Friday, September 22, 2017

Musings on a Micro-Hospital for the City of Bremerton

Recently, Chelan County overwhelmingly passed a bond for $20 million to build a new hospital, with 64.87% approval.  The community felt their aging hospital was not viable and took matters into their own hands.  After the Bremerton Harrison Hospital closes, access will become more challenging in case of medical emergencies.  Bremerton has a large population of elderly, poor, disabled, or otherwise medically fragile. While most are resilient, this community deserves a viable solution for its healthcare needs. 

From what I understand, much of the hospital structure is aging and needs to be torn down, however it is possible there are recently remodeled sections which may be viable.  If a structural evaluation yields favorable results, I propose we maintain those sections and complete a targeted demolition where appropriate.

My ideal vision would be construction of a Harrison Community Campus, to include a micro-hospital for short-stay admissions, an emergency department, and a primary care clinic.  Micro-hospitals are defined as independently licensed facilities with 8-25 inpatient beds, a fully equipped emergency department, and ancillary services, such as pharmacy, lab, and imaging studies.  Micro-hospitals can handle acuity levels comparable to those of any standard community hospital and already exist in nineteen states.

The idea of micro-hospitals is gaining traction because costs of construction are far lower than that of more traditional hospital facilities –costing anywhere between $7-$30 million, depending on the range of services available, according to Advisory Board statistics.   Micro-hospitals can meet 90% of the community healthcare needs.  They seem to flourish best in markets with critical service gaps.  Ideally, micro-hospitals are located within 20 miles of a full-service hospital, facilitating the transfer of patients to larger facilities if higher-acuity needs arise.  Hospital stays anticipated to be longer than 48 hours are sent to higher-acuity facilities.  

To date, micro-hospitals are only found in states without certificate of need (CON) laws.  Washington State has strict CON regulations.  Depending on the Silverdale Hospital expansion timeline, by 2023 Bremerton may have an opportunity to recover 74 beds; however, if CHI completes Phase II on time, a micro-hospital in Bremerton will require a certificate of need (CON) approval. While this obstacle may prove difficult, it is not insurmountable. 

Emerus is the nation’s largest operator of micro-hospitals, with 22 facilities in operation and 25 currently under development.  Structures range from 15,000 to 50,000 square feet in size and function as “healthplexes,” including primary care clinics.  According to Vic Schmerbeck, executive VP of business development at Emerus, the goal is to provide care “in a place where people work, live and play.”  Some experts worry their small size is not adequate to serve large populations, however, remaining slight in scale allows for versatility within unique communities to provide a comprehensive array of services.

Most experts believe micro-hospitals are a cost-effective healthcare delivery option for those in urban, suburban, and rural areas.  An associate director of policy development at the American Hospital Association (AHA), Priya Bathija said “We [the AHA] really think they have the potential to help in vulnerable communities that have a lack of access.”  Peggy Sanborn, Vice President of strategic growth for Dignity Health, a hospital system considering a merging with Catholic Health Initiatives said “micro-hospitals have a shorter build time, allowing the health system to bring healthcare services to patients in the community faster.”

Micro-hospitals are becoming a small giant of healthcare—a highly successful model in the new era of value over volume.  Healthcare costs at a micro-hospital are slightly higher than those of an urgent care center, yet lower than a more traditional hospital setting.  As the healthcare industry trends towards greater emphasis on the health of communities, micro-hospitals are a perfect fit, delivering care close to home, while suitably sized to meet the evolving needs of the community. 

Bremerton is a community at risk of losing access to basic healthcare services.  Building a Harrison Community Campus would be an innovative solution to deliver care that is cost-effective and efficient.  With careful planning and conservative execution, a micro-hospital could benefit patients, providers and insurers, who are crumbling under the weight of increasing costs.  Our community needs primary care, plus inpatient, urgent, and emergency care services which are accessible to everyone.  If we are ever going to contemplate passing a bond for capital improvements, a micro-hospital is one plan worth serious consideration; it would be a worthwhile investment in our children, our neighbors, and ourselves.

Tuesday, September 19, 2017

Is It Time for Physicians to Unionize?

Since the birth of our nation, labor unions have existed in one form or another in the United States.  Unions are a force to protect the ‘working population’ from inequality, gaps in wages, and a political system failing to represent specific industry groups.  Historically, unions organize skilled workers in a specific corporation, such as a railroad or production plant, however unions can organize numerous workers within a particular industry.  Known as “industrial unionism”, the union gives a profession or trade a collective and representative voice.  The existence of unions has already been woven into the political, economic, and cultural fabric of America; it may be time for physicians and surgeons to unionize.

A labor union, is a body of workers who come together to achieve common objectives, such as improved safety, higher pay and benefits, and better working conditions.  Union leadership bargains with employers on behalf of union members to negotiate labor contracts (collective bargaining.) This may include the negotiation of wages, work rules, complaint procedures, and regulations governing hiring, firing and promotion, or workplace policies.

