Key West commissioner: CHS hospital's profit margin is 'obscene and unconscionable'

Key West, Fla., commissioners are concerned about the high prices patients face at Lower Keys Medical Center in Key West, which is part of Franklin, Tenn.-based Community Health Systems. However, hospital officials say improving patient care is the top priority, not lowering prices, according to Konk Life.

LKMC and Key West officials have had a contentious relationship since last year when city commissioners voted to explore reverting the hospital back to public ownership after hundreds of patients complained of aggressive billing practices and poor care quality at the hospital.

In December, Lower Florida Keys Hospital District board chairman John Padget sent a letter to CHS CEO Wayne Smith, asking if the hospital operator would consider breaking its lease of LKMC early, as CHS' 30-year lease of LKMC doesn't expire until 2030. CHS responded in January, saying it has no intentions to terminate the lease early.

Although the issue over the lease has been settled, Key West commissioners' concerns over the hospital's prices have not abated.

At a March 21 commission meeting, LKMC's former CEO Steve Pennington said the hospital hired an outside consultant to examine the hospital's prices. Mr. Pennington said the consultant determined LKMC's inpatient charges are "in the middle of the pack compared with South Florida hospitals," according to Konk Life. The consultant found LKMC's emergency room charges were lower than its peers and its imaging charges were higher. Although Mr. Pennington said the hospital was working to reduce its imaging charges, Key West Commissioner Richard Payne said the hospital needs to do more to lower costs, pointing out that CHS recorded a 32 percent profit margin on LKMC in 2015. 

"Your hospital has a monopoly. You're 50 miles away from your nearest competitor," Mr. Payne said, according to the report. "A 32 percent profit [margin] when the national average is 7 percent is obscene and unconscionable."

Other commissioners agreed with Mr. Payne, saying lowering charges is critical. However, Mr. Pennington said the hospital is more concerned with patient care.

"We think if we provide high patient satisfaction and invest in the hospital properly, the profit margins will be where they will. That's not something we should be penalized for or [praised] for either way," said Mr. Pennington, according to the report.   

CHS did not immediately respond to Becker's request for comment. 

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