PinnacleHealth System’s plan for a Hampden Township hospital sparks burning questions in health care debate [The Patriot-News, Harrisburg, Pa.]

May 27--If the mission is to keep people out of the hospital, why build a $100 million hospital in a competing hospital's backyard?

That's one reaction to last week's announcement by Harrisburg-based PinnacleHealth System that it will build a 100-bed hospital in Cumberland County.

The new hospital in Hampden Township, with an emergency department, private rooms and services appealing to well-insured baby boomers, will be within six miles of Holy Spirit Hospital and 18 miles of Carlisle Regional Medical Center.

It sparks some burning questions of the health care debate:

--Is the intent to improve service or steal patients from other hospitals?

--Will it create competition that will benefit patients by raising quality and lowering costs?

--Or will it result in expensive, unnecessary duplication of services, with the expense leading to health insurance premiums?

Holy Spirit's reaction was that hospital admissions are down and the area doesn't need another hospital.

"Does it drive down prices? I don't know that," said state Sen. Pat Vance, R-Cumberland County, a former nurse who pays close attention to health care. "Is it possible? Yes. Does it make it a more competitive process? ... I guess only time will tell."

Mike Fiaschetti, senior vice president of provider services for health insurer Highmark Inc., said he doesn't know for certain, but data available to him don't scream out for another hospital.

"It appears we already have enough capacity in the Harrisburg metropolitan area," he said. "I think we really have to ask the question of will this create excess capacity, and what is the cost of that capacity?"

But aside from the questions, this seems certain:

Pinnacle intends to become the dominant player in the area -- Cumberland, Perry and northern York counties -- that Holy Spirit and Carlisle Regional considered their home turf.

It has positioned itself to attain the regional dominance enjoyed by WellSpan Health in the York region and Lancaster General Health in the Lancaster region, observers say.

'A VERY SMART MOVE'

The new hospital seems well-situated to provide a highly convenient option and a funnel into the Pinnacle system, which includes the full range of medical services, beginning with family doctors.

It will be built next to Pinnacle's Fredricksen Outpatient Center on Technology Parkway.

Although close to Holy Spirit, it will have the advantage of easy access to the Wertzville Road interchange of Interstate 81.

One observer said Pinnacle is already familiar in the Carlisle area, where Carlisle Regional's reputation was impacted by critical reports from the Pennsylvania Department of Health last year.

In the past, Carlisle-area residents might have hesitated to use Pinnacle's emergency room because of distance and the inconvenience of driving and parking in downtown Harrisburg.

Now, they'll be able to hop on I-81 and reach a Pinnacle emergency room within 20 minutes.

"That's probably a very smart move on their part -- not to force people to come to downtown Harrisburg," said Dennis Olmstead, a health care economist for the Pennsylvania Medical Society.

Holy Spirit Health System enjoys strong loyalty on the West Shore, said David Sarcone, a Dickinson College associate professor who formerly worked in the hospital industry.

Holy Spirit has made its own aggressive moves into the Carlisle area, most recently via a new facility offering services including family doctors and imaging just four miles from Carlisle Regional.

Sarcone believes Holy Spirit will withstand the increased presence of Pinnacle, although it might become "land-locked."

"For years and years, Holy Spirit was pretty much the West Shore hospital. That will no longer be the case. It's going to cost them more to keep up. ... I don't know if they have the same resources [as Pinnacle]," Sarcone said.

Sarcone believes Carlisle Regional will face the tougher challenge, for reasons including the fact it's part of a chain based in Florida.

"Their ability to react quickly and make significant investments is linked to the home office," he said. "I think, of the two, Carlisle Regional is at greater risk."

Observers said Pinnacle's market clout could enable it to command higher reimbursements from insurers, increasing its ability to dominate, and possibly driving up insurance premiums.

SEEING A RISING NEED

Pinnacle officials said the move is solely for the good of patients and to meet future needs rather than gobble up existing business.

Pinnacle already has a substantial Cumberland County presence, which grew yet again with the recent acquisition of Heritage Medical Group of family medical practices.

CEO Michael Young said Pinnacle's West Shore and Perry County patients have expressed a desire for easier access to Pinnacle hospital care.

