Company’s Decision To Close Nix Medical Center Draws Mixed Reviews

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Scott Ball / Rivard Report

Layoffs are slated to begin next month at Nix Medical Center downtown.

When the J.M. Nix Professional Building opened its doors in 1930 in the middle of the Great Depression, it was the first “medical mall” of its kind in the country, and its innovative approach to medicine helped transform the structure of health care moving forward.

Now simply known as the Nix Medical Center, the 22-story Gothic-style building will soon cease to operate as a medical facility, according to building tenants and Nix employees notified of the hospital’s closure. 

Dr. Keith Wright of South Texas Surgeons, a physician group practicing out of Nix Medical Center, said he and others have known for a few months that the Nix would not continue to operate as a medical facility. Although parent-company Prospect Medical Holdings Inc. has announced it’s selling the hospital, it has not commented on the facility’s future.

Wright, a former Nix chief of staff, has been part of South Texas Surgeons since 2001, but the group’s original partner, now retired, practiced at Nix Medical Center since the 1960s. “A lot of really great [providers] have been working out of the Nix for several decades. It’s disappointing for us all,” he said.

Closure of the downtown hospital has been surrounded by speculation from the general public and Nix employees and tenants, who include company mismanagement and dilapidated building structure among numerous potential reasons behind the closure, with many claiming the parent company continues to remain tight-lipped about the fate of the facility.

“Prospect is really bad at communicating,” said Jennifer Abel, Nix’s former director of surgical services, who left her position in August after three years to pursue work in College Station, a professional move unrelated to the hospital sale. “Anything they were doing to give the hospital a fair shake and keep it open, no one knew anything about because they weren’t transparent about anything.”

Since the announcement of Prospect’s intention to sell the hospital in April, the Rivard Report has received several emails and phone calls from concerned employees claiming the lack of information provided by Prospect left “medical staff and physicians in limbo.”

If the medical tower were sold to another health care company, Nix employees and building tenants might have been able to keep working in the facility, Wright said. “The people working here would have loved to stay. Nix has some of the best equipment, best anesthesia services. … It’s really an outstanding hospital.”

On Aug. 23, Prospect notified the Texas Workforce Commission and some of its employees of its intention to begin closing the downtown facility by “sometime in October or November,” with the first round of layoffs set to begin on Oct. 21.

Barbara Rodriguez, nursing administration executive assistant, said that while Prospect formally notified employees only recently, whispers of the building sale months prior gave employees and tenants ample time to make plans for employment or rental space elsewhere.

“Everyone at least had an idea this was coming pretty well in advance,” Rodriguez said. “It doesn’t make it any easier. A good majority of [employees] have been there a very long time. It’s a close-knit family, and I believe everyone is quite sad about the closing.”

Rodriguez, an 11-year Nix employee, said that, unlike some, she doesn’t fault California-based Prospect for choosing to close the hospital.

“Prospect did what they had to do. They tried to make things better, and it is what it is. Business is business and this is a for-profit hospital, it’s not a nonprofit,” Rodriguez said.

Abel said that while it was in Prospect’s best interest to make sure it succeeded, a key reason the Nix wasn’t successful is that “Prospect was not emotionally invested” in the hospital. 

“It was strictly a numbers game to them and the numbers were just not working. What work they put into fixing it? I don’t know, they never shared that with us,” Abel said. “But there were things they did that didn’t make any sense to us,” including employee transfers from one role to another and the elimination of key positions in the hospital. 

“And in moments [Prospect] told us [it] was losing money, income, we would ask if they looked into the billing system,” Abel said. “Some of it boiled down to our contracts that were set up in such a way that we didn’t make any money.” Abel said that could have been looked into. 

Just before its announcement in April, Prospect saw its credit rating downgraded by Moody’s Investor Service, the credit bond rating business of the Moody’s Corp., citing Prospect’s significantly higher debt load since borrowing $440 million last year to pay a dividend to the private equity funds that own Prospect.

The report said the company’s debt at the end of 2018 amounted to 11.5 times its cash earnings before interest payments and taxes. That compared to a ratio of 4.9-to-1 for the fiscal year ended Sept. 30, 2017, Moody’s said.

“It’s unfortunate the hospital was unable to survive, but that’s the climate we live in,” said Dr. Raul Gaona, internal medicine specialist who leased office space at Nix Medical Center for the last 10 years.Closures like this aren’t an unusual experience when a hospital is for-profit and has a lot of nearby competition.”

What could be considered unusual, Wright said, is that “Prospect was kind of trying to run [Nix Medical Center] from California.”

Dr. Keith Wright

“I think it would have helped to have local leadership here in San Antonio – consistent local leadership,” Wright said, noting that Prospect has had more than five CEOs and interim CEOs since 2012 when it acquired the hospital. “The reason the hospital is closing is a financial issue. They have not done a good job of getting contracts with payers, which is hard when you are a small health care company trying to get reimbursements.”

In a statement sent to the Rivard Report on Friday in response to various employee allegations, including lack of local leadership and frequent executive turnovers, Prospect said, “Nix Medical Center was simply not sustainable as an ongoing provider. Over the past year, Nix Medical Center has experienced a decline in community demand for its acute care services at the downtown location.”

Wright said both times the hospital was sold during his tenure there, first to Kentucky-based Merit Health Systems, which oversaw the facilities from 2004 to 2012, then the sale to Prospect in 2012, “turned out to be a good thing.”

“There were more capital resources, upgraded equipment, more marketing and recruiting. But this time when they announced the sale, there wasn’t this optimism that anything good was going to come of it because the shop was not in a good financial setting,” Wright said.

But regardless of the hospital’s five-star quality rating by the Centers for Medicare and Medicaid Services for 2019 – the highest-quality rating afforded by the Department of Health and Human Services – the hospital struggled to compete with other downtown providers.

“You have Baptist, you have Metropolitan Methodist – all close by. We are small, and big hospitals are hard to compete with,” Rodriguez said.

Prospect called the 10-mile area around Nix Medical Center area “a very competitive health care market that includes five full-service acute care facilities” and said a standalone hospital closing and laying off nearly 600 employees “should not impact the community’s ability to access care.” 

Wright argues that while the closure might not impact a person’s ability to receive care, few hospitals in San Antonio compare to what the Nix Medical Center has to offer its patients.

“I have been able to do things in this hospital that I couldn’t do in other settings. My office is here, lab, X-ray, they have an operating room, it’s an inpatient hospital. The whole building working together runs kind of like a well-oiled machine,” Wright said. “I was at another hospital [recently] and it took my partner and I eight hours to do the same surgery that takes four hours here. It’s very efficient, state-of-the-art, and provides great care for patients.”

Abel said that while she and many others think that Prospect buying Nix was the beginning of the end, she’s not sure the “end wasn’t already set in place by prior owners.”

“Prospect happened to be holding the timer when it ran out – I don’t know. What I do know is that it was a fabulous place to work and it truly was a group of truly dedicated people who just wanted to take great care of patients,” Abel said. 

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