What's Children's Worth?

Even before Seton assumed management control of the city-owned Brackenridge Hospital in 1995, Children's Hospital -- then a seven-year-old Brack youngster -- was already showing strong potential for profit. In the weeks since Seton announced plans to build a new, privately owned children's hospital, city officials have been trying to determine how the loss (or partial loss) of operations at Children's will impact Brack's ability to stay afloat. Public health care advocates fear devastating consequences that could financially and politically derail the creation of a countywide hospital district.

At this point, estimating the financial impact to Brack of Seton's gambit is only a guessing game. Outside estimates place Children's current profit margin as anywhere from $10 to $20 million. But Seton is a private, nonprofit corporation and is neither willing nor legally obligated to disclose its financial records to its landlord, the city. "They're not giving us all the detailed information we need right now," said Michael McDonald, acting chief of staff for City Manager Toby Futrell. "That's why it's difficult to ascertain, but we're still continuing our dialogue with them. What we do know," he added, "is that prior to Seton, Children's was the most profitable unit of Brackenridge."

Nonetheless, it's difficult to confirm what Children's earnings were before Seton assumed control, because the city did not separate its financial records for each division of Brackenridge. "The reason we know Children's fared better than the rest of the complex," McDonald said, "is because the cost of indigent care for kids is covered by Medicaid and Medicare, while the care for adults at Brackenridge was absorbed by the city."

Seton may have averted having to turn its books over to the city when it withdrew a request to amend its lease agreement -- to eliminate the requirement that Seton provide pediatric care at the existing Children's Hospital. Seton now says it will continue providing trauma care and some other services at the city-owned location.

Seton's position is that Brackenridge will not be adversely affected by a new hospital. "Seton's obligation to the city is exactly the same for 60 years, regardless of whether Brackenridge or Children's makes money or loses money," said Interim President and CEO Patricia Hayes. "People talk about this as if this were a revenue stream that was currently available to the city or the hospital district and [is] now unavailable. The truth is ... the lease obliges us to certain fixed payments over all these years, and we're still obliged to those payments on behalf of Brackenridge and Children's -- no matter what."