Walnut Hill Medical Center, in better days. (Courtesy: WHMC)

Health & Medicine

Go Inside What Sunk the High-End Walnut Hill Medical Center

The upscale, full-service hospital was supposed to shake up healthcare in North Texas. Instead, it filed for bankruptcy three years after opening.

In 2014, the Walnut Hill Medical Center looked like a jewel kept inside a sock. Inside the drab brown building at the corner of Greenville and Walnut Hill was one of the nation’s most upscale hospitals: A $100 million, 100-bed totem to patient comfort, complete with state-of-the-art medical technology for doctors, and chef-cooked meals and private rooms for the patients. It sat catty-corner to the competition: Texas Health Presbyterian Dallas, the very type of large, system-owned facilities that Walnut Hill’s founding doctors had wanted to get away from.

It certainly made the narrative an easy one for the founders, who were, by and large, a group of passionate doctors fed up with the bureaucracy and administrative demands at hospitals owned by huge systems like Baylor Scott & White, Texas Health Resources, and HCA. So they decided to start their own. They fully renovated an eight-story, 1980s-era building that stared north at the lush greens of Lake Highlands and beyond. It was part of a wave of upscale hospitals that thought amenities and comfort and a broad service line would attract a steady stream of patients that could keep the hospital afloat. Not so.

Just under three years after opening its doors, the hospital declared bankruptcy. Healthcare reporter Olivia Nguyen’s final story for D CEO chronicles what sunk the high-end hospital, and it’s online today.

The founders certainly thought they could make it work. Its business model was structured as such to avoid the problems that befell its physician-owned competitors. Federal law prevents hospitals where practicing physicians have a financial stake in the operations from seeing Medicare and Medicaid patients, a critical population that help can shore up revenue should privately-insured patients not show up in droves.

And so Walnut Hill’s doctors invested in the real estate and received a flat fee, freeing the facility to see publicly insured patients. This was one of the factors that killed the similarly upscale Forest Park Medical Center chain, which couldn’t see those patients and was also beset with an alleged fraud scheme.

So: What’s this all mean? It’s yet another sign that independently-owned, full-service hospitals won’t be able to compete in a system’s world. Walnut Hill, for all its high-thread count bedsheets and private ICU rooms and floor-to-ceiling windows, couldn’t bring in the volume necessary to keep its doors open. Whatever your opinion is on Walnut Hill, it’s another sign that there’s less and less room for scrappy upstarts to try something new in a healthcare industry that’s growing more expensive by the day.

Read the full D CEO feature right here.

Comments

  • They saved my life!

  • Greg Brown

    My take RN for 25 years in Texas: Americans don’t care about quality health care at all. Heck, Americans only started caring about quality BEER 10 years ago. Americans will not pay one cent extra for anything related to health care, no matter how fancy a package you put it in. This physician group is completely deluded if they believe that Americans are willing to pay extra for healthcare, or that in some magical way the costs of premium this or premium that would somehow be covered by Medicare. There is a sucker born every minute, and doctors are just suckers with more money to lose. Looking forward to the next article on the next physicians group to go bust for believing their own BS.

    • Happy Bennett

      Is quality beer a fundamental right?

      • Greg Brown

        Not sure of your line of questioning but, No. Neither beer nor healthcare are a fundamental right in this country. Instead, we expect people to use their fundamental right to Vote in their best interests to achieve their desires. Workin’ great so far.

        • Happy Bennett

          I was joking. Greetings “From the land of sky blue waters”.

  • Happy Bennett

    I agree with the RN below, that groups of physicians investing in hospitals labs and other healthcare services, outside of the specialty in which they train, are almost always confronted with diminished expectations or worse. These physicians had quite a few local examples of fraud and failure which should have made them pause and then retreat from this “share-holder” model. Consider the criminal temporarily profitable enterprise which was the “physician owned” Forest Park Hospital debacle (covered well enough by D Magazine Business this year) where over charging and fraudulent charging resulted in criminal indictments. ACOs-a mutant offshoot of the ACA- where large groups of primary care physicians practice under a “wellness” model-reportedly are able to get a “legal kickback” (sarc) from labs to which they refer (due to bending of Stark Law rules), but the design of the “government meets business” scheme is complicated and certainly not in the patient’s best interest. Other physician owned hospitals certainly have their challenges usually until they are “absorbed” by bigger hospital chains, usually at a loss to the investors, unless some other crisis occurs. I am not sure what the “mission” of the Walnut Hill facility was– and it isn’t explained in these otherwise interesting articles. Was this a “heart hospital” with other services? Due to declining reimbursements from all insurers, typical healthcare delivery systems are economically stressed. there are a few lean exceptions–but if someone is peddling a too good to be true investment–one should run not walk away. Greg below describes frustration with patient “expectations”–but these are variable and dependent upon the patient.

    • Greg Brown

      An excellent summary. You can’t get blood from a stone, and Medicare and the American People are Granite.