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Wednesday, 11 May 2011 20:19

Mission in the crosshairs: Hospital turf war in WNC heats up

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A state bill aimed at ensuring a balance of power between Mission Health System and smaller hospitals has placed lawmakers in the middle of a healthcare turf war.

As Mission steps up efforts to acquire smaller hospitals and doctors’ practices around the region, some fear the Asheville-based health system will siphon healthcare dollars away from local communities and limit the scope of medical care patients can get closer to home.

Meanwhile, patients don’t want business motives to drive the healthcare they receive. The medical community universally asserts that isn’t the case, even as hospitals jockey over market share and fiercely guard their territory from encroaching competition.

But Sen. Jim Davis, R-Franklin, who introduced the bill, isn’t so sure.

SEE ALSO: Angel close to merger with Mission if state bill stays at bay

“Health care is a business, it is a huge business, and for Mission it is close to a billion dollar a year business,” said Davis, an orthodontist in private practice who represents the six westernmost counties in the General Assembly. “Just like any other business we have to guard against monopolies.”

If Mission’s dominance is allowed to expand unchecked, with more and more doctors and rural hospitals coming under its umbrella, Davis fears everything except routine medical procedures and basic care would be funneled to the flagship in Asheville.

“None of these hospitals in the western part of the state want to be an emergency care center and just shove everything to Asheville,” Davis said. “Local hospitals want to maintain care in the local communities.”

Mission leaders maintain they do not want to suck up business from smaller county hospitals — and if they tried, patients wouldn’t stand for it.

“The data has been very consistent that people prefer their local hospital for routine hospitalization,” said Janet Moore, communications director at Mission.

Mission plays a life or death role for patients across Western North Carolina as the only hospital in the state’s 17 westernmost counties where highly advanced medical care is provided.

It’s not in anybody’s interest to see that function undermined, Moore said. On that point, Davis agrees.

“It is essential that Mission hospital remain strong in the western part of the state,” Davis said.

Yet Moore said the freshman senator’s bill would hamstring Mission: it would bar Mission from affiliations or joint ventures with other hospitals and doctors’ practices until the end of the year, or until a study is completed.

“This bill says Mission has to compete with a different set of rules than everybody else,” said Moore. “We are a little perplexed by the bill. What problem is this legislation supposed to fix?”

Mission is already subject to anti-trust regulations, imposed when it merged with St. Joseph’s Hospital. The state dictates how much it can charge for procedures, sets a profit ceiling and limits how many doctors the hospital can employ.

“We basically operate under a microscope,” Moore said.

Davis questions whether the rules go far enough, however.

“I have heard of quite a few physicians that are concerned about the lack of competition in the medical field,” Davis said.

Davis’ bill would commission a study to determine if those concerns are warranted.

“I have no evidence Mission has done anything wrong,” Davis said. “The whole purpose of my bill is to start a conversation.”

 

Mission’s frontline

Doctors in the region are divided on whether Mission is predatory in its business practices.

“There always will be a lot of paranoia in healthcare that the big, 800-pound gorilla is going to come in and steal your patients,” said Dr. David Mulholland, a family doctor in Waynesville who is affiliated with Mission.

But, that’s not the case, he said.

“They have plenty of patients. They don’t need any more patients,” Mulholland said.

What Mission does need, however, is referrals for highly specialized care not available at local hospitals — such as neonatal intensive care, open-heart surgery or repairing aortic aneurysms. Mission needs enough volume to cover the cost of highly specialized doctors and equipment. It counts on smaller hospitals to send patients needing advanced medical care its way, Moore said.

But when the hospitals in Haywood, Jackson and Swain counties partnered up last year with Carolina’s Health System headquartered in Charlotte, Mission began fearing those patients could be sent out of the region to Charlotte.

“Hospitals have very small profit margins. If even a small percentage of that business was siphoned off to Atlanta or Charlotte, it would be a big thing. It would hurt access for everyone in Western North Carolina,” Mulholland said.

Mission had hoped the MedWest group of hospitals in Haywood, Jackson and Swain would partner with it. But when they chose Carolinas instead, Mission reacted.

