A Vision For Sustaining Summa Health And Building A Healthier Summit County
On January 17th, 2024, Summa Health announced the sale of the health system to venture capital-backed HATCo and its conversion from a non-profit to a for-profit. To sell Summit County’s largest employer and provider of services —a non-profit community institution that has been built and sustained by the Akron community for 132 years — is the wrong direction for the Akron and Northeast Ohio community at this time. However, with or without HATCo, it is inevitable that the healthcare landscape in Summit County will be radically different by the end of this decade. Our community should embrace bold decisions and make investments in our future to ensure that this change will be for the better. We should do this not by soliciting money and leaps of faith from far away, but by investing in ourselves and channeling the best of our own collective potential. Summa Health should be transformed into a publicly-owned, county-run hospital system, to ensure and preserve its legacy and mission of service to the greater good, and to realize the unmet challenges of building a healthier Summit County.
Summa, like most non-profit hospitals across America, faces very real financial and organizational challenges. The long-term financial stability of hospitals in the United States is uncertain, especially for middle-sized and regionally-scaled health systems like Summa. In the years during and since the COVID-19 pandemic, Summa has struggled with increased personnel and operating costs, deteriorating operating margins, and the strain of capital projects and debt on balance sheets. However, despite recent challenges, there is reason to believe that Summa’s finances are stable for the near future, and that better financial days lie ahead, both for Summa and for the non-profit hospital sector at-large. The system’s financial fundamentals are sound and would offer sufficient runway for the exploration of alternatives for the future, namely conversion to a county-run system. There is little reason to hastily mortgage one of our community’s greatest assets as part of a corporate experiment now.
During 2022 (the most recent full year in which complete financial information is available) Summa lost approximately 39 million dollars on approximately 1.78 billion dollars of revenue, according to its financial disclosures. Summa’s losses mirror those of non-profit hospitals nation-wide, and regionally, with both the Cleveland Clinic and University Hospitals sustaining worse losses as a percentage of revenue than Summa in 2022. Projections for 2023 are that Summa will suffer losses greater than in 2022 and under-perform rebounding regional and national hospital performance. However, financial analysts remain more optimistic with regard to Summa’s improving financial performance over the long-term. In its July 2023 analysis of Summa’s financial position and debt outlook, Fitch Ratings assessed the system as stable, citing: “Summa’s favorable market position, sound balance sheet metrics and solid and stable operations, despite pandemic related operating challenges.” Fitch anticipates Summa’s finances to stabilize in 2024, before returning to profitability in 2025. In a separate November 2023 report (paywall), Moody’s Analytics mirrors Fitch’s projections about improved non-profit hospital performance in 2024 and beyond for the non-profit hospital sector, noting that higher reimbursements, increasing patient volumes, and cooling labor costs will improve hospital operating margins towards pre-pandemic levels in the coming years. Fitch’s projections for Summa’s operating cash flows in 2024 and beyond mirror expectations for the non-profit hospital sector at-large, anticipating positive cash flows in-line with industry averages. Summa’s total assets of 1.81 billion still exceed its total liabilities of 1.31 billion as of 2022. And while Summa’s cash-on-hand and investment portfolio dipped significantly during the pandemic, the level of unrestricted cash still matches total debt. The organization’s ability to pay on its 856 million dollars of outstanding debt (as of 2022) was assessed as stable by analysts, and the institution still has untapped credit lines. While Summa, like every health system in America, still faces challenges, the fundamentals provide a solid cornerstone for a bold new direction.
