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Experts: Care is not top priority in new hospital choice

Ideally, the criteria for selecting the builder of Fort Mill's new hospital should be which applicant can provide the best health care, at the lowest cost, while serving the most people, health care experts say.

But, state health regulators in Columbia are examining balance sheets, demographic profiles, estimates of usage, building square footage - even highway traffic counts - as they evaluate applications from the parent companies of Carolinas Medical Center, Presbyterian Hospital, and Piedmont Medical Center. A decision is expected by Sept. 9.

Health care quality measures, while part of the regulatory conversation, are apparently not among the top criteria being used to make a decision, according to interviews with professors and others who follow the health care industry.

"The Department of Health and Environmental Control has always said that everyone provides quality of care," said Lynn Bailey, a Columbia-based health care consultant with 30 years of experience.

Daniel Sullivan of Sullivan Consulting in Atlanta said DHEC's attitude has been "it is beyond our capability to evaluate quality. They assume all provide high quality. The underlying health of a community doesn't factor in."

Gerald Anderson of Johns Hopkins University said the certificate of need process used by South Carolina could match the community health needs to the provider with the best care record.

But as currently used, the process "does not have the tools to determine which applicant is best," said Anderson, director of Johns Hopkins' Center for Hospital Finance and Management.

The certificate of need process is used by South Carolina and other states to determine which applicant will be given the right to build a hospital or other medical facility. The process is designed to encourage the growth of needed facilities, while managing their cost and avoiding duplication of services.

The lack of medical focus is not unusual, say health care experts interviewed by The Herald. A study by the nonpartisan, nonprofit National Institute for Health Care Reform found the certificate of need process is often highly subjective, "heavily influenced by political relationships" and affected by an applicant's clout, size, and wealth. South Carolina was one of six states studied by the institute.

The study also found that the Fort Mill hospital fight is being played out in other areas of the country where there are growing, well-insured, and largely affluent populations. Suburban areas near Seattle, Detroit and Augusta, Ga., all have contentious certificate of needs battles. Conversely, there are no fights to build hospitals in rural or less affluent areas.

This is the second battle involving the Fort Mill hospital. In 2006, DHEC awarded the hospital to Piedmont Medical Center, after a similar battle between it and Carolinas HealthCare System and Novant Health. Carolinas HealthCare System owns CMC and Novant owns Presbyterian.

The decision was appealed, and an administrative law judge sent the case back to DHEC in 2009, setting off the current fight.

The three applicants made their case publicly before state health regulators on June 29.

The stakes are high. Whoever gets the certificate will shape health care in northern York County for years to come through the addition of offices for doctors and specialists. If either Carolinas HealthCare System or Novant Health is selected, it will add another hospital to its system that sends more serious cases to its big Charlotte hospitals, health care experts said.

Carolinas HealthCare System and Novant officials have consistently denied they are building a "feeder" hospital.

The applicants each employed two parallel efforts to win the Fort Mill hospital bid. One has been the costly public relations campaign to secure community support, which has included websites, billboards and other advertising.

The other has been the ongoing exchange of information between regulators and the applicants since an administrative law judge ordered the Department of Health and Environmental Control to reconsider its 2005 decision to award the certificate of need to Piedmont Medical Center.

The applications, the exchange of correspondence and letters of support for each hospital fill volume after volume of binders at DHEC's Columbia office. In their applications and correspondence, each of the competing hospitals makes the case they are best qualified. The hospitals also question their competitors' qualifications.

That's standard practice, said health care experts: play up your strengths, punch holes in your competitor's application.

The number of letters - DHEC has stopped counting them - is overwhelming, but not unexpected. Presbyterian claims 10,000 letters. The two others have thousands of letters of support too.

"Some people think you can win by weight, rather than by quality," Sullivan said. "The quality of the letters count."

The state's certificate of need process lists 33 criteria that can be used to evaluate applications. In a 2006 letter to applicants, DHEC listed the project review criteria it considered most important. The criteria was also included in a June 29 summary handout about each applicant's submissions.

The highest priority for the Fort Mill hospital is compliance with the state health plan, which says York County needs 64 more hospital beds.

Carolinas Medical Center and Presbyterian both plan 64-bed facilities. Piedmont Medical Center wants to build a 100-bed hospital, shifting some beds from its Rock Hill hospital. Piedmont argues Fort Mill is growing so fast that 64 beds is not enough.

