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Valley officials working to ‘synchronize’ healthcare pieces together

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    Future physicians take the hippocratic oath during a white coat ceremony July 21 at the University of Texas Health Science Center in San Antonio. The ceremony marks the students entry into the medical school. photo by Nathan Lambrecht/nlambrecht@themonitor.com

Posted: Saturday, September 21, 2013 8:18 pm

In the Rio Grande Valley’s health care system, change is the operative word.

From the restructuring of its Medicaid program under managed care to the continued uncertainty about the Affordable Care Act’s impact, the Valley has undergone sweeping changes over the past few years in how it delivers healthcare to its residents.

But the pace of change is certain to escalate as the University of Texas System develops the region’s first medical school — a boon that promises to further reshape the Valley’s health care infrastructure, but one that likely won’t come without an added cost to taxpayers.

With so many changes happening so rapidly, it’s difficult to predict exactly what the Valley’s health care model will look like in the future, said Hidalgo County health director Eddie Olivarez, the county commissioners’ point man on all things health care. Olivarez said the end result should be a system primed to meet the diverse needs of its residents after the county reached a “tipping point” that other urban parts of the state have already passed.

“(The health care system) isn’t necessarily changing as much as it’s catching up,” Olivarez said. “We’ll soon be at a point where we are on par with major urban areas in sophistication, accessibility and infrastructure.

“I see that happening in the next five to 10 years due to this medical school.”

SUSTAINING THE SCHOOL

While the exact look of the Valley’s future health care model may still be unclear, the pieces coming into place at least provide a glimpse of its probable design.

One component expected to eventually be put in place is a taxing district that would help pay for indigent care here and support the medical school’s operations.

When the University of Texas System announced its plan last year to merge its two universities in South Texas, it committed $10 million annually from its own resources toward the development of the Valley’s long-sought medical school. The UT System also said it would ask the Legislature to allocate another $30 million annually — $10 million of which was already dedicated — toward expanding the Regional Academic Health Centers in Edinburg and Harlingen into full-fledged medical school campuses.

But even if local lawmakers can convince their state counterparts to come up with the rest of the requested appropriations, they’re still short for a medical school that should cost about $50 million to operate each year.

Realizing that a financing gap existed and would likely be covered by local taxpayers, Hidalgo County lawmakers built their arguments for landing the medical school’s first two years over Cameron County based on their county’s larger tax base. If the medical school would inevitably require the support of a taxing district to sustain it, the lawmakers argued, its biggest component should be placed in Hidalgo County, which has twice the tax base of its neighbor.

Even after an eleventh-hour compromise by Valley lawmakers sealed passage of the legislation authorizing the medical school and regional university, Hidalgo County officials have continued to discuss the likelihood of a taxing district in spite of uncertainty over how much it would levy or how its funds would be used.

The legislation’s author, state Sen. Juan “Chuy” Hinojosa, D-McAllen, said the Valley’s approach has been to set the foundation with the medical school and build on it from there.

“There are a lot of moving parts, but all the moving parts have to be synchronized,” said Hinojosa, who introduced legislation this year to create a hospital district in Hidalgo County but then pulled back on the reins late in the session. “We have to get them all synchronized to fit together, and it’s part of the process we’ll continue to be involved in.”

A HIGH COST

The next step in that process will come when early voting begins in October, where voters statewide consider a constitutional amendment, supported by Hinojosa and state Rep. Bobby Guerra, to repeal language inserted in the Texas Constitution that severely limits the county’s authority in creating a hospital district.

The House and Senate passed resolutions earlier this year to put language on November’s ballot to strike provisions inserted in the state constitution in 1960 that capped the taxing authority of any hospital district formed in Hidalgo County to 10 cents per $100 in valuation — much lower than the 75 cent cap later introduced for nearly every other county in the state.

Although the actual rate varies by Texas county, most hospital districts levy taxes between 20 to 40 cents, making Hidalgo County’s constitutional cap a significant challenge in setting up a serviceable district.

Repealing the cap would give the county more flexibility, but clearing the constitutional hurdle at November’s ballot box is just one obstacle. Finding a way to service the needs of both the medical school and the county’s indigent care population without overburdening taxpayers is another.

