Excess Care?

 

On April 28, privately owned Nueterra and the University of Missouri Health System applied for a Certificate of Need (CON) from the Missouri Health Facilities Review Committee to build a $38 million, 10-bed surgical center in Columbia at 4130-4150 Lenoir St.

The proposed hospital, known currently as the Fulton Medical Center New Campus expansion for its association with Fulton Medical Center, would be owned — as is Fulton Medical Center — by Nueterra (65 percent) and MU Health System (35 percent).

“A new 10-bed hospital in south Columbia will help address high patient populations at University Hospital,” says Amy Leiker, Nueterra’s vice president of global marketing.

“I’ve walked through this application with a bunch of people, and the word that comes up every single time is absurd,” says Jim Sinek, Boone Hospital Center’s president. Sinek, who became president of Boone Hospital Center two years ago, has 25 years of hospital administration experience in Arizona, Iowa, Missouri and Nebraska. “You’ve got 70,000 people you’re trying to provide with convenient, accessible care, and you’re Fulton Medical Center located in Fulton, Missouri, but you’re building a new facility in Columbia?”

The proposed facility would be within four miles of five Columbia hospitals: University Hospital, Truman Memorial veterans’ Hospital, Women’s and Children’s Hospital, Boone Hospital Center and Landmark Hospital.

Boone Hospital Center has voiced strong opposition to the new facility in the form of community forums, public hearings, expert testimony, employee meetings, a marketing campaign and, ultimately, a petition it plans to deliver to the CON hearing July 13. Sinek thinks the new facility would only redistribute patients from Columbia’s existing hospitals.

 

“The one hospital that is going to be impacted the most is Boone because we do a significant amount of surgery with independent physicians who can go anywhere they want with their patients,” he says. “This has the potential to destroy an exist- ing hospital for the benefit of a for-profit company’s shareholders.”

“Boone Hospital Center, from an ownership and financial standpoint, is our county’s biggest asset,” says Boone County Commissioner Dan Atwill. The hospital contributes $2 million each year to the county coffers, in addition to the free and reduced-price services and education the nonprofit hospital offers to residents.

“This organization is the biggest asset that the citizens of Boone County own,” says Dr. Jerry Kennett, former chief medical officer for Boone and a trustee on the board. “It’s in the interest of the citizens of the county for this hospital to continue doing well and not to be diverting profits to a for-profit company from Kansas.”

If you build it, will they come?
Since 1980, Missouri, along with many other states, has been requiring all new hospital facilities to prove need. The goal is to contain health care costs while improving quality of care and increasing access to medical care. although common knowledge dictates that competition benefits consumers, in the case of health care, competition may actually drive costs up.

“Imagine a small town with four MRIs,” says Dave Dillon, vice president of media relations at the Missouri Hospital Association. “That would probably be considered excess capacity, but if someone thinks they can make a profit off of it, they might still add another MRI. You have that expensive infrastructure either way, so the costs to the patient will be reflected in that excess capacity.”

Excess capacity is any unused resources at a hospital facility, including beds, equipment and even staff.

Recently, University Hospital has experienced near-capacity patient volumes, according to Mary Jenkins, public relations manager for MU Health System — between 80 and 100 percent full.

It receives patients from the emergency department, in addition to referrals by community physicians, MU physicians and community hospitals throughout central Missouri. Boone Hospital Center receives patients by the same methods, including referrals from its 300-person medical staff. According to documents kept by the Missouri Department of Health and Senior Services, Boone Hospital Center was 46 percent full, and Fulton Medical Center was 31 percent full. MU Health is not required to submit this data but reported an occupancy rate of 65 percent in a recent mail campaign. The CON application also states that other hospitals in the proposed geographic service area exceed 80 percent, but the proposed facility application states that there are no hospitals in the geographic service area except for the applicant, Fulton Medical Center.
“For those hospitals closest to the service area, the applicant expects them to experience no impact,” the application reads. “This project is targeting the patients currently served by Fulton Medical Center and the University…” according to the application, Fulton Medical Center referred more than 500 inpatients and nearly 1,000 outpatients to the university for surgical procedures. It estimates it will be utilized by 10,561 patient days during its first year in operation, 13,603 the second year and 15,622 the third year. It also estimates only 19,174 of Boone County’s 170,773 residents will fall in the hospital’s service area, along with 49,687 from Callaway County, and thus estimates that 103 beds are needed to meet these potential patients’ needs.

 

Private vs. public

According to the Nueterra website, the company’s goal is to “improve health care delivery models and grow market share.” Based in Kansas, the organization specializes in joint ventures with health systems, hospitals and physicians. Nueterra and MU Health together purchased 37-bed Callaway Community Hospital in December of 2014, renaming the facility Fulton Medical Center and changing the delivery model to a value-based model.

Nueterra is the majority partner, at 65 percent, with MU Health System owning the rest.
Although MU Health System refused to comment on its involvement, Leiker mentions the longstanding — 40-year — relationship between Fulton Medical Center and MU Health.

“Fulton Medical Center patients have received quality care from MU physicians and residents, while MU medical and nursing students are able to practice medicine in a rural hospital setting,” she says.

“Because the new hospital will be operated as Fulton Medical Center in partnership with the existing facility in Fulton, it will create new revenues to improve care options at both locations,” Leiker says.

