Boom times at Nationwide Children’s Hospital – Columbus Dispatch

By almost any measure, central Ohio’s pediatric hospital is on a growth spurt that would rival that of any of its adolescent patients.

Revenue might have reached $2 billion for the first time in 2015. Annual surpluses from operations nearly doubled, to a record $285 million in 2014.

Where I-70 skirts Downtown, the steel skeleton of a six-story outpatient care center stands as the latest evidence of a decade-long building boom — an investment of roughly $1 billion by the nonprofit hospital on and near its main campus.

Hiring, already brisk, shows no sign of abating. The Columbus City Council last month approved a $15 million income tax break for the hospital, which plans to add the equivalent of 1,500 full-time jobs by 2030. Hospital officials say the anticipated average salary is $78,000.

The hospital employs the equivalent of more than 8,300 full-time workers.

“The place is really humming,” said Dr. Steve Allen, the hospital’s chief executive officer.

Nationwide Children’s investment in research also has vaulted to record levels: $50 million in 2015, up from $34 million two years earlier. That spending excludes roughly $70 million per year that the hospital receives from the National Institutes of Health.

But it includes philanthropy, most notably recent donations of $10 million annually from the hospital’s namesake, Nationwide, for genomics research.

“It’s all about whether you read the textbooks or you write the textbooks,” Allen said. “And we intend to be a place that writes the textbooks.

“And you can only do that if you’re out there discovering new cures and treatments, and also investing in understanding how it is or why it is that children get sick.”

Officials give much credit to the hospital’s accountable-care organization, Partners for Kids, for its performance in 2014, which Moody’s Investors Service described as “extraordinary.”

The hospital hasn’t been the only beneficiary of that organization’s work; taxpayers have, too.

Partners for Kids is the intermediary between Ohio’s five Medicaid managed-care plans and roughly 320,000 children in southeastern and central Ohio enrolled in those plans.

The organization works with more than 1,000 doctors, providing incentives for them to intervene in a child’s health and head off illnesses that otherwise must be treated in more costly ways.

Key to lowering costs has been coordinating care for young patients and making doctors aware of medications that might be just as effective but less expensive; pharmacy spending per Partners For Kids patient dropped 1 percent in 2014.

Partners for Kids also is working to put into practice guidelines for the care of newborns in hospitals: how best to feed them, avoid the potential complications of prematurity and help babies born to narcotic-addicted parents through the difficulties of withdrawal more quickly, said Dr. Sean Gleeson, the organization’s president.

Several long-term care initiatives such as those wiped out tens of millions of dollars in losses that the hospital had recorded each year as a result of caring for Medicaid patients, said chief financial officer Tim Robinson. Rather than a shortfall, the hospital in 2014 recorded a surplus on its Medicaid patients.

That shift, in turn, has led to lower payment rates per Medicaid-enrolled child in 2016, saving taxpayers about $30 million, Robinson said.

Nationwide Children’s performance stands out among its peers, including Cincinnati Children’s Hospital Medical Center, which also ranks among the nation’s top children’s hospitals.

For example, revenue exceeded expenses by 17 percent at Nationwide Children’s in 2014, compared with 9.5 percent at Cincinnati Children’s in its most recent fiscal year, according to a Dispatch review of their audits.

Through a spokesman, officials at nonprofit Cincinnati Children’s last week declined to grant an interview about that hospital’s financial performance.

Nationwide Children’s is seeing larger surpluses and reserves at a time when its burden of uncompensated care is shrinking. The cost of its charity care, already low since few children are uninsured, shrank in 2014 to $7.5 million.

Should the hospital’s tax-exempt status be reconsidered in light of that? Hospital officials don’t think so.

“We see all kids regardless of the ability to pay. There is never anyone denied care,” Robinson said. “The fact we’re (delivering care) more efficiently doesn’t make us less of a nonprofit.”

Hospital officials also said that the large surpluses don’t undermine the case for an income-tax break for the hospital.

The children’s hospital has invested heavily in capital and the community’s employment base, and its high-tech research creates spinoff potential, they said.

The hospital’s average daily census swelled last year to 480 from 407, stretching the staff and forcing more overtime. That hasn’t dampened employee morale, Robinson said, though officials declined to share data from employee surveys to support that assertion.

“People have really had to work hard this year,” Robinson said. “This year (2015) was unprecedented in terms of the spike of growth. We’ve worked really hard to remedy that, and I think we have.”

bsutherly@dispatch.com

@BenSutherly