April 9, 2014

Carolinas HealthCare asks judge to reconsider decision awarding Fort Mill hospital to Piedmont Medical Center

Carolinas HealthCare System has asked an S.C. Administrative Law Court judge to reconsider his decision to give permission to Piedmont Medical Center to build a Fort Mill hospital.

Carolinas HealthCare System has asked an S.C. Administrative Law Court judge to reconsider his decision to give permission to Piedmont Medical Center to build a Fort Mill hospital.

Carolinas HealthCare filed its 23-page motion Wednesday, alleging the court, “unconstitutionally engaged in economic protectionism that violated the dormant Commerce Clause of the U.S. Constitution and the basic tenets of the free market system.”

Carolinas HealthCare, which operates Carolinas Medical Center hospitals and clinics in the Charlotte region, wants the court to grant its motion for reconsideration “in its entirety” and to issue a stay of the order.

Judge Phillip Lenski cited potential economic harm to PMC, combined with the hospital’s commitment to York County as the leading factors in why he awarded a certificate of need to PMC on March 31.

In its petition for review, Carolinas HealthCare said the court elevated the adverse economic impact criteria beyond what the state Department of Health and Environmental Control intended. DHEC ranked adverse impact near the bottom of the 33 criteria it used to evaluate applications for a certificate of need for a Fort Mill hospital.

In his opinion, Lenski wrote that PMC could not challenge the priority of the criteria which was set in 2006.

Nonetheless, Carolinas HeathCare argues, the court “elevated adverse impact over all other criteria” with the purpose of protecting PMC from out-of-state competition.

Further, Carolinas HealthCare argues that the court’s opinion has numerous errors, including the court relied on “testimony that does not exist,” the court misapplied the current S.C. Health Plan, the court “erroneously admitted and relied upon” witnesses “closely affiliated with Piedmont,” and the court failed to “weigh and balance any adverse effects of a new CHS hospital with the increased accessibility such a hospital would offer the majority of northern York County residents who presently seek healthcare from CHS.”

Carolinas HealthCare officials did not elaborate Wednesday on their petition for review.

Bill Masterton, PMC’s chief executive officer, said Wednesday, “While we knew this was a possibility, we remain committed to our plans to provide high quality healthcare at Fort Mill Medical Center.”

Lenski’s decision, released on April 1, overturned a 2011 decision by DHEC to award a certificate of need to Carolinas HealthCare System.

10-year battle

Carolinas HealthCare’s appeal is the latest step in a nearly 10-year battle over who gets to build a Fort Mill hospital.

Much of that time has been spent in court. After DHEC initially awarded a certificate of need to Piedmont in 2006, the case was appealed to an administrative law court judge, who ordered that the case be returned to DHEC. That ruling was appealed to the state Supreme Court, which sent it back to DHEC.

Before Carolinas HealthCare asked Lenski to review his decision, PMC officials had said they were moving forward, updating construction plans. Masterton said Piedmont’s Fort Mill hospital could be open by 2018.

Lenski’s decision followed 15 days of arguments in April and May 2013.

In his 40-page opinion, Lenski agreed with Piedmont’s argument that a Carolinas HealthCare hospital in Fort Mill would cause PMC economic harm, reduce the number of Piedmont patients and affect the Rock Hill hospital’s ability to provide quality health care. The judge also agreed with Piedmont that a 100-bed Fort Mill hospital would better serve the area for the present and future. Carolinas HealthCare proposed a 64-bed facility, which is what the state called for in its initial determination nearly 10 years ago that the area needed a hospital.

Carolinas HealthCare argues the court misinterpreted the state’s Health Care Plan to justify a 100-bed hospital, saying that state has reduced, not expanded, the need for beds at PMC. Carolinas HealthCare argues the 2004-2005 plan called for 64 beds and that a 2012-2013 plan calls for 16 additional beds at PMC.

Carolinas HealthCare argues the change is the direct result of PMC’s drop in patients and and its corresponding patient gain. Carolinas HealthCare estimated that more than 50 percent of people in northern York County get their medical care from one of its hospitals or providers.

In considering economic harm, Lenski said the loss of patients would adversely affect Piedmont and independent physicians in York County. The result could be the loss of specialty services such as heart surgery, neurosurgery, vascular surgery and specialized women’s and neonatal care.

If Carolinas HealthCare’s application were approved, “consequently there would be no hospital in York County providing many of the high quality and tertiary services that Piedmont provides,” Lenski wrote.

The judge also said that awarding a certificate of need to Carolinas HealthCare would not stop the migration of patients to facilities in North Carolina and that CHS has no way to shift patients from CMC-Pineville to CMC-Fort Mill, as it had proposed.

Carolinas HealthCare had argued that many York County patients already travel to its hospital in Pineville, N.C.

The “court finds CHS’s assumption that it would not take patients or market share from Piedmont by operations of CMC-FM unreliable,” Lenski wrote, adding that “to the extent that CHS can control where patients go for service, the court finds that there is little incentive for CHS to simply shift existing patients to CMC-FM. ... Merely serving the same patients that CHS already serves does not reflect sound business or healthcare planning principles.”

Lenski, basing his opinion on expert testimony, estimated that if Carolinas HealthCare built the Fort Mill hospital, Piedmont would lose between 1,600 to 3,000 patients per year and between $12 million to $22 million in income annually.

In its request for review, Carolinas HealthCare argues the court placed too much reliance on Piedmont’s expert witnesses and that the judge also relied on hearsay testimony.

Carolinas HealthCare argues these actions are legal errors that require correction.

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