Mission began actively recruiting doctors in Haywood to join its staff. It also set up an outpatient clinic practically next door to Haywood’s hospital staffed by rotating doctors from Asheville.

Critics fear such a toehold could allow Mission to steer patients to Asheville for services. But it could be Mission is merely protecting its interests.

“Would they have had an interest in Haywood County if it was still just Haywood Regional Medical Center? They probably would have said ‘No, it is a stable situation. We get the tertiary referrals and that’s what we need and that’s what we want,’” Mulholland said. But “hospital administrators know the history of what happens when other competing large health care systems come into your area.”

Perhaps the paranoia cuts both ways, however.

MedWest CEO Mike Poore said his hospitals are not sending patients to Charlotte rather than Mission.

“Our referral patterns have not changed at all,” Poore said. “Patients do not have to worry that if a physician is employed by whatever institution that healthcare decisions are made based on anything other than providing the best care.”

When Poore’s own son needed neurosurgery recently, he sent him to Mission, not Charlotte.

“The neurosurgeons at Mission are excellent,” Poore said. “There is no reason for anyone to go beyond there for tertiary care.”

Poore said there are a lot of fears, but they are nothing more than that.

“We are working very hard to work together,” Poore said.

Dr. Stephen Wall, a pediatrician in Haywood County, said Haywood is a great hospital with great doctors, as is Mission.

“I wish we could all work together regionally,” Wall said. “I wish we could do this without always feeling like we are cutting each other’s throats.”

While MedWest frets that Mission is trying to steals its local health care dollars, and Mission frets that MedWest will send patients to Charlotte instead of Asheville, competing hospitals are nothing new in major metropolitan areas.

“It is not uncommon to have surgery center, hospital, surgery center, hospital — all within a stretch of a quarter mile,” said Dr. Chuck Trentham, an anesthesiologist at Angel Medical Center in Franklin. “We just aren’t used to the big business of medicine.”

Trentham said both sides are off in their portrayal of Mission — as a predatory hospital on one hand, or a purely benevolent institution on the other.

“I don’t think they are as bad as they are portrayed, or as good as they portray themselves,” Trentham said.

Angel CEO Tim Hubbs said he does not resent doctors affiliated with Mission providing services in their territory.

“If I didn’t have them coming a couple days a week I may not have an oncologist. For us it is not competition, it is providing a benefit to our community,” Hubbs said.

Wall said the outpatient clinic being run by Asheville doctors could be driven more by doctors’ interests than Mission’s.

“There are probably too many doctors in Asheville,” Wall said. “It is a great area and doctors want to live there, so there is competition for a shrinking healthcare dollar.”

In Franklin, doctors are used to competition from neighboring counties. Several Sylva-based practices have satellite offices in Franklin, holding office hours there one or two days a week, and sending business out of the county to Harris hospital run by MedWest in Sylva.

“The same way Mission is encroaching on MedWest, MedWest is encroaching on us,” Trentham said.

 

Who’s for it?

While battle lines are being drawn over the bill, exactly how it came to be isn’t completely clear. Davis wouldn’t name names when asked who approached him about the bill or who helped write it.

“I have talked to a lot of people about this bill,” Davis said. “There were hospitals and physicians groups and individuals that encouraged me to file this bill.”

It’s no secret that Park Ridge Hospital in Hendersonville supports the bill, and many believe it was the instigator. Park Ridge has reportedly brought two lobbyists on board to advocate for the bill in Raleigh.

For now, it remains the lone hospital that has gone public in support of the bill.

Park Ridge is part of the Adventist Health System, with 43 hospitals in 12 states. While Davis is a Seventh-Day Adventist, he said he did not introduce the bill to help Park Ridge because of that shared connection.

Davis said there are a “plethora” of theories about motives behind the bill. But he said his primary concern is that “health consumers’ interests are protected.”

Despite tension between Mission and Haywood, MedWest is not for the bill.

“We just don’t feel like we have any standing to support that bill,” said MedWest CEO Mike Poore. “We don’t see legislation as how you deal with competition. We believe in providing good quality health care, strong access and a great patient experience as how we compete, and that legislation is not needed.”