In 2010, the percentage of workers belonging to a union in the U.S. was 11.4%, compared to 27.5% in Canada.  There are strong, causal linkages between a diminished proportion of the workforce unionizing and loss of worker bargaining power.  Obviously, the leadership of corporations prefers workers having less leverage while negotiating; unions allege this employer-incited opposition has contributed to the decline in membership over time. 

However, the popularity of unions is growing, according to a January 2017 survey conducted by Pew which found 60% view unionization favorably.   More than half of young, millennial Republicans are in favor of unions as well, something that would have been shocking a decade ago.  Maybe the time is right for physicians to unionize?

In 1972, Dr. Sanford A. Marcus, a surgeon in private practice formed the Union of American Physicians and Dentists (UAPD).  It has been the most successful physician union and is affiliated with the AFL-CIO.  A quote from their website is apropos, “Hospital administrators easily manipulated physicians, treating them as if they were hired hands.  Insurance companies were dealing with them as if they were employees.  Government programs… controlled key aspects of doctors’ work, told them how much they would be paid, and what procedures they would be paid for.”  This sentiment sounds familiar.

Dr. Marcus saw medicine being ripe for takeover by corporations who were more concerned with profit than ensuring high quality care was provided to patients.  Medical associations were and still are overlooking the needs of front line practicing physicians; Dr. Marcus believed a union was the only organizational structure which could level the playing field.  He met with the AMA and they were ardently against unionizing.  The AFL-CIO initially balked at his suggestion, saying “Come back in ten years”, assuming most physicians would be employees at that point in time.  It has taken more than a decade, but our profession has arrived at the point where the majority of physicians are employed.  Large corporations are stripping physicians of professionalism and belittling our management role.

The Economic Policy Institute recently released a report with objective data supporting the assertion that unionization benefits workers in the long-term.  The EPI report found unions definitively raise wages for both union and nonunion workers.  A worker with a union contract earns 13.2 percent more in wages than a peer with similar education and background experience.  Through establishing wage “transparency”, unions raise earnings of women, black, and Hispanic workers, groups whose pay tends to lag behind that of their white, male counterparts.  Hourly wages for women are 9.2 percent higher than nonunionized women across similar occupations.  Black unionized workers in New York City earn 36.1 percent more than nonunion laborers in the same demographic. 

In addition, unionized workers have better health and wellness because unions ensure employers are held accountable for safe, non-abusive working conditions.  Unions can strengthen families by obtaining better leave policies, retirement benefits, and health insurance, while at the same time, safeguarding that employees have due process in promotions, dismissals, or terminations.  Front line workers often face tangible challenges often overlooked by management; as a result, they have a tremendous knowledge to suggest improvements to the workplace, make it safer, and increase productivity. 

Physicians certainly qualify as an industry sector whose bargaining power has fallen far below the value of their effort.  Labor unions exist to protect workers against imbalance in negotiations.  In a recent Washington Post article, Jared Bernstein posed that collective bargaining should be structured by industry sector instead of by individual corporations.  Interestingly enough, Larry Mishel, President of EPI and the report author, told Bernstein, “We need a design where people have collective bargaining rights as restaurant workers, as opposed to one where they gain those rights one restaurant at a time.”  Physicians may need collective bargaining rights as an industry, not as employees of Everyday Hospital, USA. 

UAPD has survived over four decades because they have offered traditional and innovative approaches to assist physicians with boots on the ground.  While officially opposing unionization, the AMA did try their hand at it during the mid-1990s, when President Clinton was working on universal health care.  After spending $3 million, they brought in 38 physicians, but the effort ended in colossal failure. 

For physicians in private practice, UAPD developed a grievance process when insurance companies unfairly deny reimbursement.  Their organization is run by physicians and for physicians.  They have won battles against large hospital corporations, advanced pro-physician legislation, organized a compassionate strike of physicians, and countered doctor-bashing in the media. 

Dr. Marcus once said, “There are no dinosaurs left…, they were unable to adapt to changing environmental conditions.  We stand a much better chance of preserving our professionalism through the process of becoming unionized workers – admittedly a terribly unprofessional thing to do... But then, that’s just the sort of adaption those dinosaurs were incapable of making, isn’t it?”  As the world becomes more divided, politically, economically, and medically, physicians stand to lose the profession we love dearly.  The moment has arrived for physicians to put aside our differences, of gender, specialty, or political ideology, and support an organized body standing up for the collective voice of physicians. 