He said the decision to build a West Shore hospital was driven by expected population growth in Cumberland and Perry counties, especially among people who are aging and whose use of health care will grow.

Another driver is a goal of taking health care into the community, rather than vice-versa.

Young stated a goal of having a Pinnacle family doctor within 10 minutes of all its patients, having Pinnacle specialty services within 20 minutes, and having a Pinnacle hospital within 30 minutes.

In recent years, Pinnacle has acquired medical practices, imaging services and other specialty entities throughout its service area.

The purpose is to provide the full range of medical services, better coordination and tools such as electronic medical records to keep patients healthier, reduce hospitalizations and lower health care costs.

That scenario is playing out nationally. It's driven by a movement, involving both government programs such as Medicare and private insurers, toward paying medical providers for quality rather than volume. The focus will shift to "managing" patient's health rather treating their episodes of sickness.

At the same time, there's an expectation that per-patient reimbursement from both government and private insurers will decrease. The consensus is that bigger organizations will be better-positioned for success.

It's logical that Pinnacle's expansion plans would point west, given that territory to the east is well-controlled by the region's other giant, Penn State Milton S. Hershey Medical Center.

It's also worth noting that none of the area's health care players have respected geographic boundaries. Penn State-Hershey owns medical practices in Cumberland County, which generate referrals for its more specialized services.

Even Geisinger Health System, another highly ambitious player north of the Harrisburg region, has taken steps to mine the area for patients.

LETTING MARKET DECIDE

Dr. Scott Owens, an independent urologist, initially assumed the purpose of Pinnacle's new hospital is to siphon business from Holy Spirit.

But after more thought, he concluded it makes sense in terms of meeting the region's future needs, improving coordination of services and better serving existing Pinnacle customers located west of the Susquehanna River.

Owens performs surgery at Holy Spirit and Pinnacle facilities. He described patients who desire Pinnacle services but are reluctant to go downtown.

He believes Holy Spirit can hold its ground. It will have to highlight what it's good at, excel in measurable outcomes for things such as cardiac and orthopedic procedures and infection rates, and publicize its successes.

"They need to be a strong community hospital that excels at bread-and-butter medicine. They need to become the experts in that community, provide the services, have the outcomes and define it more specifically," he said. "Pinnacle has taken the lead, on the [new] facility and the message, and Holy Spirit has to parallel that."

Dr. Joseph Cincotta was an independent family doctor until earlier this year, when Pinnacle acquired Heritage, making him a Pinnacle employee.

Cincotta fully embraces the idea of integration and coordination of medical care, referred to with terms such as "accountable care organizations" and "medical home."

He believes that by linking doctors and giving them the tools to share patient information, Pinnacle will push patient health to a higher level.

Several local observers representing business interests said they trust Pinnacle to evaluate market needs and make moves that are in its best financial interests. They see that as the best path to serving patients.

"I like to go with the theory that the marketplace should decide the amount of capacity in a given area ... let the market decide what patients want to do and where they want to be treated," said Rick Dreyfuss, an analyst for the conservative leaning Commonwealth Foundation.

But there's also evidence that increased competition in a region doesn't necessarily lower prices, and sometimes the opposite occurs.

Studies have shown that an abundance of things such as heart centers and high-tech imaging devices can lead to more use of medical services and higher overall costs, but not better health.

There's also evidence that attaining great size and scale doesn't always lead to lower prices, as it does in retail.

In the Pittsburgh area, dominated by the University of Pittsburgh Medical Center, businesses complain that costs have continued to spiral upward.

There's debate over whether the blame lies with UPMC or with Highmark, which is the dominant health insurer.

Highmark's Fiaschetti, while raising questions about whether Pinnacle is creating excess capacity, agreed with Pinnacle on the idea of integrating services for the purpose of better-managing patient's health.

The need for that will remain, regardless of the fate of President Barack Obama's health care reform law, which would push medical care providers in that direction.

"We are going to pay providers for value," Fiaschetti said. "Those who do it well are going to get our members, and those who don't, won't. I think Pinnacle is aligned with us on that."

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