To convert Summa Health into a publicly-owned, county-run hospital system offers the best path forward for the health system and the surrounding community at this time. Ten hospitals in Ohio are currently county-owned and run, with MetroHealth in Cuyahoga County being the largest and perhaps most well-known. I published a review and commentary of the state’s public hospital infrastructure in the Ohio Journal of Public Health last year. Despite its challenges, the system offers untapped opportunities for communities across Ohio, urban and rural alike. This brief from the County Commissioners Association of Ohio summarizes the law regulating county hospitals in Ohio, and the Ohio Revised Code offers latitude for county governments “to purchase, acquire, lease, appropriate, and construct a county hospital or facilities.” Though there is not recent precedent for such a transition from private to public ownership, the law as written should allow Summit County to take control of Summa Health for the establishment of a county-run hospital system. Per state law, a county-run hospital system would function as an independent agency of Summit County government, with governing authority vested in a Hospital Board of Trustees comprised of six to ten members appointed by the elected Summit County Council. Hospital operations and finances, as well as board deliberations, would be subject to transparency provisions required of government agencies by the Ohio Public Records Act and Ohio Open Meetings Act, ensuring public access to information and greater accountability.
To establish and fund a publicly-owned, county-run hospital system in Summit County would require a substantial commitment from the public in order to succeed. The success of such a system would depend on a dedicated revenue stream to support hospital operations. Ohio county governments and agencies are funded primarily by property and sales taxes, and a county-wide sales tax option would represent the most robust avenue towards raising the amount of funding needed for a county-run hospital. Summit County’s sales tax is among the lowest in the state of Ohio. Of the county’s 6.75% sales tax rate, 5.75% goes towards the State of Ohio’s General Revenue Fund, 0.5% goes toward Summit County’s General Revenue Fund, and 0.5% goes towards the Summit County Metro Transit Authority. To create a public hospital system, Summit County could levy an additional 0.5% sales tax to fund hospital operations. The resulting county-wide sales tax rate of 7.25% would still be the lowest among the state’s large urban counties. A reliable estimate exists of how much money this would generate annually, as it would equal the collections of the County General Fund and Transit Authority, which in 2022 amounted to almost 52 million dollars per year each.
An infusion of over 50 million dollars per year would stabilize hospital finances and allow surplus money to be directed towards public health and community benefit efforts. Such an amount would exceed Summa’s annual losses for 2022 and likely anticipated losses for 2023, and it would very likely create a substantial operating surplus by 2025, in line with the expectations of financial analysts that Summa and strained non-profit hospitals across the country will realize positive cash flow in the coming years. Public ownership of the hospital system, and financial support from taxpayers, would provide a guarantee far more durable than any venture capital firm or other buyer could offer. This would, of course, rely on the generosity of taxpayers to approve an increase and the will of Summit County’s political establishment to make the system work. Such a proposal would have to go before voters to get approval, but there is reason to believe that they would support it. The creation of a publicly-owned, county-run hospital system would ensure continued success of the county’s largest economic asset and social services provider, and it would be a significant investment in the public health and welfare. There is reason to believe that the people of Summit County can be relied upon to do the right thing and make the commitments necessary for the long-term vitality of our community and its health.
A transition to a county-run hospital system would likely provide other benefits to stabilize health system finances, beyond just the financial windfall of a sales tax. The model would allow for streamlining of personnel, operations, and logistics, likely leading to decreased operating costs and improved organizational efficiencies. It would also allow for better integration of Summit County’s existing public health and social services infrastructure to align with hospital efforts. Staff recruitment and retention is generally good at public hospitals, given the attractiveness of government employment and associated benefits. MetroHealth, a similarly-sized health system to Summa, provides a worthy comparison of a county-run hospital system. MetroHealth has maintained positive operating margins over recent years, despite having a less favorable payor mix and higher community benefit spending than other hospitals in the region. While MetroHealth faced the same headwinds as the hospital industry in 2022, it reported better operating margins than its private counterparts in Northeast Ohio during that time, despite only receiving 32 million dollars in public support for the year.
