DALLAS — As Parkland Hospital nears completion of a nearly $1 billion tower to replace its overcrowded facility near downtown Dallas, officials announced Wednesday that the beleaguered county charity hospital would not lose its Medicaid or Medicare federal funding.
The announcement followed a crucial federal evaluation in June and July to decide whether the hospital that serves indigent patients from Dallas county and surrounding suburbs should be disqualified from the federal funding.
Loss of the funding would have threatened continued operations of the public hospital.
“We have reviewed the survey findings and determined that your hospital is in substantial compliance with all applicable Medicare conditions of participation and EMTALA (Emergency Medical Treatment and Labor Act),” wrote Gerardo Ortiz, associate regional administrator for the U.S. Department of Health & Human Services in a letter to Robert Smith, interim chief executive officer for Parkland Health and Hospital System.
Parkland will remain under supervision by the U.S. Department of Health and Human Services as the hospital uses outside consultants to monitor its billing operations and patient-quality efforts over the next five years.
The hospital also will have enhanced safety oversight from state health regulators for another year as part of a settlement agreement to resolve penalties for past care failures.
Parkland’s failure to meet expectations in a 2011 federal survey of Medicare and Medicaid services brought a downgrade from Fitch Ratings to AA-plus from triple-A in June.
The downgrade affected more than $700 million of bonds issued in 2009 for the new hospital complex. All but $24.8 million of those were issued as Build America Bonds shortly after voter approval in 2008.
“The downgrade reflects Fitch’s concerns regarding management and operational uncertainties stemming from a failed federal Center for Medicare and Medicaid Services survey in 2011,” wrote Fitch analyst Jose Acosta. “While Fitch believes the district is likely to pass a subsequent re-survey in 2013, the recent failure, along with the ensuing management turnover, is not consistent with Fitch’s highest credit rating.”
Standard & Poor’s placed a negative outlook on its triple-A rating for the district on April 3, 2012, also citing the Medicaid survey.
The district’s operating margins have been pressured by costs associated with its extensive Medicare and Medicaid compliance efforts coupled with modest revenue growth.
The hospital has been the subject of a series of stories from The Dallas Morning News citing improper patient care and other controversies.
Parkland’s new tower, rising across the street from the existing hospital, is expected to be completed in 2014.