The next priority is documenting community needs from demographic and socioeconomic data to identifying the services the applicant plans to offer, "in an acceptable period of time and at a reasonable cost."

Universal access to health care at the facility was also listed.

The third priority is financial, including projected revenues and expenses for a Fort Mill hospital, and efforts to contain those costs. Estimated net income for a Fort Mill hospital ranges between $2.5 million to $6 million after about three years of operations, according to the applications. Carolinas HealthCare System's net income estimates are $2.5 million, while Piedmont and Presbyterian estimate net income of between $5 million and $6 million.

The fourth, and final, priority is the record of operations for each applicant, letters of support and any adverse economic impact on existing facilities. Piedmont has said not getting selected could mean as much as a $14 million loss at its Rock Hill facility because of decreased use.

Carolinas Medical Center also argues economic harm if Presbyterian is awarded the certificate. Presbyterian would take patients from the existing providers, and Carolinas Medical Center says it serves 57 percent of the population of northern York County, many at its Pineville hospital.

William Brandon of the University of North Carolina-Charlotte said there are also various "informal considerations" that are outside the regulations, but could have influence.

Among them are the debate over profit versus non-profit hospitals and the changing face of healthcare as mandated by the federal government. Another is the economic impact of a new hospital - new hires at the facility as well as more doctors offices affiliated with the Fort Mill hospital.

"In health care, people believe that there should be a level playing field," said Brandon, the Metrolina Medical Foundation Distinguished Professor of Public Policy at UNCC. "Taxes shouldn't enter into it. The reality is in health care there is a prejudice against for-profit health care," because of the belief for-profit hospitals increase costs to make money.

Piedmont is a for-profit operation. The other two applicants are nonprofits.

One of Piedmont's consistent points to residents is that it pays taxes. A new hospital could add as much as $4 million to local tax collection. Carolinas HealthCare and Novant also pay property taxes on some nonmedical operations in York County, but it is far less than Piedmont's bill.

Alwyn Cassil, spokeswoman for the National Institute for Healthcare Reform, said when there is not a dispute about the need for a hospital - which is the case in Fort Mill - more attention is paid to community needs, such as "who brings more jobs."

These discussions "become more about politics than health services," she said.

If President Barack Obama's call for more streamlined health care with easily accessible medical records is considered, Carolinas HealthCare Systems might have an advantage, Brandon said. He said the way Carolinas HealthCare operates is one model for the future of health care.

If competition is a prime consideration, Presbyterian could have an advantage, said health care experts interviewed. But competition, Sullivan said, is usually not a high priority. Some health care experts believe that competition does not reduce prices. Rather, it results in two hospitals serving fewer people, driving up costs and affecting the quality of care, said Anderson of John Hopkins University.

Sullivan said that because Piedmont Medial Center is already in York County, it could have an advantage because DHEC has considered incumbency in the past.

But Bailey cautioned against reading too much into previous DHEC decisions. Much of the staff at the agency has changed and its has new leadership appointed by Gov. Nikki Haley.

"Nobody has been through this process before," she said. "Being remanded back to staff is new territory."

Additionally, Bailey said, the environment surrounding the applications has changed significantly - Fort Mill's rapid growth, health care reform and Carolinas HealthCare Systems and Novant acquiring more local practices.

"The medical community is no longer independent," she said.

Bailey said the one aspect that could work in favor of Carolinas HealthCare System and Novant Health is their track record of building new hospitals.

There is also a different political climate in Columbia. On the day the Fort Mill hospital applicants appeared before DHEC, the state legislature voted to override Gov. Haley's veto of funding for the certificate of need program.

"Only the politically naive believe politics are not being played out at the highest level of this application," Bailey said. She said she has no direct knowledge of political influence, but based her assumptions on more than 30 years of experience in dealing with the state.

Health care experts said each applicant presents a strong case for selection.

"DHEC has a tough job," said Sullivan of Atlanta. "The applicants on the surface all seem similar. There is not a clear-cut decision."

The latest DHEC's decision can be made, by law, is Sept. 9. That decision can be appealed to the full DHEC board, which does not automatically have to hear an appeal. Applicants can appeal the decision to an administrative law judge. Appeals to the state's Appeal Court and Supreme Court are also possible.