Tuesday, September 12, 2017

Hold the Mayo and Save Our Hospital

There is a grassroots movement, 4500 strong, known as “Save Our Hospital” gaining notoriety in Albert Lea, Minnesota.  This story is symptomatic of the fact that hospital consolidation has slowly become a national pastime.  With declining revenue under the Affordable Care Act, mergers increased by 70%, leaving small communities scrambling for healthcare access.  The latest casualty in the ‘hospital-consolidation-for-sport’ trend is Albert Lea, a small city located in Freeborn County, Minnesota.

Known affectionately as the ‘Land between the Lakes,’ it has a population of 18,000 spread over 14 square miles.  Not surprisingly, Mayo is their largest employer; the 70-bed hospital serves almost 60,000 in a region including patients who live in Iowa.  In Rochester, MN, the Mayo Clinic is regarded by many as one of the premier medical facilities in the country.  Originally of humble origins, founder William Mayo opened a practice during the Civil War and later, passed it down to his sons; today, the Mayo Clinic flagship is located in Rochester, Minnesota and plans to become a renowned premier medical destination for the world. 

Corporations with such lofty ambitions tend to make “small” sacrifices along the way; often, on the back of a beloved rural town.  On June 12, Mayo clinic administrators announced they would transition all inpatient services to Austin, more than 20 miles away.  Mayo cited ongoing staff shortages, reduced inpatient censuses, and ongoing financial difficulties as their reasons for hospital closure.  Rural care was mentioned to be at a crisis point, which is an altogether callous assessment of the troubling situation facing communities across this country. 

The Albert Lea City and County Hospital Association formed in 1905 when concerned citizens raised funds to build a community hospital.  Renamed Naeve Hospital, after a prominent donor, it became the lifeblood of this rural community.  Physician groups collaborated to start the Albert Lea Clinic and Albert Lea Medical and Surgical Centers.  For financial reasons, on Jan. 1, 1997, Albert Lea’s Clinics and Naeve Hospital merged with the Mayo Medical Center in Rochester.  At that time, a now-retired local physician expressed concern about the challenges of recruiting physicians to the rural locale.  Mayo, however, scoffed at his assertion.  Recently, Dr. Bobbie Gostout, Vice President of Mayo Health Clinics, confirmed it was indeed difficult to recruit newly trained physicians to small areas with a heavy night call burden.

It is estimated the facility in Albert Lea sees 500 patients per day including office visits, dialysis, cancer care, and other outpatient services.  Approximately 7 patients per day will be affected by this move.   Freeborn County Attorney David Walker is evaluating if Mayo violated their bylaws by not holding a vote for the consolidation decision.  Mayo is denying a vote was necessary.  Walker has asked the state Attorney General to weigh in on the debate. 

Hospitals across the nation are focusing on efficiency while trying to improve care quality and maximize revenue.  Consolidation can help lower overhead expenses; however, over time, the heartland and the people being served suffer for a variety of reasons.  Mayo administrators blame $13 million in losses over the last two years at the Austin and Albert Lea campuses as the cause for hospital closure.   Prior to making this pivotal move, Mayo conducted an 18-month internal review; unfortunately, neither the City Council nor County Commissioners were consulted.  In July, Albert Lea City Council unanimously approved a resolution requesting Mayo halt the process until 2018, in order to solicit feedback from the community impacted by this decision.  The Freeborn County Board also called for a six-month moratorium from Mayo.  Both requests were denied by the behemoth that is Mayo. 

Not every community member in Albert Lea is opposed to hospital closure.  Some physicians working at Mayo feel they are stretched too thin and cannot survive with two rural facilities to staff.  Recruiting nurses and physicians has been extremely challenging, according to them.  The hospital in Austin is 20 minutes away, which they feel is adequate, alternatively, Owatonna is 25 minutes north, and Mankato is 35 minutes away and has a Mayo helicopter stationed there for medical evacuation needs.

Mariah Lynne, co-founder of Save Our Hospital, said "Our mission for Save Our Hospital is to maintain a full service, acute hospital in Albert Lea, Minn., for the benefit of our citizens and our surrounding citizens."  This grassroots organization is asking Mayo to return the hospital facility to Albert Lea so they can find another company interested in providing hospital services for their residents.  The Service Employees International Union (SEIU), which covers healthcare workers, is also supporting this community effort. 

Mayo plans to move intensive care, labor and delivery, and surgery services to the Austin facility, which is more than 20 minutes away.  Reduced access to timely medical care can actually translate into higher mortality in rural areas overall.  Since 1990, maternal mortality in the United States has been increasing steadily.  Today, more American women are dying of pregnancy-related complications than in any other developed country throughout the world. Rural hospitals, which are financially struggling, are less prepared for maternal emergencies today than they were two decades ago.  Potentially fatal complications which are initially treatable may become lethal in the setting of fewer resources and longer travel distance when seeking care.     

