Citing budget cuts and the nation’s ongoing economic crisis, Shands HealthCare officials announced Wednesday, Oct. 22 they can no longer sustain financial losses at Shands AGH and will relocate its programs and services in one year.
Operations now housed at Shands AGH will move to Shands at the University of Florida and its cancer hospital, which is scheduled to open next fall.
Dr. Michael Good, interim dean for the College of Medicine, told college faculty and staff through an email on Wednesday that this initiative helps position UF and Shands for continued future growth on the Southwest Archer Road clinical campus.
“We are committed to the health of this community and providing needed clinical services to all its citizens, such as that provided in our UF Shands Eastside Community Practice and Southwest Fourth Avenue clinics, and at Shands at UF,” Good said.
In 2007, Shands AGH lost more than $12 million as federal and state funding was slashed, reimbursements from government programs and private insurance companies dropped and patient volumes declined.
“We’ve struggled over how to offer the best care to our patients and community given our health system’s existing resources,” said Timothy Goldfarb, Shands HealthCare CEO. “A poor financial outlook ahead and growing healthcare-industry challenges have forced us to make this very difficult decision.”
Goldfarb added that the city’s first hospital has historical and sentimental value to many people who live in Gainesville but that Shands AGH is no longer financially viable.
For years, physicians moved their practices to the west side of Gainesville and, in many cases, their patients moved with them. Efforts to bring in new patients and expand high-demand services have failed.
Shands HealthCare has invested more than $86 million in renovations, repairs and equipment at Shands AGH. Over the next five years, Shands would need to invest another $50 million just to maintain its upkeep. Continuing to invest in the facility is not the best use of limited resources.
At the same time, the demand for charity care rose dramatically. Just last year, Shands HealthCare as a system spent more than $115 million providing charity care to area patients. This sum doubled in the last four years. Given the economic climate, that number is likely to increase further.
The changes are part of an effort to cut $65 million from the Shands HealthCare system budget over the next three years to offset major anticipated shortfalls.
Regardless of the economic forecast, Shands HealthCare and UF remain committed to the greater Gainesville area. Goldfarb said Shands will now examine ways to enhance healthcare services in east Gainesville. UF intends to seek a partner to develop a life science and technology incubator on the Shands AGH site to commercialize UF research. This facility would anchor Southwest Second Avenue and help it become a vibrant corridor between downtown Gainesville and the university.
“With one of the nation’s most successful research and technology transfer programs, we believe UF is uniquely positioned to bring more research to the market,” said Bernie Machen, UF president and Shands HealthCare board of directors chairman. “This facility will help our researchers launch businesses using their discoveries. As a result, we will generate economic development in the growing Second Avenue corridor and bring new jobs to the state.”
For the future, Shands HealthCare officials envision building a new academic medical campus on the south side of Archer Road across from the existing Shands at UF campus. Construction of the new patient-care tower that will house both the Shands at UF Cancer Hospital and a new Critical Care Center is the first step in fulfilling this vision.
“For 50 years, Shands HealthCare has grown and adapted to meet the changing healthcare needs of the communities we serve,” Goldfarb said. “By focusing on how best to reinvest the delivery of healthcare services in our system and using the talents of our employees, volunteers and physicians, we will position Shands HealthCare to continue this tradition.”