Officials from ashland, Fulton and the Southern Boone County development Council and Callaway County see the potential the new facility would bring, not only in financial stability for Fulton Medical Center but also in terms of jobs and economic development opportunities. The application included letters of support from State Rep. of district 49 Travis Fitzwater, MU Health System executive vice Chancellor Harold a. Williamson, Fulton Mayor LeRoy Benton, Fulton director of administration William R. Johnson, the Callaway County Commission and former District 10 Sen. Jeanie Riddle.

The application adds that, in addition to the longstanding relationship with Callaway County Hospital, “The University also felt that it was important to its educational mission to maintain a teaching presence there for resident physicians.”

“Fulton Medical Center has been financially challenged for many years and needs to adapt to a changing health care world,” reads the CON application. “Since it would be a small hospital specializing in surgery services, there would be additional benefits for the patients, as well. Studies show that many of these facilities achieve greater patient satisfaction, reduce costs and decrease infection rates.” For example, those with contagious illnesses won’t be treated at the facility, which would likely result in fewer infections and, thus, post-surgical complications.

“As part of the Affordable Care Act, the federal government is now linking delivery of quality care with payments,” says Dillon from the MHA. “If you’re an outlier, better or worse, you might get a bonus or discounted payment based on outcomes.” Currently, costs are loosely based around an established list of prices, called the Charge Master, Dillon says, but under the new model, which he says most hospitals are shifting to, hospitals will be paid more if their outcomes are above average.

“The variation can be small, but even 1 percent in either direction, you can really feel it,” Dillon says. Upon its third year of operation, in 2019, the hospital is estimated to result in a net income of $1,903,747.

“I think they’re sold on the concept that if they build a profitable hospital here, they can apply some of those profits to keep Fulton Medical Center open,” Sinek says.

“Limited-service providers often sound like a good deal….they say they offer focused care, efficiencies, etc.,” Sinek says. “But everyone pays an average based on the entire spectrum of cases. The assumption is that with a full range of cases, the simple cases balance against the costlier, complicated cases and things will work out.”

“Companies like Nueterra screen for only the simpler cases and still get paid the average,” Sinek says. “They earn a bonus for offering nothing special, and leave the rest to places like Boone Hospital.”

As a nonprofit hospital, Boone Hospital Center provided $11 million in charity care in 2014, in addition to its community health programs and contributions to the county. In 2014, MU Health Care provided $43.2 million in charity and uncompensated care.

“A dollar that would have come through Boone and would have done a great deal for our county, in terms of roads, bridges and health care, two-thirds of it would now go to Nueterra’s shareholders,” Sinek says.

“All kinds of services we provide don’t pay for themselves,” Sinek says. “Many of them you can only do because you take profits from one part of the organization, like surgery or imaging, and you apply it to the services that are losing money.”

Sinek says the types of surgeries the application states the new facility would offer “are pretty straightforward, fairly non-complicated and good payer types of surgery procedures.” He says some of the most profitable cases are routine procedures, such as total knee and hip replacements.

“Generally speaking, nonprofits can still make a profit, but they have to put it right back into activities that benefit the community,” Dillon says. “For-profit gives that profit back to its shareholders.”

“There’s a general understanding that we need additional mental health facilities,” Atwill says. “I understand that [providing surgeries] is the plan, but should you go out and build the most lucrative or what will best serve the county?” Atwill would like to see increased collaboration among local health facilities to provide the highest quality and most efficient care to the most residents of Boone County and says he is willing to get that ball rolling.

 

Not all care is created equal

The proposed 51,500-square-foot facility is expected to have an emergency department, 10 medical-surgical beds and two operating rooms, according to the CON application, and is expected to provide general, urology and orthopedic surgeries.

Leaker says physicians from the existing hospital in Fulton, MU Health Physicians, as well as potential new hires will see patients at the new hospital, another concern for Boone Hospital Center, which utilizes independent physicians instead of employing physicians.

Dillon says he’s seen a trend toward employed physicians, which means the physicians work for the hospital directly and are more likely to have set pay and set hours. “We’re starting to see that physicians want to have a life outside of work,” he jokes. at the same time, increased requirements are making private practice more expensive, albeit paired with greater independence.

“Independent physicians have the privilege to work with a hospital or provide care in a hospital,” Dillon says. “as long as they’re granted privileges to practice there, they can practice at as many hospitals as they want.” This is the model of staffing that Boone Hospital Center utilizes.

“Employed physicians are also less likely to send a patient to the competition,” Dillon says. He also says volume and specialty might play a role in where an independent physician might choose to practice.

“If one facility does 1,000 knee transplants a year, and the one across town does 100, they may want to practice at the one with the higher volume” for its efficiency and financial benefits, Dillon says.

“If I’m a physician, the extent to which the hospital could do these surgeries quickly and at a low cost, it might be advantageous to a physician,” Sinek says.

“It’s unlikely that [MU Health System] is going to tell its employed physicians to take patients to the Fulton Medical Center expansion and lose 65 percent of the profits to Nueterra,” Kennett says.

Ultimately, when it comes to filling beds, it’s up to physicians, not hospital administrators.

“They are the gatekeepers for us,” Dillon says. “They can’t do their business without the environment we provide, and you can’t be admitted to a hospital unless a physician puts you there.”

 

Getting approved

“Many Certificate of Need applications go through without opposition because there’s a genuine need,” Sinek says. “People are having to leave town for care because the occupancy rate is at 85 or 90 percent, and that’s a dangerous situation.

“If they’re opposed, it’s because other parties have looked at it and questioned that need,” he continues. “I think this is an opportunity for the CON committee to really look at the data at the hearing on July 13.”