The Baylor/Methodist Saga, Part 3 of 3 - Uncertainty, hope as giants part ways

HoustonChronicle.com - Uncertainty, hope as giants part ways

HoustonChronicle.com

Feb. 22, 2005, 12:31PM

Uncertainty, hope as giants part ways
Baylor's choice for a new partner put plenty at stake
Editor's note: With new partners and new ambitions, Baylor College of Medicine and The Methodist Hospital all but part company. The split has generated sorrow and hope. The question, though, remains: Can the storied institutions be as formidable, apart, a
By TODD ACKERMAN
Copyright 2005 Houston Chronicle

In the end, the conflict between Baylor College of Medicine and The Methodist Hospital came down to control.

Both wanted more. Neither would budge.

On April 21, 2004, as rumors swirled around the Texas Medical Center about who'd become Baylor's teaching hospital, the college's board met to choose between longtime partner Methodist or new dalliance with St. Luke's Episcopal Hospital. Baylor President Dr. Peter Traber presented the two options, which boiled down to Methodist's better resources or St. Luke's philosophical compatibility.

"I, Peter Traber," he said, "am willing to work hard to implement either of these."

The board went for St. Luke's, infatuation over money. Many found it strange — though the two institutions already had a limited relationship, St. Luke's had long billed itself as the Medical Center hospital for doctors who didn't like the dominant presence of a medical school. A 1994 plan to merge with Methodist fell through, for instance, because its doctors didn't want to be under Baylor's control.

The announcement didn't go over well at Methodist, which was previously upset with Baylor for publicly announcing its clinic plans and what they suspected amounted to secret negotiations with St. Luke's. Now, officials said, they had to hear of Baylor's rejection from the media.

But Methodist didn't waste much time moping. Two months later, it announced it had its new partner — Cornell University's medical school in New York City, nearly 1,500 miles away, an unrivaled distance between a teaching hospital and its medical college. Skeptics viewed it as buying a brand name — the school already has a teaching hospital in Manhattan, as well as eight other hospital partnerships in greater New York — but Methodist was unwavering in promising the idea will work.


Fighting a 'custody' battle
The relationship cost Methodist $100 million. Cornell gets $10 million a year for five years, and New York-Presbyterian Hospital — with whom Cornell is contractually bound by a 76-year-old affiliation — gets the other five-year allotment of $50 million.

The new deals only exacerbated the fighting, most of which involved who would get "custody" of shared staff. Methodist accused Baylor of using residents as "pawns" when the college began moving some to St. Luke's; Traber responded that Methodist was just unhappy it was losing "cheap labor."

At another point, Baylor threatened Methodist with legal action if it didn't stop its "aggressive recruiting" of college faculty-physicians. Behind the scenes, Baylor was getting help from a formidable figure — Joe Jamail, dubbed the "King of the Torts" for his multimillion dollar court victories involving contract interference.

It got so bad that Mayor Bill White intervened, calling on Methodist to accept Baylor's long-standing suggestion that the two institutions try mediation. Methodist finally acquiesced, but after three months the mediators withdrew. Traber said Methodist handled the mediation "like your child would when told to do something." Methodist Chairman John Bookout expressed vindication for Methodist's initial resistance.

White got involved, he said, partly because the two nonprofits were "built with Houston philanthropy and public assistance" and partly because he'd been contacted by doctors, who believed a great community resource was being ruined by board politics — specifically, by a personality conflict involving Baylor Chairman Corbin Robertson Jr. and Bookout.


Pain felt on both sides
Both Bookout and Robertson call the theory nonsense — they say they have long histories of conducting business professionally and strong boards to whom they answer. But Robertson acknowledges that at one point during negotiations he suggested he and Bookout step down as chairmen if that would help discussions.

Others blame Traber, Baylor's first president to come from outside. Noting his experience at Pennsylvania, where he resigned rather than go along with the board's plan to sell the school's hospital, they think he is committed to school-owned hospitals and was recruited to divorce Methodist. Traber dismisses the suggestion.

Whatever the cause, no one disputes the pain the divorce has caused.

Dr. Stanley Appel, the 73-year-old neurology department chairman who chose to stay with Methodist, talks sadly about the freeze he feels from former colleagues at Baylor. Dr. Dale Hamilton, a Baylor endocrinologist whose diabetes program is being moved to St. Luke's, laments that he'll no longer be able to trade insights with some Methodist staff who'll now be working at a diabetes center the hospital plans to launch. Robertson, who served on both boards before Methodist voted him off last year, says simply, "I've got a hole in my heart."

Perhaps no one feels the loss more than famed heart surgeon Michael DeBakey, who spent decades building up Baylor's association with Methodist and who warned of the crisis in a 2002 letter to trustees, more than a year before matters came to a head. Friends describe him as "heartbroken" about the split, but he stops short of the word.

"It certainly saddens me," says the 96-year-old DeBakey, after a moment of reflection. "I don't understand it. I don't think it's in the best interests of either institution."

The key question now involves what will to happen at St. Luke's, where many private doctors are said to be nervous about Baylor's new presence. The contract with the college calls for hospital service chiefs to be selected collaboratively, not just granted to Baylor, but skeptics suspect that in time the college will take over.

A January Standard & Poor's analysis predicted some doctors will leave St. Luke's for Methodist. Noting his hospital has lost no doctors so far, St. Luke System CEO David Fine calls the suggestion "wishful thinking" by Methodist.

But clearly St. Luke's, whose officials were astounded Methodist let Baylor get away, faces significant risk as a result of the new partnership. Smaller and less affluent than its longtime rival, it must manage increased volume, potentially alienated existing medical staff and expansion. It is paying Baylor $20 million and has budgeted $20 million more for related expenses.

Baylor, too, faces risk. Never known for its business acumen, now without Methodist's deep pockets to back it up, it must show it can profitably run a clinic in an environment glutted with such outpatient centers. It also must withstand the loss of key people to Methodist and other institutions, and a possible hit, at least in the short term, to its national rankings.


New opportunities seen
Methodist's risks are nothing about money and all about its reputation. In short, can it survive the loss of star doctors who helped make its name and remake itself as an academic institution, with its own newly started research institution and residency program? Experts say such enterprises of quality usually take decades to build.

"It's going to take a certain amount of time, probably two to three years, for this to sort itself out," said Martin Arrick, a Standard & Poor's analyst who wrote the January Methodist report. "Until then, there's going to be a lot of nervous people in the Texas Medical Center."

Much of the nervousness will center on money. A few Medical Center officials worry the conflict could cause some patients to head to a community hospital. Some are convinced that continued Baylor-Methodist discord will turn off philanthropists.

But a few see hope in the divorce, great opportunities from great upheaval, the chance for new kinds of collaboration. One such was the rapprochement last year between Baylor and the Texas Heart Institute, estranged the last 35 years because of the rivalry between DeBakey and Dr. Denton Cooley. And what else would have caused Methodist, sued by Texas Attorney General Jim Mattox in 1990 for shirking its duties to charity care, to even suggest it's interested in helping staff public hospitals for the indigent through its new partnership with Cornell?

Still, as the squabbling between Baylor and Methodist shows no signs of abating, the best view might be the last line in a thank you note received by Dr. Richard Stasney, a Methodist ear, nose and throat specialist. It said, "Let's pray for peace in the Middle East — and the Texas Medical Center."