Pennsylvania officials announced Thursday a broad collaboration to improve health care in North Philadelphia and a swath of surrounding neighborhoods where at least half the residents receive Medicaid, costing more than $1 billion last year.

The North Philadelphia Health Enterprise Zone encompasses an area from around Spring Garden Street north to Olney and from Frankford in the east to Germantown in the west. It is home to five hospitals that struggle financially under a heavy load of Medicaid patients.

Ted Dallas, secretary of the Pennsylvania Department of Human Services, which manages Medicaid, decided it was time to see whether there was a better way to deliver health care in the enterprise zone, where 31 percent of the population lives under the federal poverty line, twice the national average, and the life expectancy of children in two of the zone's 15 zip codes is 20 years shorter than that of their counterparts in wealthier areas.
"There is a great deal of investment and money already going into providing care. This is really about finding ways to make that care better and more coordinated," Dallas said before a presentation at Project HOME's Stephen Klein Wellness Center near Temple University's main campus.

Dallas acknowledged the Health Enterprise Zone covers a larger area than most people think of as North Philadelphia. "The zip codes that are involved are the zip codes of the people who use the health-care resources in North Philadelphia," he said.

The multipronged effort to get at the seemingly intractable problems of poor health and poverty will address not just what happens in hospitals and doctors' offices, "but also engage the community and really address those social determinants of health and unmet health-related social needs that hit health outcomes," said Susan Freeman, chief medical officer of Temple University Health System.

The initiative follows the closure in March of St. Joseph's Hospital, part of the financially ailing North Philadelphia Health System, which received special state aid averaging $11.3 million annually over the last nine years.

Estelle Richman, who in various roles in city, state, and federal government, helped keep St. Joseph's afloat and has had her eye on North Philadelphia for decades, said Thursday at the Klein center that the state money going to the hospital had become disproportionate to its role in the community. "It was time," she said.

Richman, who was Dallas' boss when she was secretary of the Pennsylvania Department of Welfare under Gov. Ed Rendell, also said she played a part in urging the three large and competing institutions along North Broad Street -- Hahnemann University Hospital, Temple University Hospital, and Einstein Medical Center Philadelphia -- to collaborate in the Health Enterprise Zone.

Those three hospitals have a hard time covering expenses because Medicaid does not pay the full cost of care. To compensate, the state has poured hundreds of millions of extra dollars into hospitals there -- money that makes the difference between an operating profit and losses. The Temple University Health System alone has received $868 million in supplemental payments since 2010.
Even so, Temple Health and Einstein Health Network each had operating profit margins of less than 1 percent in the year ended June. Comparable operating results for Hahnemann were not available.

Among the key initiatives of the Health Enterprise Zone is an effort to identify the top 100 adult and child "superutilizers" -- people who have complex needs and make frequent emergency-room visits, Dallas said. These are people in the 1 percent of the U.S. Medicaid population who account for 25 percent of total expenditures, according to the federal Centers for Medicare and Medicaid Services.

"In each emergency department all along Broad Street on any given day, a patient will present that is known to everybody," said Barry Freedman, chief executive of Einstein Health Network. "They are known to our doctors. They are known to our nurses. They are known to our security guards. They are known to our housekeepers. They are known by first name, and they are known for the problems they live with."

A study found 500 patients who visited one of the three North Broad Street emergency departments at least 10 times a year and 100 patients who visited at least 20 times a year, at a huge financial cost to the heath-care system and social cost to those individuals, Freedman said.

"We need to make sure that if you're treated at Einstein, if you're treated at Temple, if you're treated at Hahnemann, we know what's happening to that patient," Freedman said.

The collaboration goes beyond the health systems.

The Pennsylvania Department of Education is providing $1.5 million in grants to support Philadelphia's community schools initiative.

The Chamber of Commerce for Greater Philadelphia is participating in a bid to increase employment opportunities in North Philadelphia.

Dallas, the human services secretary, also hopes to attract philanthropic support for projects that reach further into neighborhoods than large health systems can manage.

Much of the work in the collaboration will be done through stakeholder committees with members from government, educational institutions, health-care providers, community groups, and others, who can sign up on the agency's website, Dallas said.

Joanne Grossi, the Philadelphia-based regional director of the U.S. Department of Health and Human Services for Region III, said she was unaware of similar efforts elsewhere.

"I'm really applauding the city of Philadelphia and the state for what they are doing here," Grossi said. "I think it's really innovative and it's really important."