Janesville in midst of health care building boom [The Janesville Gazette, Wis.]
By Jim Leute, The Janesville Gazette, Wis. | |
McClatchy-Tribune Information Services |
Two new clinics.
Millions of dollars more spent on remodeling and expanding area health care facilities.
Why the spending explosion in the local health care industry? Will it improve local health care or is it a medical arms race simply intended to attract more patients?
Health care providers wrapping up nearly
Some industry observers, however, say such projects often are designed to increase the number of patient procedures, capture market share and lock down profits, regardless of the community's medical needs.
In less than a month, SSM Health Care of
Whether on billboards or at construction sites, it's nearly impossible to drive anywhere in
Providers -- only slightly slowed by the recent recession -- are in expansion mode in an effort to hold or grow market share in an increasingly competitive sector, those experts say.
"It has little to do with what consumers want or need," said Dr.
"You've got well-meaning organizations that are trying to optimize their own health and strength."
The whys and wherefores
Improved access to local health care that's more efficient from a cost and quality perspective is the main reason for the new
"We heard from the community that it wanted choice in its health care options," said
For years, Dean physicians have treated patients in
When hospitalization was necessary, some of those patients were admitted and treated by Dean doctors at
Early studies -- many supported by insurance claim information -- showed that a significant number of patients get primary care in
"It became obvious to us that they want to be part of an integrated delivery system," said
Dean patients, Johnson said, wanted a more complete range of health care services in
"Riverview would be adjacent to a hospital that we wouldn't admit to anymore," Samitt said. "
Swanson said the neighboring providers would be able to develop efficiencies that will create a safer, more cost-effective environment.
Part of that will be an immediate reduction in cost -- estimated at 38 percent -- that Dean won't pay to put its patients in Mercy's beds.
"Our view was that we have an integrated system, but in
"Our whole model works on collaboration and efficiency, which then gives better premium control. By having the
Mercy: Staying the course
Each year,
In recent years, that's translated into capital spending of about
"When you look at our 10-year history, we have been through similar cycles of growth," he said. "Our current level of capital investment is in line with the size of our health care system and our previous capital investments."
Mercy has several current projects that are particularly visible.
In addition to the
"What we have going on is a few very obvious projects that people see, so they think, 'Oh my, there's a lot of construction going on,'" said
Mercy operates 64 facilities in 24 communities in southern
Larger projects such as the
"For smaller and ongoing projects, we utilize our operating cash to the extent that we do have investment earnings that help to fund that, and then the fallback is to go to the bond markets," he said. "Bond markets are very favorable right now, similar to mortgage rates."
Bea said the front of the hospital and its patient services area haven't been touched in 15 years.
"We've got these three projects going on that are kind of in people's faces," he said. "But what people don't know is that we had the same kind of level of expenditures with the big double MRI suite that blends right into the hospital, so people don't even know that it was an addition to the hospital.
"We put tons of money into new electronic medical records, millions into big, gigantic standby generators. People don't see that stuff. We're not doing any more expenditures or construction than we ever have. It's just that it's more visible right now."
Visible but necessary?
There's little doubt patients in the
Some people, however, wonder whether the growth is necessary and question whether an increasingly competitive health care market is expanding without regard to the community's medical needs.
Leaders of the two primary health care providers in
Others, including industry watchers, say unchecked growth leads to unnecessary care that everyone pays for either through higher premiums for private insurance or through taxes to support
In a 2006 study, it found that the
For example, the study found that the local area had more primary care physicians than the national population-based average but fewer pediatricians.
Because demographics differ across the nation, the data do not mean the
"Generally speaking, adding capacity beyond what the community needs is not a great thing," said
"The question becomes: Is what's being done truly addressing the community's needs, or are they being done to address someone's bottom line?"
Cassil said health care spending is increasing faster than the nation's gross domestic product.
"If we're getting better health care for that kind of spending, then maybe it really is better than a few more flat screen TVs," she said.
Samitt said Dean doesn't look at communitywide ratios when determining staffing or services.
Instead, he said, the system bases its staffing on patient demand. That starts with primary care physicians and expands to specialty care physicians as warranted, he said.
Who measures demand?
"There are some nuances, in my opinion, when you talk about 'community need,'" Mullahy said. "There is a pretty significant number of health care consumers who believe more is better, shinier is better.
"Give me the shiniest toy, and I can be a happy health care consumer."
Community needs often are confused with community preferences, Mullahy said.
"The needs of today are not what they were 20 or 40 years ago," he said. "If it's out there, we want it.
"I and others are somewhat vexed when it comes to convincing health care consumers that more is not always better, newer is not always better, shinier is not always better."
Meeting customer preference is not a bad business model, he said, adding that it's the backbone of most businesses.
Health care, however, is different, he said.
"Bigger, newer, shinier costs more, but how are those price signals translated back to consumers?" he said. "Those price signals often get diluted."
To illustrate his point, Mullahy talks about what likely happened at recent enrollment sessions for health care plans in communities such as
Suppose, he said, there are two providers, and one just built a shiny, new facility, with all the fancy trappings that Mullahy refers to as the "hotel side" of health care.
