Making good on Baylor Med’s bad bet

27937 The Chronicleís Todd Ackerman and Loren Steffy did a good job in this weekend article of chronicling the series of bad bets that Baylor College of Medicineís Board of Trusteeís made in the wake of the schoolís unfortunate 2004 divorce from The Methodist Hospital. Baylor Medís travails have been a regular topic on this blog, most recently here.

The elephant in the parlor of Baylor’ Medís financial problems is the $600 million in bond debt that Baylor Med incurred in connection with its currently mothballed hospital project. Indeed, the difference between the total bond debt and the value of the underlying collateral would gobble up a large chunk of Baylorís endowment, which is currently a tad under a billion dollars. That was enough to scare off Rice University, although I question whether that was the right long-term decision for Rice.

So, the future is bit cloudy for Baylor. But what Iím wondering is whether there is a local partnership that could bail Baylor out of most of current problems while providing an essential benefit for the Houston community?

The last time I look into the issue, estimates in the Houston metro area has one of the largest percentages of uninsured residents in the U.S. (over 30% versus a national average of about 16%). The Harris County Hospital District ultimately ends up with the issues involved with financing indigent care as well as ensuring that adequate medical facilities exist for local citizens.

Given the HCHDís projected need for facilities to keep up with the growth of the Houston area, it makes sense for the HCHD to engage Baylor in discussions over a partnership in which HCHD would make an investment in the hospital in return for Baylorís agreement to staff the institution as its primary teaching facility.

Baylor and the HCHD already work closely in connection with the staffing of the Ben Taub Hospital trauma unit in the Texas Medical Center. A pure teaching hospital for Baylor would provide a quasi-public, low-cost alternative to the Med Centerís impressive but expensive array of private hospitals.

Sure, the details would have to be worked out, such as management of the facility. But doesnít such an investment by the county make sense, particularly when compared to ones such as this?

2 thoughts on “Making good on Baylor Med’s bad bet

  1. having trained at baylor, i believe they have all the hchd exposure that makes sense. an excellent partner for baylor? why, methodist, of course.
    at a tough time in medical finance history, the two made a mistake that can be corrected by re-marrying–they will not be the first grownups to do so with great success.

  2. Dr. Tom, that would be the optimal solution. However, I remain unconvinced that Baylor and Methodist can ever resolve the staffing problems that were a big part of the divorce.
    If Baylor cannot assure that its faculty members will be heads of their respective departments at its teaching hospital, then Baylor is going to be at a disadvantage in recruiting top-notch faculty members.

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