War of the Wards

Phoenix Children's Hospital, for years hidden inside Good Samaritan hospital, seems to have been misplaced by the federal government

Some allege a concerted effort by hospital officials to keep these problems quiet. Stamp denies this, but admits Phoenix Children's hasn't tried to publicize the mess. Others suggest that politics and preferential treatment have led to state officials downplaying the seriousness of the situation. One observer says keeping a lid on the whole issue "is the worst way to deal with it," because it leads people to believe Phoenix Children's has something to hide.

An August 31 letter from HCFA to Stamp about the meeting Thursday suggests Phoenix Children's didn't want much to leak out about the issue.

"It is necessary to notify the Arizona State Agency and its Title XIX program of this meeting and so we are sending them a copy of this letter. We will not notify anyone else, as you requested," HCFA's Wayne Moon wrote.

Baby Koreen Sullivan in ICU of the Phoenix Children's Hospital is attended to by (left to right): her mother, Jennifer Sullivan, RN Tracy Atwood and RN B.J. Spinks.
Paolo Vescia
Baby Koreen Sullivan in ICU of the Phoenix Children's Hospital is attended to by (left to right): her mother, Jennifer Sullivan, RN Tracy Atwood and RN B.J. Spinks.

Stamp is reluctant to reveal much about the hospital's specific plans, saying an announcement will be made soon.

And while he characterized the communications between Phoenix Children's and HCFA as an ongoing attempt to smooth things over, an examination of HCFA's letters reveals a growing sense of irritation on the part of the government.

From an August 7, 1998, letter: "It has come to our attention that Phoenix Children's Hospital (PCH) is not a Medicare certified hospital. Rather than meeting the requirements for a childrens hospital . . . and meeting the requirements for a hospital-in-a-hospital, PCH is operating as part of Good Samaritan Hospital, using its Medicare provider number . . . and has been treated as a department of Good Samaritan Hospital for Medicare reimbursement over the years.

"If the Health Care Financing Administration (HCFA) approved this arrangement, it was in error and now it must be decided whether or not PCH wishes to meet the requirements for a childrens hospital as the current arrangement cannot continue."

From a March 11 letter: "Thank you for your letter of January 29, 1999 in which you explain your desire to be Medicare certified as a children's hospital in a hospital. There are other items, in addition to the qualifications mentioned in your letter, that must be met before your facility can be certified as you have requested . . .

"In order to be a separate hospital, Phoenix Children's Hospital must have its own discreet space (i.e. not scattered throughout GSRMC [Good Samaritan Regional Medical Center]), with its own entrance and signage so the public knows it is entering PCH rather than GSRMC when presenting at the facility. Beds may not be commingled with those of GSRMC and the services you provide must be in your own square footage . . ."

The letter questions Phoenix Children's contention that it meets a federal requirement that at least 75 percent of its patients are referred by hospitals other than the "host hospital" -- Good Sam.

"Would you clarify for us how neonates [newborns] delivered on campus are direct admits rather than transfers from GSRMC? Or does PCH have its own labor and delivery department? If the babies are born in GSRMC and then admitted to PCH's NICU [Neonatal Intensive Care Unit], the admission would be considered a transfer from the host hospital."

Also questioned is how Phoenix Children's can segregate its costs and services from Good Sam's. "We believe it is critical for PCH to address how it, as a separately certified hospital, intends to account for its costs, which currently are included in GSRMC's cost reports."

An August 4 letter:

"In our March 11, 1999 response to your letter of January 29, 1999, we explained what was necessary for Phoenix Children's Hospital to qualify as a free-standing hospital. You never responded to that letter . . . This will notify you that by October 15, 1999, the Health Care Financing Administration must receive a complete outline of how Phoenix Children's Hospital intends to qualify for Medicare certification as a hospital. Your plan must include a reasonable time frame for accomplishing the project, as well as acceptable benchmarks for each step involved in order for us to approve it. If we cannot approve it, we will instruct Blue Cross of Arizona to cease payment for any services provided by your organization effective October 31, 1999. This action will be coordinated with AHCCCS, the Arizona Medicaid agency."

And from an August 31 note:

"The letter you sent on August 17, 1999 was a good beginning but is not detailed enough to be the acceptable plan we requested. As already mentioned, HCFA cannot permit the current situation to continue until 2001."


So what could HCFA have done? Some suggested it would levy a huge fine or shut the hospital down, but Caldwell, the HCFA administrator, says she didn't plan to do either. "My main interest is getting it straightened out," she says.

Another option would be to make Phoenix Children's pay back all the money it has improperly received from the government. One estimate of that amount -- dollars received in excess of what it would have had it not been reimbursed at higher children's hospital amounts -- places that figure at around $20 million a year.

But will Phoenix Children's officials be asked to cough up those dollars?

"Technically, they could, but who would be stupid enough to try and do that?" Caldwell asks. She explains that the money went to cover costs of health care services that have already been performed. "It's not like they put the money in a Swiss bank account."

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