Meanwhile, A Public Hospital Struggles To Serve

For 38 years, E.V. Thomason Memorial Hospital has been a fixture in El Paso, Tex., the dusty border city where Columbia/HCA Healthcare Corp. got started in 1988. Its emergency room, immunization program, and outlying clinics have been among the few sources of quality health care for El Paso's poor--about 30% of the city's population of 650,000. Now, the 289-bed county hospital is struggling. Thomason is expected to treat 100,000 emergency-room patients this year--triple the volume of the mid-1980s. And though the cost of its charity workload is expected to climb 16% this year, to $44 million, its annual federal funding has plunged 58% since 1991, to $24 million.

At the same time, Thomason finds itself waging an unlikely battle for revenue-producing Medicaid patients with its for-profit rivals in El Paso, Columbia/HCA and Tenet Healthcare Corp. Since January, the number of Thomason Medicaid patients has slipped by 6%. "We're getting squeezed by the two giants," says Pete Duarte, chief executive of Thomason.

The squeeze is particularly painful because Thomason has long used Medicaid revenues to subsidize its charity care. The federal government typically reimburses hospitals up to 80% of the bill for Medicaid patients, and Medicaid money usually accounts for a critical 40% of the hospital's operating revenues.

But Columbia and Tenet, each of which operates two hospitals in El Paso, are aggressively wooing Medicaid patients--especially lucrative maternity cases. With its revenues expected to drop 10% this year, to $89 million, Thomason may have to curtail many of its public-health services, including participation in the county's aggressive immunization program. And county health officials worry that Columbia and Tenet won't step up to help fill the gap. But they haven't received any promises. Says Dr. Laurance N. Nickey, director of the El Paso Health & Environmental District: "When it comes up that the people we treat have no insurance, the conversation trails off."