Mayo appears to be sacrificing a rural hospital in Albert Lea to pursue ‘champagne wishes and caviar dreams.’  Mayo plans to invest in the Destination Medical Center Project, focused on drawing foreign visitors who will bring with them not only champagne and caviar, but also open wallets.  Two major projects in Rochester are currently under way – the expansion of the Mayo Civic Center to the tune of $84 million and $93 million in upgrades at Mayo’s St. Mary’s Hospital.   When asked about complaints regarding the loss of services in Albert Lea while making elaborate plans in Rochester, Dr. Gastout said investments are helping to shore up Mayo’s long term survival.   She denies allegations the exorbitant Destination project is related to the Albert Lea Hospital closure, stating “Growth should not be misinterpreted as easy sailing in one place, and difficulties in another.”  

Reflecting on the loss of rural hospitals across the nation, my thoughts circle back to residents in Lee County, Georgia and my hometown in Kitsap County, Washington.  All three groups are engaged in clashes of David and Goliath-esque proportion against conglomerate hospital corporations threatening to destroy their respective healthcare landscapes.   While they might make strange bedfellows, City and County leaders are finding common interests aligning with local unions supporting healthcare workers, such as the SEIU (Minnesota) and UFCW-21 (Washington State.)  Together, these innovative alliances are making significant progress which may turn the tide.   For some of the large hospital systems, “easy sailing” may soon look like nautical navigation during a tropical storm.  While corporate headquarters is distracted with their dwindling bottom lines, betting on the underdogs seems prudent; after all, they are the ones gambling with their lives.  

Tuesday, September 5, 2017

A Two-Hospital Solution in the Event of a Mass Casualty Incident (MCI)

An Open Letter to the Washington State DOH Certificate Of Need Office:

CHI has had persistent operational and financial losses since 2012.  According to CHI’s Fiscal Year 2016 financial report, the company suffered a $460 million operating loss. According to Moody’s, CHI's total debt is at $9.0 billion and their outlook remains negative. The continued weak balance sheet will lead to further downgrades of long term and short-term bond ratings in the future.  As a result, they are seeking a merger with Dignity Health yet another conglomerate organization.

CHI turnaround strategies are: 1) Cutting staff, as salaries and benefits make up 50% of operating costs, 2) Reducing supply stockpiles for emergencies, 3) Outsourcing and 4) Speeding up revenue cycle operations.  “Turnaround strategies” have failed because staff may only be reduced to the extent they can save lives.  In particular, resource limitations of a financially-strapped corporation will be unable to mount an adequate response in the event of a mass casualty incident (MCI.) 

This past week, the nation watched as Hurricane Harvey became the costliest natural disaster in U.S. history.  Some have called it a “1,000 year storm.”  Tens of thousands were evacuated from their homes and needed shelter.  The death toll is slowly climbing.  Parts of Houston may be uninhabitable for weeks to months as the city works diligently to recover from the damage, physical, psychological, and emotional. 

In June 2016, Kitsap County emergency personnel participated in Cascadia Rising, a large-scale earthquake drill.  At the time, three local hospitals planned to coordinate management of injured casualties:  Navy Hospital, which would treat the “walking wounded” (least injured), or Harrison Silverdale and Harrison Bremerton, which would clear their emergency departments to receive the flood of injured patients.  While those plans have changed, the grave risk to our community in the event of an earthquake should not be ignored. 

In a Mass Casualty drill more than twenty years ago at Madigan Army Medical Center, I learned that optimum survival unequivocally depends upon sifting the distribution of injured casualties through the filter of expert triage.  Working fifteen years as a regional pediatric CPR instructor for the American Heart Association has taught me the value of ensuring emergency skills keep up with scientific progress.  Likewise, Kitsap County emergency plans will need modifications to reflect our changing healthcare landscape. 

The World Health Organization defines a Mass Casualty Incident (MCI) as “an event which generates more patients at one time than available resources can manage using routine procedures.”  Successful medical management depends upon the rational utilization of resources to ensure the timeliest treatment for the greatest number.  It is well accepted that smaller hospitals (those with Level 3 or 4 designations) face challenges treating larger numbers of casualties due to resource limitations. 

The ‘golden hour’ is the 60-minute period when medical intervention is most effective at reducing mortality following trauma.  Remoteness can preclude timely access to a Level 1 Trauma Center, like Harborview, which is 65 miles away.  Quick evacuation and transfer to an appropriate receiving hospital can be a highly critical task.  Casualty distribution decisions must prevent overwhelming a single facility, as exceeding hospital capacity can jeopardize care quality.  If only one hospital emergency department remains, there will be no alternative.

The Seattle Fault runs through Kitsap County from the Hood Canal to the Puget Sound. FEMA predicts an earthquake of 7.0 or greater magnitude could injure 400 people severely enough to require hospitalization and kill more than 150 people; thousands more could sustain minor to life-threatening injuries.  Survival outcomes will depend upon this ‘golden hour’ response time. 

