City vs. Seton: Coming to a Hospital Near You

Negotiations between City Hall and the Seton Healthcare Network, beginning this week, could determine the future of public health care in Austin.

City leaders and Seton Healthcare Network officials will meet this Friday, Dec. 13, for the first round of negotiations in what could ultimately determine the future of public health care in Austin and Travis County. City Manager Toby Futrell says she expects the two sides will begin by "laying everything on the table" regarding the publicly owned Children's and Brackenridge hospitals, which Seton leases and operates.

The city and Seton are currently in conflict over Seton's plan to pull out of Children's and build its own separate pediatrics facility. Before that happens, Futrell wants binding assurance from Seton that the new hospital will serve all children, regardless of their ability to pay. Futrell also wants Seton's word -- in writing -- that it will continue its commitment to Brackenridge, which stands to lose some financial stability once the children's hospital is privatized.

Preparing for Friday's meeting, Futrell, her staff, and a team of lawyers have spent the past weeks on a fact-finding mission, gathering and studying various data that could bolster the city's bargaining power. "I am learning that lease -- its strengths and its weaknesses," Futrell said. Seton's position going into the negotiations is harder to read. Said Interim President and CEO Patricia Hayes: "Seton has been meeting with the city manager's office regularly for several years to discuss issues relating to the success of our lease relationship with the city. As we always have, we will be happy to listen to any proposals the city manager wishes to bring to the table."

Austin lawyer Jim George will join Futrell at the table as the city's outside counsel. "I intend for Jim to take a very strong lead in helping to guide the lease negotiations," Futrell said. Observers rooting for the city in the Seton battle recognize George as one of the most formidable litigators in Texas -- a "junkyard dog," one called him. (George's law firm, George & Donaldson LLC, represents the Chronicle.)

To Seton officials, the justification for the new facility is cut-and-dried: Overcrowded conditions at Children's, compounded by pediatric physicians' demands for more space, have forced Seton to take immediate action. Without consulting the city, Seton signed a contract option to buy property at Parmer and I-35, where it plans to build a state-of-the-art pediatrics hospital, scheduled to open in 2007. The network turned down the city's offer to help finance the construction of a replacement hospital on city-owned land, thus keeping Children's in the public domain.

Seton's October surprise angered community leaders and public health care providers. Children's -- along with Brackenridge and other public medical facilities -- had been slated for transfer into a proposed hospital district, which proponents expect will go before Travis Co. voters in November 2003. City officials admit they were stung by Seton's lack of inclusiveness on an issue of such importance to the community. Seton has since taken steps to try to correct its public relations blooper, but public opinion appears no less critical. More recently, the hospital system hired Futrell's former boss, ex-City Manager Jesus Garza, who brokered the existing lease agreement with Seton. That move, too, has been criticized as a rather transparent attempt to restore credibility.

Futrell says she hopes to have the Children's Hospital dilemma resolved within the next couple of months. But no one seems eager to handicap how the outcome of that dispute will affect the proposed hospital district. "We're just waiting to see what happens," offered Clarke Heidrick, co-chair of a steering committee laying the groundwork for a district.

Meanwhile, there's another fly in the ointment. With hospital district backers nearly ready to file bills in the Legislature to enable the district (which needs to happen before a November referendum), some city officials seem to be getting cold feet about relinquishing control of the Austin/Travis Co. Community Health Centers to a public financing district. Although it hasn't been officially considered by the city manager or the City Council, one idea drifting out of City Hall proposes that, in the event voters approve the district, the city continue to operate the clinics through September 2004, the end of the 2003-04 fiscal year. One reason for City Hall's concern is the infant district's ability to cover the overhead costs of absorbing more than 350 clinic employees. Given the city and county's record of discord on management and control issues, the two entities are not likely to see eye to eye on how, or when, the clinics should be transferred into the district.

Rather than taking an incremental approach, Heidrick says he'd prefer to start off with "everything in one pot." His sense is that the hospital district efforts might go more smoothly without the occasional curve balls, but he knows that's asking a lot. At any rate, he says, "Our main focus right now is on how to operate the clinics most effectively ... and on moving our legislative package forward."

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Seton Healthcare Network, City Manager Toby Futrell, Patricia Hayes, Jesus Garza, hospital district, Clarke Heidrick, Children's Hospital, Brackenridge Hospital

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