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“You do fall in love with institutions the way you fall in love with a life’s companion. It’s hard to say what there was about this institution that appealed to me right from the beginning. It wasn’t the appearance. Now the place looks like something you wouldn’t be ashamed to be seen with in public.”
— Phil Zieve, in an interview with Dome, June 2000



Bayview Milestones

1773 The Baltimore City and County Alms House was established west of Baltimore to house the poor.
1866 The Alms House relocated to 240 acres overlooking the Chesapeake Bay and was renamed the Baltimore Bay View Asylum.
1885 An informal association with Johns Hopkins began.
1925 The institution was renamed Baltimore City Hospitals.
1935 City Hospitals opened a 450-bed general hospital (the present A building) and the north section of the B Building.
1968 The Kiwanis Burn Unit (later the Baltimore Regional Burn Center) and the National Institute on Aging’s Gerontology Research Center opened.
1972 Chesapeake Physicians launched.
1982 Under an agreement with the city, Hopkins began managing Baltimore City Hospitals on a trial basis.
1984 Ownership of City Hospitals was transferred from the city to Johns Hopkins Hospital and University. City Hospitals was renamed the Francis Scott Key Medical Center (FSKMC) with Ronald Peterson its president.
1986 The Johns Hopkins Health System was established with FSKMC a key component.
1989 The School of Medicine opened its Asthma & Allergy Center at FSKMC.
1991 FSKMC opened the Johns Hopkins Geriatrics Center (now the JH Bayview Care Center).
1994 Francis Scott Key Medical Center was renamed the Johns Hopkins Bayview Medical Center. Bayview opened the Francis Scott Key Pavilion, an acute care facility.
1999 Greg Schaffer succeeded Peterson as president.
2001 Reuven Pasternak approved first Vice Dean for JH Bayview Campus
2002 JH Bayview Physicians (formerly Chesapeake Physicians) merged with JH Clinical Practice Association, uniting the faculty practices of both hospitals under the CPA.


A Dream of a Deal
By Anne Bennett Swingle
and Neil A Grauer

Almost exactly 20 years ago, Johns Hopkins acquired the ailing Baltimore City Hospitals. Today, that municipal hospital has been transformed into a thriving, multifaceted institution, one we know now as Johns Hopkins Bayview Medical Center.

City Hospitals as it looked 20 years ago when it was acquired by Johns Hopkins

The Bayview Campus, C. 2000

No one would dispute the fact that two decades ago, Baltimore City Hospitals was a run-down, money-losing institution. But as one of the oldest, continuously operating health care facilities on the East Coast, it also had a whole lot going for it. Tough and tenacious, it had reinvented itself time and time again in order to remain useful and relevant. Few knew how much City Hospitals had to offer. Wary that acquiring it would prove a financial quagmire, Johns Hopkins drove a particularly hard bargain. It turned out to be a dream of a deal, and today, the acquisition is considered the most successful conversion of a municipal hospital anywhere in the country.

Early Days

Bay View Asylum: Built in 1886, this original, three-story ediface evolved into today's Mason F. Lord Building
Bayview began life in 1773 as the Baltimore City and County Alms House. Situated on what is now Baltimore’s west side, near where Maryland General Hospital is today, it was repeatedly pushed to the fringes of urban development. It landed on its present site, a rolling parcel of land far to the southeast of the city and overlooking the Chesapeake Bay, in 1866 when it came to be known as Bay View Asylum. It housed the poor and insane and was known as a dreaded, sinister place. Bay View was a name Baltimore mothers evoked when they disciplined their children, as in, “If you don’t behave, you’re going to wind up at Bay View!”

The link with Johns Hopkins was forged in the mid-1880s, even before its hospital opened, when William Welch, University pathologist, began studying Bay View Asylum patients in his research. Later, medical students from Hopkins joined University of Maryland students doing clinical rotations there.

Building Bayview's reputation in gerontology: Nathan Shock, Mason F. Lord and John Burton

Baltimore City Hospitals

In 1925 Bay View Asylum was renamed Baltimore City Hospitals—plural because it encompassed three separate hospitals: one for acute care, another for chronic care, and a third for tuberculosis patients. Psychiatric patients continued on at City Hospitals up through the 1930s when they were admitted to state institutions.