Hospitals, because of their 24-hour operation and emergency services, are seen by the public as a vital resource for diagnosis, treatment, and management of injured people.  However, relying on one Level 3 hospital does not allow for the possibility it could be damaged or destroyed.  In Houston this week, 20 hospitals have had to evacuate, quarantine, or divert incoming casualties.  An internal emergency, such as loss of electric power or potable water, turns a hospital “back-up” into a critical life-line for our community.  According to Darrell Pile, chief executive of an advisory group for a 25-county region in SE Texas overseeing medical crisis preparation and management, the storm “challenged every plan we’ve written, every resource, every piece of inventory.”

The best scientific studies were conducted in Israel following accidents or terrorist attacks.  They demonstrated that utilizing two lower level ER/hospital facilities in tandem was critical to efficient management of injured casualties, particularly occurring outside a metropolitan locale.  For Kitsap County specifically, the best case report in the literature involves a passenger train and truck collision in a geographically isolated Israeli town.  Air evacuation by helicopter enabled rapid transport of casualties from the accident scene to two lower-level trauma centers and permitted equitable distribution of the wounded.  According to the study, 289 passengers were injured and 7 were killed.  Six helicopters participated, evacuating 35 victims by air, with an elapsed time between first helicopter landings to mission completion of 83 minutes.

Due to the fact access could be complicated by geography, air-medical evacuation has been strategically incorporated into the county MCI response plan.  Understanding our topographical limitations, I spent six weeks on Life Flight Teams 1 and 3 in Colorado conducting helicopter and fixed wing patient transports in preparation for independent medical practice on the Olympic Peninsula.  One helipad at one hospital plus one accessory landing zone will not allow adequate means by which to transport the high volume of casualties conceivably produced by a MCI.  The Israeli case report specifically highlights the value of using unconventional solutions when navigating geographic challenges. 

In the event of a devastating earthquake, our community could be isolated for days or even weeks, as connection to mainland, by bridge or ferry, may be temporarily disrupted.  The Peninsula has 3 level III centers, Harrison Bremerton and Silverdale (336 beds), and Olympic Medical Center (126 beds.)  Jefferson Healthcare and Mason General have Level IV designations.  Due to the fact that access to high level trauma care requires crossing a bridge, evacuation by helicopter will be essential.  Cold” loading (the method used by non-military medical teams) is safest; yet requires landing, shutting the engine down, loading the patient, and then lifting off, with a turnaround time of 13-15 minutes at a minimum.  A single facility will quickly become massively overwhelmed; whereas, having two to four landing zones at two hospitals provides the opportunity to meet the needs of wounded casualties most efficiently.

The pattern of distributing casualties to multiple receiving centers after MCI’s in the United States is well-established. Victims of the Columbine massacre were evacuated to six different hospitals.  After the devastating Virginia Tech shooting, 29 victims were triaged through four facilities.  One hospital assisting that effort was Montgomery Regional, with a Level 3 designation; they had the capability of receiving only 15 wounded, yet successfully stabilized them all.  Three who were more severely injured were directly transported to the nearest Level 1 Trauma center 27 miles away.  Outcomes absolutely depend upon matching casualties with facilities having the adequate resources to stabilize them.

In Aurora, CO, 100 injured people from the movie theatre were sent to six different hospitals.  Not only did first responders coordinate flawlessly, but they also used unconventional distribution procedures which improved outcomes.  For the first time, victims were transported two to three at a time inside of police cars.  A retrospective analysis concluded this single decision saved the lives of many, even though emergency personnel took a chance.  CHI consolidation plans involve a calculated risk too, one which may cost more lives than initially anticipated in the long-run.

A two-hospital solution provides our best chances for survival in the event of a MCI, an assertion backed by solid scientific evidence.  The procurement of every hospital bed by a corporation on the brink of financial implosion and their ill-fated hospital consolidation is gambling with our lives.  Since Cascadia Rising, the ER at Naval Hospital has downgraded to an urgent care, leaving fewer options for allocating casualties.  Moreover, Kitsap County is poorly situated geographically, precluding timely access to high level trauma care, which makes thoughtful triage, evacuation, and transport of victims even more critical. 

In my opinion as a mother, community physician, and county resident, a two-hospital solution is best for the entire population of Kitsap County.  This hospital consolidation controversy has mostly focused upon CHI financial quandaries, the fact monopolistic systems drive up cost, and guaranteeing freedom from their religious directives.  Additionally, we must prioritize preserving and protecting the 250,000 innocent lives of those residing in our beloved community in the event of a mass casualty incident. 

Tuesday, August 22, 2017

Washington State Regulators Gave CHI a Monopoly. It is Time to Take it Back.

By Councilman Richard Huddy and Niran S. Al-Agba, MD

In a perfect world, Harrison Medical Center would not have been given to an out-of-state hospital conglomerate. In a reasonable world, CHI would not leave Bremerton without a hospital when it moves Harrison Medical Center to Silverdale. CHI would build a new 262-bed medical center in Silverdale, and operate an 85-bed hospital in Bremerton.