Some in the medical community have accused MedWest of advocating for the legislation, however.

“There has been a lot of goings on behind the scenes and behind closed doors,” Moore said.

Dr. Peter Goodfield, an Asheville cardiologist, claims the legislation was “promulgated by Park Ridge Hospital and MedWest.”

Park Ridge in Henderson and MedWest-Haywood are the region’s biggest and likely strongest hospitals after Mission. Yet their close proximity to Asheville makes it easy, too easy, for patients to defect — and thus have the most to lose should Mission launch an all-out affront.

While MedWest’s official position is against the bill, individual doctors in Haywood County are supporting it.

Three former chiefs of staff of MedWest-Haywood have gone on record supporting the legislation and accusing Mission of predatory practices. They wrote to the state as part of the public comment period on the COPA.

“Taking patients from the local hospital and medical community undermines the strong rural hospital system we are trying to build,” Dr. Shannon Hunter, an ear, nose and throat specialist in Haywood, wrote.

Dr. Al Mina, a general surgeon in Haywood County, believes Mission’s “aggressive expansion” into surrounding counties should be halted while the issue is studied.

“I have seen them duplicate services here in an attempt to weaken the local hospitals and siphon care that can very easily be performed here to Asheville,” Mina wrote.

Dr. Charles Thomas, an oncologist with 21st Century Oncology in Haywood County, has been at war with Mission hospital for more than 15 years.

Mission has attempted to block 21st Century Oncology from opening new cancer treatment centers in the region, from Franklin to Murphy to Marion. Mission challenged state permits for the competing cancer services and filed lawsuits to the same end.

“Throughout these many battles Mission’s ‘mission’ was to prevent competition,” Thomas wrote in his public comments to the state. “Mission will continue to do everything in its power to dictate healthcare delivery in Western North Carolina – even if it means cancer patients have to travel hours to receive necessary care.”

 

Recruiting doctors

In an effort to temper Mission’s dominance in the region, Davis’ bill aims to cap the number of doctors on Mission’s payroll.

Mission can’t employ more than 20 percent of the doctors in Buncombe County under its current anti-trust regulations. It is approaching that cap now.

Mission asked the state to increase the limit, which may have backfired by opening the door to the current debate. Davis’ bill would immediately stop Mission from employing more doctors during a study period, and would cap the number of doctors Mission can employ to 10 percent for the 18-county region. (The 20 percent cap now applies only to Buncombe.)

It’s not surprising that Mission wants to employ more doctors. It’s a national trend, driven by today’s generation of doctors who find the hassle of running their own office — the stress of being an entrepreneur on top of practicing medicine — isn’t worth the freedom.

It’s also financially attractive. Doctors are increasingly being squeezed by rising overhead and lower reimbursements from Medicare and Medicaid patients. As a result, doctors are gravitating toward a new model of being employed directly by hospitals. The hospitals keep the revenue generated from the patients, while providing a steady salary to the doctors.

But allowing Mission to employ more and more doctors will give them a lock on health care, Davis said.

“Where do you think the physicians are going to refer their patients if they are employed by Mission?” Davis said.

If Angel Medical in Franklin merges with Mission, Davis questioned whether doctors would start referring patients to Mission instead of the much closer hospital in Sylva.

But Mulholland in Waynesville said he does not steer them toward Asheville over Haywood.

“I let them decide where they want to go,” Mulholland said.

“I have no reason to stop using the local specialists. I still talk to and use our local physicians and trust them.”

Mission employs 150 physicians out of 700 who have privileges to treat patients at the hospital. Other hospitals employ a greater percentage of their doctors than Mission does. Angel employs 15 of the 40 doctors on its active staff while MedWest employs 75 doctors out of 230 — both more than one-third.

The majority employed by Mission are specialists. If they had to operate as a private practice, they wouldn’t be here, Moore said.

“There isn’t the volume of work here, for them to maintain their own practice would be financially very difficult,” Moore said.

Specialists employed by the hospital include several children’s specialists, like pediatric cancer and surgery.