When presented to employees, the insurance premium for that provider's plan is
"The one that didn't build anything comes in with a premium of
"But what if the difference was
Decisions, he said, often are influenced by human nature and not honest determinations of whether the newer, bigger and fancier components contribute to better health care.
"The evidence is pretty vague that it does," Mullahy said. "We may perceive that we are healthier and happier, but are we really?"
She said time will tell whether competition in
"Amenities are often used as a proxy for quality," DeMars said. "Most consumers are often tempted to believe that newer means better quality."
DeMars said consumers often don't have any idea what a community needs in terms of health care.
"Do we need ambulatory surgery centers, more beds, more mental health providers?," she said. "Where is the objective data to help us decide? There just isn't any."
Health care, she said, is unlike other industries in that providers create the demand that can lead to an over-supply.
"We're going to have to live with the infrastructure that's being created for a long time," she said. "I hope it improves quality and costs, but only time will tell.
"We need better, more objective data to understand what our communities need, and I would think that most consumers, given the choice of good data, would dismiss the amenities, waterfalls and fireplaces."
Do better or do more?
Local providers say consumers aren't paying for their building projects in the short term.
Granted, they say, patients and their insurers do feed an organization's earnings, which ultimately pay the capital expenditure bills and bond retirement.
"You've got to remember that most health care pricing is set on fixed-price margins," said
For the most part, others tell health care providers what they can charge.
"The rates are set, so the question for providers becomes, 'How can we make more money?'" Studer said. "Then it comes down to volume."
Goodman of the
"We've got a health care reimbursement system that pays for any care that's delivered, whether it's valuable or not," Goodman said. "That has led to this unbridled growth.
"An increase in providers or services does not lead to better quality and lower price. It leads to a medical arms race where everyone is adding more and more, and that added capacity needs to be kept busy."
Mercy, SSM and Dean officials said that Goodman's statement is true from a broad perspective.
In many markets, they said, competing providers are building to increase the number of procedures.
But not locally, they said.
"That's one of the ways that Dean/SSM are a bit of a different system than others," Samitt said.
"For many years, our focus has not been on volume; it's been on value. To function as an integrated system, we're responsible and accountable for the physicians, the hospitals and the cost of care through health care premiums. Our focus has been on improving the quality of care and being prudent stewards of our customers' resources."
Samitt and Mercy's Cook said the reimbursement model is changing, and it will put more emphasis on cost and quality than on volume.
That's a result of the Patient Protection and Accountable Care Act of 2010.
One the act's provision is a program called value-based purchasing, which gives the government the power to base a portion of hospital reimbursement payments on how well hospitals perform in 25 core measures.
One facet of the value-based purchasing program raises the stakes even higher for systems that voluntarily agree to become "accountable care organizations." ACOs, as they are known, will give doctors and hospitals further financial incentives to provide quality care to
"With value-based purchasing, unless you're at the top docile of performance, you're not going to get any of those incentives," Cook said. "We know that the average hospital out there is going to see less reimbursement. It's not going to grow."
The purpose of value-based purchasing and accountable care programs is to reward systems for doing better, not for doing more, Samitt said.
Integrating cost, quality efficiencies
While changes may be on the horizon, several health care industry watchers have argued that the national building boom has created an increase in services and procedures that are often duplicative and unnecessary.
Summing it up in 2007,
"Instead, they were powered by the hospital's need for market share."
In his lengthy career, Mercy's Bea has seen examples of what Mahar and others suggest.
Often, he said, hospitals without integrated physicians are forced to compete by adding buildings and equipment whether that growth serves a community need or not.
"They try to gain market share from doctors through building new facilities," he said.
That, however, is not the strategy for Mercy, which has long had doctors that are integrated into its system, he said.
With exceptions for referrals for advanced care, Mercy doctors admit their patients to
"Our 380 doctors are part of our system," Bea said. "We don't have to go out and try to one-up a competing hospital with a new facility.
"We've been able to get full life and then some from our facilities because our doctors are integrated."
Bea said that in communities where doctors are not integrated into one hospital system or another, hospitals compete for market share by routinely dressing up their facilities to lure doctors and their patients.
Samitt agrees that integration is critical to controlling costs.
The new
Full integration in
"When we have separate elements to the system, we either can't guarantee on the quality side or the cost and efficiency side, and being an integrated system allows us to simultaneously focus on both," he said. "It's not just cost control by competition; it's cost control by functioning as an integrated system."
Health care officials: 'Integration' drives building
Talk to the leaders of SSM Health Care of
The word also has been prominent in the vocabulary of
Generally, integrated health care systems are designed to contain costs while maintaining quality. They generally pursue economies of scale and eliminate redundancies through centralized control systems.
Since Bea arrived in
The intent is for the services to work together to provide patients with a coordinated and convenient continuum of care.
That continuum of care, Bea has said, allowed Mercy to incorporate far-reaching efficiencies that lower the cost and improve the quality of health care.
That's the same strategy SSM and Dean will use in
For decades,
Dean has long partnered with St. Mary's on the hospital side, and officials from both organizations decided that a St. Mary's hospital in
"It became obvious to us that they want to be part of an integrated delivery system," said
Thus the new hospital, which Dean and SSM officials said will improve the quality of care delivered in
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(c)2011 The Janesville Gazette (Janesville, Wis.)
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