After all, with a population of 40,000, Bremerton is the largest city in the county. With a daytime population of 70,000, Bremerton is the largest employment center in Kitsap County. Bremerton also is home to the greatest concentration of skilled nursing facility patients, assisted living residents, and disabled people in the county. It makes sense that Bremerton would have a hospital, an emergency room, and a full array of medical services. CHI, however, wants only one hospital in the county.

In a rational world, Bremerton would be able to shrug its municipal shoulders, bid adieu to CHI, and welcome another hospital provider from around the Puget Sound to build a new hospital in the city. UW Medicine, Virginia Mason, Swedish Medical, and Kaiser Permanente to name but a few. Certainly, one of those outstanding organizations would be interested in serving the good people of Bremerton! Most everyone knows that Bremerton is on the ascent, and that Harrison is leaving just when they should be staying.

But, hold on… it’s not that simple. Bremerton is located in Washington, one of the 35 states with a certificate of need law. The regulators who work in the Certificate of Need (CON) program at the Washington Department of Health have given all of Kitsap County’s 336 acute care beds to CHI to operate as a monopoly. Eleven psychiatric beds remain, which CHI does not want to operate.

How did we get here? America has struggled to balance access to hospital services with utilization, quality and price for the past 50 years. In the mid-1960’s, certificate of need laws were established to limit the supply of hospital beds and equipment, prevent overutilization of services, control costs and improve quality.

New York became the first state to adopt a CON law in 1964. By 1980, with Federal encouragement, every state except for Louisiana had a CON law. The states reasoned if they could reduce unnecessary duplication of facilities, equipment, and services, costs and utilization would decrease, and quality and access would improve. It worked for a while; unfortunately, the CON laws had unintended consequences.

Over time, hospital reimbursement changed from cost-based fee-for-service to outcome-based value pricing. Hospitals shifted from a core mission of independent, non-profit service to corporate, for-profit competition. In an April 2017 white paper, Gaynor, Mostashari and Ginsburg observe, “there has been a great deal of consolidation in hospital, physician and insurance markets... hospital markets are significantly more concentrated… insurance markets are also often dominated by a small number of large insurers… and many physician practices are being acquired by hospitals.” Horizontal and vertical mergers and acquisitions have reduced competition, stifled innovation, and resulted in higher prices and lower quality.

For the last fifteen years, the Federal Trade Commission and the Department of Justice Antitrust Division have taken an active position against the continuation of CON Programs. In a joint report entitled, “Improving Healthcare: A Dose of Competition,” they stated, “The Agencies believe that, on balance, CON programs are not successful in containing healthcare costs, and that they pose serious anticompetitive risks that usually outweigh their purported economic benefits. Market incumbents can too easily use CON procedures to forestall competitors from entering the incumbent’s market… Indeed, there is considerable evidence that CON programs can actually increase prices by fostering anticompetitive barriers to entry.”

The Kaiser Family Foundation reported health care costs are 11 percent higher in states with CON laws compared to states without these restrictive statutes.   The evidence is clear CON laws not only increase costs, but also restrict access for the underserved, especially in rural areas.  Hospital bed access is expressed in the number of beds/1,000 population; on average, there are 3.62 beds/1,000 people in the United States.  Recent studies by Strattman and Russ found states with CON laws have 1.31 fewer beds/1,000 overall.  Kaiser Foundation found Washington and Oregon have the lowest bed ratios in the nation, at 1.7 beds/1,000, with Kitsap County having a woefully inadequate ration of 1.30 beds/1,000.  In short, the evidence supports the fact that CON regulations worsen access for rural residents. 

Due to these negative consequences, 14 states discontinued their CON programs, New Hampshire being the most recent one to repeal, effective in 2016.  As part of Senate bill 5883, our Washington State Legislature is currently evaluating the effectiveness of the Certificate of Need Program at the Department of Health. 

In Washington State, CON regulations encourage appraisal of the needs for a particular geographic region, usually a county, and as a part of that evaluation, regulators solicit input on behalf of the public or “affected” persons.  It is vital the public understands the complex CON process clearly, so we may actively participate.  In Kitsap County, the CON regulations currently support a monopolistic system by default; a single entity “owns” every authorized hospital bed.  Each of us living within Kitsap County are “affected” by this critical decision, but not all seem to comprehend the long-term consequences of relocating 100% of available hospital beds to Silverdale. 