“Without those specialists here these families and their children would be driving anywhere from two to four to six hours to get care,” Moore said.

Rural hospitals that have affiliated with Mission in recent years were partly drawn by having a heavy-weight in their corner to help recruit doctors.

Once affiliated with Mission, Angel Medical may be able to attract doctors to Franklin that it couldn’t on its own.

“We have the resources to pay the competitive salaries,” Moore said.

Mission is better equipped to help set up their offices, to buy them the equipment and technology they need, and offer them a larger network of doctors to be a part of, Moore said.

However, Davis has heard that some physicians felt forced to give up their private practices and become employees Mission. State regulators who crafted Mission’s anti-trust regulations obviously thought a cap was necessary, but didn’t foresee 15 years ago that it would be necessary beyond Asheville’s borders.

“There is a reason that was there: to protect physicians’ practices and to protect patients,” Davis said.

But according to Dr. Peter Goodfield with Asheville Cardiology Associates, tightening the cap for Mission when the national trend is moving the opposite direction is ridiculous.

“There are going to be virtually no physicians remaining in private practice. None of us can survive,” Goodfield wrote in public comments submitted to the state.

 

Mission monopoly?

Mission has already folded three smaller hospitals into its umbrella — those in Marion, Spruce Pine and Brevard. The hospital in Franklin is headed that way.

Mission is also close to a deal to build a $45 million outpatient center in conjunction with Pardee Hospital in Henderson County, seen as a threat to Park Ridge, which is also based in Henderson County.

Mission is not taking advantage of its dominance when it comes to pricing, Moore said. Its is the third lowest hospital in the state for costs, even though Mission has the highest percentage of patients in the state on Medicare and Medicaid — nearly 70 percent — who pay less than other patients.

While Davis talks about Mission’s unfair advantage, Moore said the bill actually stacks the deck against Mission.

Mission’s neighbors include Park Ridge in Hendersonville, run by Adventist Health System, with hospitals in 12 states, and Carolinas Health System in Haywood County, which has 29 hospitals under its umbrella.

“And they are claiming that we are a monopoly?” Moore said. “We don’t mind competing on cost and quality. We just want there to be a level playing field.”

Angel is a stand alone hospital, an increasingly rare status for small hospitals. It can’t continue that way indefinitely and has brokered a deal to merge with Mission in coming months. The bill would delay or even derail it.

Angel might then have to turn to MedWest for a partnership, which already has hospitals in Haywood, Jackson and Swain.

“That’s a de facto monopoly right there,” said Dr. Chuck Trentham, an anesthesiologist at Angel.

But given its market share of only 60 percent in Haywood and 57 percent in Jackson, it doesn’t come close to the definition of a monopoly, MedWest CEO Mike Poore said.

“The contrast to that is Mission’s market share in Buncombe and Madison is north of 94 percent,” Poore said.

 

 

What is COPA?

While a bill circulates in Raleigh to limit the dominance of Mission Health System, a state regulatory process is already under way to examine just that issue, independent from the legislation.

Mission is governed by anti-trust regulations dating to its merger with St. Joseph’s 15 years ago. The regulations are up for review, prompting a flurry of debate in the medical community about whether Mission’s ambitions should be curbed or it should be given the freedom it needs to serve as the region’s healthcare leader.

 

The players

Mission Health System: Memorial Mission merged with St. Joseph’s hospital 15 years ago to form a single, large hospital serving the Asheville area. It has three smaller hospitals under its wing, with plans to add a fourth.

Park Ridge Hospital: Based in Hendersonville and perhaps Mission’s fiercest competitor, Park Ridge is part of Adventist Health System with 43 hospitals in 12 states.

MedWest-Haywood, MedWest-Harris, MedWest-Swain: The hospitals in Haywood, Jackson and Swain counties recently united forming the new entity MedWest and adopting new names in the process. They are 18 months in to a three-year management contract with Carolinas HealthCare System.

Carolinas HealthCare System: As the state’s largest hospital network, the Charlotte-based system has 33 hospitals under its umbrella.

Angel Medical Center: A small standalone hospital in Franklin, Macon County. Angel plan to affiliate with Mission.

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