Hidalgo County Judge Ramon Garcia, who has worked to hold the line on county taxes during his tenure in office, said commissioners can’t start serious discussions about a hospital district’s cost to taxpayers until they get a better sense of what the actual financial needs will be. The delay is compounded by Valley lawmakers still seeking state appropriations for the medical school before it officially opens in 2016.

Garcia said he’ll remain cognizant of the potential cost to taxpayers even as the county pursues something that is “badly needed” to address medical education and indigent care in South Texas.

Hidalgo County, with a current tax rate of 59 cents, has the highest tax rate of the state’s 20 largest counties outside of Galveston County, where the rate is set at 61 cents.

Harris County commissioners, in contrast, set a tax rate of 40 cents for county government last year but then used another 18 cents to fund the Harris County Hospital District — a combined total of 58 cents. In Dallas County, the combined cost from operating Parkland, its public hospital, and county government is 51 cents.

El Paso, a border county peer, set a tax rate of 23 cents for its hospital district last year and 41 cents for county government.

Unless Hidalgo County offsets even a minimal hospital district’s expenses with reductions elsewhere in its budget, the combined tax rate would easily surpass what taxpayers in other Texas counties pay.

But Hidalgo County’s high tax rate is in part the result of its efforts to provide adequate services to a large poor population without the benefit of a large tax base that defrays some of those costs — a dilemma likely to be magnified if the county sets up a hospital district.

Some of the county’s health care costs would be mitigated, for example, by the introduction of medical school personnel and students who could provide care to the indigent and uninsured for free or by expenses elsewhere in the county’s existing budget that would go away (This year, Hidalgo County set aside $8 million, or 5 percent of its general fund budget, for indigent care, a cost that would be shifted to any new district).

But Hidalgo County officials are also betting that the medical school will be an economic catalyst that can expand the county’s existing tax base to help offset any new costs for operating it.

“A new medical school allows you to recruit new business, which increases the tax base and then you can build better roads or better schools,” said Garcia, the county judge. “That’s why it’s such an unquantifiable catalyst if it’s able to be realized. The implications will continue to multiply.”

The medical school costs would also be buoyed by expected agreements with other local governmental entities, such as cities and commitments like the $60 million from Doctor’s Hospital at Renaissance to bolster residency programs, Kenneth Shine, UT System executive vice chancellor for health affairs, said during an editorial board meeting with The Monitor this month.

“The point is we would see some of the tax money we’re talking about used to expand care and increase access,” Shine said. “What the community, I think, would be buying is some combination workforce, improved health care and economic development.”

UT System Chancellor Francisco Cigarroa added that national organizations have already expressed interest in endowments and philanthropy connected to the new institution.

LOOKING NORTH

If there’s a single model that Hidalgo County might look to emulate, it would be the contemporary in the UT System’s medical school development process.

When Travis County and the City of Austin created Central Health in 2004, the entities set an initial tax rate of about 8 cents after transferring most of the entities’ respective tax bases dedicated to healthcare to the district. Last year, the district also became a conduit for the development of the Dell Medical School — which, along with the Valley’s medical school, is slated to open its doors in 2016 — when Travis County voters approved a referendum raising the Central Health’s taxes another 5 cents to help fund the city’s first medical school.

But Travis County’s health care district has maintained a lower tax rate than most of its peers in the state largely because it shunned operation of a public hospital in favor of contracting with an existing hospital that provides services to the indigent. That sort of model may prove to be a necessity in the Valley, where all the hospitals function as safety nets.

Since about 38 percent of Valley residents are uninsured, a sole public hospital could easily be overwhelmed.

Valley healthcare officials will look to Travis County, Bexar County and other urban areas for best practices as they design a model for medical education and indigent health care that fits this region’s unique demands, said Israel Rocha, the government affairs officer at Edinburg’s Doctors Hospital at Renaissance.

But he said the key recent development amidst numerous changes is the Valley’s evolution from a broad desire for an improved health care system to a meticulously developed plan for one.

“The legislation shows it was a thought-out, concentrated process,” he said, referencing the passage of various bills that approved the medical school and new university.“We hope to be able to continue on the building of that roadmap to have equality in our healthcare system as does every other part of the state.” 

 

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