In response to requests by the City of Bremerton and two other affected parties, the Washington State Department of Health granted a reconsideration of its CON decision to relocate all hospital beds from Bremerton to Silverdale. A public hearing will be held at 10:30 am on Friday, September 8, 2017, in the meeting room at the Bremerton School District Office located at 134 Marion Avenue N in Bremerton. The City of Bremerton seeks rejection of Phase 2 of Harrison’s relocation in order to build and operate a new Bremerton Community Hospital that will provide a choice to all Kitsap County residents who need hospital care and all doctors, nurses, technicians and other workers seeking employment. Please attend the public hearing.

Tuesday, August 15, 2017

A Hospital With No Beds Cannot Stand.


America has struggled to balance access to hospital services with escalating prices for those amenities over the past 50 years.  While there are many factors contributing to this challenge, the state certificate of need (CON) laws—those requiring state approval for hospital expansions and new construction—are examples of regulations that were designed to help but have had unanticipated negative side effects. 

In 1964, New York became the first to grant a state this power with a CON law. By 1978, with Federal encouragement, 36 states had enacted CON laws. The states reasoned if they could reduce unnecessary duplication of facilities, equipment, and services, costs would decrease and access would improve. Over time hospitals have shifted from a core mission of cooperation to one of competition, and it has become clear CON laws are in fact, discouraging competition, propping up prices, and aiding the creation of monopolies.  The Kaiser Family Foundation reported health care costs are 11 percent higher in states with CON laws compared to states without these restrictive statutes.   

The evidence is now clear CON laws not only increase costs, but also restrict access for the underserved, especially in rural areas.  Hospital bed access is expressed in the number of beds/1,000 population; on average, there are 3.62 beds/1,000 people in the United States.  Recent studies by Strattman and Russ found states with CON laws have 1.31 fewer beds/1,000 overall.  Kaiser Foundation found Washington and Oregon have the lowest bed ratios in the nation, at 1.7 beds/1,000, with Kitsap County having a woefully inadequate ration of 1.30 beds/1,000.  In short, the evidence supports the fact that CON regulations worsen access for rural residents. 

Due to these negative consequences, 14 states discontinued their CON programs, New Hampshire being the most recent one to repeal, effective in 2016.  As part of Senate bill 5883, the Washington State Legislature is evaluating the effectiveness of the Certificate of Need Program at the Department of Health. 

In Washington State, CON regulations encourage appraisal of the needs for a particular geographic region, usually a county, and as a part of that evaluation, regulators solicit input on behalf of the public or “affected” persons.  It is vital the public understands the complex CON process clearly, so we may actively participate.  In Kitsap County, the CON regulations currently support a monopolistic system by default; a single entity “owns” every authorized hospital bed.  Each of us living within Kitsap County are “affected” by this critical decision, but not all seem to comprehend the long-term consequences of relocating 100% of available hospital beds to Silverdale. 

Recently, letters to the editor have suggested “bringing in another corporation to build a hospital in Bremerton” as a viable solution. While I endorse this sentiment wholeheartedly, our state CON laws will prohibit this as a feasible choice. CHI Franciscan controls all of the beds available for Kitsap County, except for 11 psychiatric hospital beds in which they have no interest.  No hospital corporation will step forward, tear down an aging facility, and build a new one for the miniscule potential 11 hospital beds would serve. 

The CON process can take a minimum of one to two years and cost between $50,000 and $5 million depending on time-to-approval and the appeals process.  Once both phases are completed in Silverdale, ANY city or corporation wishing to build or remodel the Bremerton campus will be required to complete the CON process.  It is highly unlikely a new organization will focus on the Olympic Peninsula for some time due to these massive investment requirements.

The Washington State Department of Health granted reconsideration of the decision to relocate EVERY single hospital bed to the Silverdale area. Reversing this decision would not oppose the Phase 1 hospital expansion in Silverdale, which is already under way.  Encouraging the State to reevaluate this decision is trying to ensure adequate health care choices remain in two locations. If the City retains 85 hospital beds, the possibility of tearing down, rebuilding, or relocating the Harrison Campus becomes a reality.   

The moment to change our destiny is now.  It is imperative local lawmakers, City representatives, and the entire community engage in this multifaceted process and  stand up, together, for choice, competition, better access, and lower health care costs for every man, woman, and child residing in Kitsap County.  In my humble opinion, supporting this reconsideration endeavor is categorically in the best interest of this community.  Please attend the public hearing scheduled for Friday September 8th at the Bremerton School District Conference Room on Marion Street and share your thoughts.  This is our chance to be on the right side of history. 

Tuesday, August 8, 2017

The Little County That Could: The Fight in Lee County, Georgia for Hospital Choice

…“I think I can.  I think I can.  I know I can,” The Little Engine that Could.   

As hospital consolidations sweep the nation, the monopolies being created are like insurmountable peaks over which rural communities must climb on their quest to find affordable healthcare.  Lee County, in Southern Georgia, is a little place with big dreams; they are resolutely determined to build a 60-bed community hospital and provide local residents with real choices.  For years, two competing hospitals served the population of 200,000 spread over six counties:  Phoebe-Putney and Palmyra Park. Phoebe-Putney Memorial Hospital put an end to that by securing a 939-bed hospital monopoly and an ample market share.