In the 1950s, City Hospitals was bursting at the seams with patients. Beds in its long, open wards were spaced about 10 feet apart and separated by curtains. It was now a teaching venue exclusively for Hopkins medical students, as Maryland had pulled out of its City Hospitals arrangement. Programs Bayview would become famous for, such as gerontology under Nathan Shock and later Mason Lord, were thriving. The National Institute on Aging’s Gerontology Research Center opened in 1968, the same year that community support from the Kiwanis’ Club established the now renowned Baltimore Regional Burn Center.

Dire Straits

The A Building as it looked in the 1960s.
Cities throughout the United States were struggling in the 1970s and 1980s to maintain their municipal hospitals, and Baltimore was no exception. Run by municipal bureaucrats who knew little about hospital administration, City Hospitals was on the brink of financial disaster.

A bright light was Chesapeake Physicians, one of the first faculty practice plans in the country. When it was established in 1972, revenue for physicians and medical staff began flowing in.

And yet, by 1980, Baltimore Mayor William Donald Schaefer was exploring bids from for-profit health care companies to take over City Hospitals, which was losing millions annually. Meanwhile, Chester Schmidt, president of Chesapeake Physicians, and Philip Zieve, chief of medicine, were lobbying The Johns Hopkins Hospital to acquire their besieged, but still promising, institution.

City Hospitals' Chester Schmidt, left, and Phil Zieve sought to convince Hopkins to acquire their ailing institution.
In fact, City Hospitals had what Hopkins wanted: Chesapeake Physicians, the region’s only burn unit, kidney dialysis and transplant programs, a long-term care facility, a couple of federal research centers, hundreds of teaching beds—not to mention 134 acres of land. Fearing competition from a for-profit hospital, Robert Heyssel, then president of Hopkins Hospital, and Richard Ross, dean of the medical school, reasoned that the acquisition might make sense—if Hopkins could manage City Hospitals successfully for a trial period and reduce its deficits.

Such a Deal

In 1982, under a contract with the city, Hopkins assumed management of City Hospitals and sent a trio of young hospital administrators out to run it. Ronald Peterson, William Ward and Kenneth Grabill dramatically reduced City Hospital’s multimillion-dollar deficits. In 1983, University and Hospital trustees voted unanimously to start negotiations to take over City Hospitals.

The team that built Bayview: Ken Grabil, Judy Reitz, Ron Peterson, and William Ward.
Negotiating the deal with Schaefer, Heyssel played hardball. Under the terms of the agreement, the city promised to pay Hopkins $5.4 million over the next four years to cover part of the $8.4 million needed for improvements. Hopkins would loan the remaining $3 million to the city. The city and Hopkins would split profits from developing City Hospitals’ land over the next 20 years. Remarkably, if Hopkins could not operate City Hospitals successfully after five years, it could give it back.

In the end, Hopkins never put a dime of its own into the deal. (It was able to cover its portion of the upgrade expenses with revenue generated at City Hospitals.) Negotiations were concluded in March 1984; the transfer of ownership was effective July 1. City Hospitals was renamed the Francis Scott Key Medical Center, with Peterson its president. Soon thereafter, he added Judy Reitz to the management team.

Bayview Today

Deal maker Robert Heyssell: "Hopkins had a huge stake in the continuence of City Hospitals."
Today the Bayview Medical Center is a 700-bed community teaching hospital with federal research institutes, nationally known programs and regional centers. Its impact on southeast Baltimore City and County is immeasurable. Its nationally known geriatrics program provides hundreds of elderly people with residential and outpatient care. It houses Maryland’s only burn center, an area-wide trauma center, comprehensive substance abuse programs, a digestive diseases/motility center, and regional centers for neonatal intensive care and sleep disorders.

In the 20 years since the takeover, admissions, surgical procedures and clinic visits have risen consistently. Approximately 2,000 employees have been added to the payroll. Buildings and grounds have been transformed. The campus now is modern and vibrant. Most significantly, considering Hopkins’ worries as it hammered out the City Hospitals deal, Bayview has been in the black.

William Donald Shaefer: "The first year, they broke even. The second year, they made a profit. The third year, I knew we'd made a bad deal!"




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