The creation of a public hospital system could also open the door to finally shift the healthcare landscape in Summit County away from competition and towards collaboration. Prior to the acquisition of Akron General Medical Center by the Cleveland Clinic to form Cleveland Clinic Akron General in 2015, the healthcare landscape in Summit County was marked by fierce competition, and often outright animosity, between the county’s two largest health systems. These attitudes held healthcare quality in the region back and betrayed the non-profit mission of both health systems to serve the greater good over realizing market dominance. Though cross-town relationships and collaboration have improved significantly in recent years, much collaborative work can still be done to improve resource allocation, system efficiencies, and access to care. Both Summa Health and the Cleveland Clinic are incredible assets to the community. Summa has consistently been the largest provider of healthcare in Summit County, with a commanding 51.5% inpatient market share as of 2022, as compared to Cleveland Clinic Akron General’s 31%. While the Cleveland Clinic has pursued assertive regional, national, and global expansion over the past decade, Summa remains the only non-profit health system solely focused on Greater Akron and the needs of its communities. The Cleveland Clinic enterprise, however, boasts some of the largest and highest-rated specialty care networks in the country. The Cleveland Clinic is able to capitalize on economies and processes of scale to deliver highly-efficient and cost-effective specialty care.
The healthcare landscape in Summit County should be reimagined as a collaboration between a publicly-owned Summa Health and the Cleveland Clinic and other private stakeholders, rooted in a county public health infrastructure built around addressing social determinants of health. Formal partnerships between hospitals in Summit County, particularly with regard to referral networks and partnerships for the provision of specialty care, would increase system efficiency, reduce costs, and improve resource allocation and access to care for county residents. Such a landscape should ensure that hospitals recognize their own strengths and each other’s and build partnerships accordingly. Summa’s leading market share position and local roots in Summit County, coupled with the Cleveland Clinic’s extensive specialty care network, could provide the foundation for a collaborative framework focused on improved population health and enhanced access to care.
Both Summa Health and Cleveland Clinic Akron General provide hundreds of millions of dollars per year in community benefit, charity care, and reduced-cost care. Coordination between the two institutions should focus on how to best deploy resources to maximize impact and promote healthier communities. There are long-standing criticisms that the non-profit hospital structure still does not provide for the level of community benefit and social impact necessary, given health systems’ large budgets and tax-exempt status. A reimagined public hospital system would provide an enhanced focus on realizing community benefit and bridging health disparities. In Summit County, the economic status quo has created regional inequalities between the City of Akron and its suburbs, with significant health disparities by race and class. A public hospital system would provide an opportunity to directly integrate a health system with government-run public health and social services agencies. With a focus on social determinants of health and maximizing community health, this framework could provide new opportunities for a healthier Summit County. In addition to leveraging these assets to improve health and social services, any hopes of real economic stability for the region will rest on a robust and thriving local healthcare sector, currently the largest share of the regional economy.
There are few certainties as we look toward the future, and perhaps the only certainty will be change itself. The creation of a county-run hospital system in Summit County would raise complex financial, legal, and political questions, and it would rely on the generosity of taxpayers. It would be a leap of faith. But it would be no more of a leap of faith than the current proposal to sell the health system to a venture capital-backed network ultimately controlled by billionaire investors from out-of-state. No matter how aspirational the folks at HATCo may seem, the reality is that the for-profit hospital model does not have a track record worth believing in. America is littered with the desolation wrought by for-profit healthcare, and countless examples can be mustered of people and communities made poorer and sicker in its wake. Selling Summa Health — one of our community’s greatest assets — is an action that can never be undone. The hospital is a non-profit community institution that has been built and sustained by generations of Akronites for 132 years, and fundamentally, it belongs to the community. And so it should remain, as a public asset that will endure and grow for generations more. It is better to take a chance with public ownership and our own ability to invest in ourselves and our neighbors, than to expect salvation from venture capitalists and distant corporations.
Akron native and writer David Giffels once said that the story of Akron was that of “a great rise and a great fall and a gritty climb back towards grace.” Such is embodied by the boom and collapse of the city’s tire-making industry, and the subsequent and still ongoing search for Akron’s civic reinvention in a changing world. Over the years, many in Akron have been in search of a ‘next big thing’ or a saving grace to restore some idea of foregone prosperity. Summa embodies what is still best about our community, and the question of its future, in a way, embodies the long-standing questions over the reinvention of Akron. I do not believe that this will ever come from beyond our own community. Our collective destiny, and any hopes we may harbor for a better future, rests with our greatest asset: the people of our communities and their commitment to passing on something better to the next generation.