Their efforts began in 2003, when Phoebe-Putney Memorial Hospital in Albany, Georgia successfully opposed a bid for a Certificate of Need (CON) to open an outpatient surgery center.  Frustrated from a free-market perspective, accountant Charles Rehberg and a local surgeon, John Bagnato, began sending anonymous faxes to local business and political leaders, criticizing the financial activities of the local hospital.   These faxes quickly gained notoriety, becoming known as “Phoebe Factoids.”  Concerned about negative publicity, Phoebe Putney executives hired FBI agents to intimidate these men. 

Undeterred, these two renegades discovered Phoebe-Putney Hospital was charging uninsured patients far more for services than insured patients.   This brought widespread attention to the plight facing millions of uninsured Americans.  Many began to question what obligation a nonprofit hospital has to provide charity care for those in need.  Phoebe-Putney was caught using aggressive collection tactics, such as wage garnishment and the placing of liens on homes of patients unable to keep up with payments.  Their experience inspired a documentary called “Do No Harm.”

In-depth research uncovered millions hidden in offshore bank accounts disguised under the auspices of a non-profit— not only at Phoebe, but also at other non-profit hospitals across the country.  As whistleblowers, Rehberg and Bagnato were subsequently targeted by Phoebe and indicted on fraudulent charges of telephone harassment, aggravated assault and burglary; charges without merit which were dismissed in 2006.  

After successfully blocking the surgery center CON, Phoebe-Putney set its sights elsewhere looking to acquire the only other hospital facility in the surrounding six-county area:  Palmyra Park.  In 2011, the Federal Trade Commission (FTC) attempted to block this proposal on the grounds that the combined entity would control in excess of 85% of the market share.  Phoebes’ CEO insisted hospital consolidation was necessary to deliver cost-effective, high-quality medical care, calling the merger “the right thing for citizens.’’   The FTC argued the deal was anti-competitive (which it was) and health costs would increase significantly (which they did.)  The FTC secured a preliminary injunction but Phoebe prevailed, arguing Georgia CON laws prohibited the sale of Palmyra Park to an independent entity.  

Ultimately, the FTC was obligated to settle with Phoebe, making the dream of a hospital monopoly a reality.  However, the settlement had three stipulations:  1) Public acknowledgement the acquisition would substantially lessen competition within the six-county market; 2) Phoebe was required to provide the FTC with prior notice of transactions acquiring any part of a general acute-care hospital, or controlling interest in other facilities; and 3) Phoebe was precluded from opposing CON applications from other entities for five years.

Barring Phoebe from challenging CON applications was an innovative solution to a monopolized region; however, Phoebe already handily dominated the market.  The Certificate of Need process is expensive and time-consuming; therefore, legal experts anticipated this limitation alone would be ineffective in enticing new competitors to enter the region.  Yet, predictions can sometimes be incorrect.

Enter “The Little County That Could,” a.k.a Lee County, Georgia, with its population of 29,000 and land mass of 362 square miles.  The community and their steely resolve have yielded unexpectedly positive results.  Lee County officials filed a Certificate of Need application for a 60-bed hospital earlier this year.  The Lee County Development Authority will own the hospital structure and a separate entity will lease the facility.  Services offered will include acute and emergency care, including an ICU, medical/surgical unit, inpatient and outpatient beds, and full radiology capabilities, such as CT and MRI.  The hospital will create more than 350 "good-paying jobs" and provide access to health care for all, regardless of their ability to pay. 

While Phoebe Putney agreed not to challenge a CON application until 2020, the settlement does not preclude engaging in “sneaky” public relations tactics.  Phoebe commissioned a study to calculate the effect the Lee County Medical Center would have on the financial outlook for Phoebe-Putney.  DHG Healthcare projected Phoebe will lose more than $250 million in revenue over five years.  The firm found by the third year of operation, annual losses will be $30.1 million for inpatient care, $23.7 million in outpatient care, and $6.4 million for emergency care at Phoebe.

Lee County is on their way to achieving something extraordinary; challenging the dominance of a hospital monopoly.  On July 21, 2017, the CON application for Lee County was deemed complete by the Georgia Department of Community Health.   A decision is anticipated by Nov. 15.  If granted, the county plans to break ground on the new structure in early 2018. The CEO of Lee County Medical Center, Mr. G. Edward Alexander, stated “Our goal is to ensure that decisions for the hospital are made locally by people who live and work in Lee County.”  

Lee County, I salute you.  Medically underserved communities everywhere are supporting your efforts to transform the healthcare landscape for the better.  May your success inspire a revolution, proving that healthcare can be repaired by patients, physicians, and communities – working together.