Guerra said, HCA was “ripping off this community to the tune of $20 million.” Dr. Casso added that, although the buy-back clause was in the contract, the city would have to pay the construction costs, pay all taxes paid by HCA during the period, pay an inflation adjustment tied to the Consumer Price Index, and pay in cash. If the city cannot afford the Current cost of building a hospital, he said, it would certainly be unable to pay the inflated buy-back cost. “Once we sell this hospital, it’s gone forever,” Dr. Casso concluded. After an intense campaign in which the coalition of poor people and farmworkers went house-to-house with their arguments, they pulled out a narrow victory. The proposed charter change failed by 118 votes out of more than 6,000 cast. In the predominantly poor, Hispanic southern half of town, the vote was two to one against the sale. A similar margin in favor of the sale prevailed in the more affluent northern part of McAllen. El Bob Fatherree is a reporter for the Monitor in McAllen. 8 FEBRUARY 1, 1980
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