Grand Valley Hospital Wars
A series of increasingly aggressive business moves by two Grand Valley hospitals culminated last week with rival announcements about future expansion, a trend that is raising concerns about quality of care and forcing doctors to choose sides.
St. Mary’s Hospital announced Tuesday that it is negotiating with Primary Care Partners, one of the Grand Valley’s largest medical practices, to form a collaborative venture the hospital claims will reduce health care costs through better integration.
That declaration came a day after Community Hospital announced it was in final negotiations to secure financing for construction of a long-planned hospital building adjacent to Canyon View Medical Plaza.
The rival announcements underscore intense competition for market share now underway between the two nonprofit organizations that have charitable or health-of-the-community missions. There are other examples.
■ St. Mary’s earlier this month began openly calling on Community to scale back its plans for a new hospital.
■ Community signed exclusive medical service contracts with two major employer groups last winter. The contract requires employees to receive treatment at Community Hospital if it is available there.
■ Community’s attempt to use the contracts to steer patients its way caused physicians employed by St. Mary’s to retaliate in March. They all resigned their privileges and refused to practice further at Community.
The tit-for-tat machinations could threaten the Grand Valley’s reputation as a collaborative, cost-effective health care system, Dr. Paul Simmons wrote in an email to The Daily Sentinel.
“The relationship between St. Mary’s Hospital and Community Hospital is at a historic low,” Simmons wrote. “These two hospitals have traditionally cooperated, allowing the people of Grand Junction a choice where they get their health care. This move will make it very hard, if not impossible, for Grand Junction patients to get inpatient care at Community Hospital, especially for more complex problems.”
Several doctors said they feel pressure to choose sides in the escalating engagement. Many others have already made their choice.
spark that lit the fuse
Both sides said Community’s negotiations of contracts with Mesa County and School District 51 late last year are the cause of the rift. The process started with requests for proposals from the schools and county.
Community offered several plans in response, said Chris Thomas, Community Hospital CEO.
Under one of the networks created by Community, county employees were offered access to every hospital in the area.
Under another, the only hospital available in the network was Community. The exclusive provider network involving only Community offered the steepest discounts.
More than 85 percent of county employees decided to enroll in Community’s exclusive provider network, Thomas said.
“That’s what set this off,” he said.
“(Community’s) decision to offer an exclusive provider network ... has brought a level of competition that has happened in other communities,” said Dan Prinster, vice president for business development at St. Mary’s. “Who knows if we’re going to be able to step back from it.”
Traditionally, a preferred provider network gives its members a substantial discount on health care when it is provided by medical professionals in the network.
Preferred provider networks allow patients to see physicians outside the network on the condition they pay a much smaller discount for the privilege. In an exclusive provider arrangement like Community’s, however, members must pay full price to see health care providers outside the network.
The exclusive provider contracts do not present financial risk to Community because they obligate the county and District 51 to pay for every primary care visit the county and school district employees make during the month, Thomas said.
They have 24-hour access to primary care services at Community Hospital and several of the medical practices it has hired of late. For example, Community recently hired all of Internal Medicine Associates’ internists as employees.
County employees are attracted to Community’s exclusive provider network because it offers discounts as high as 40 percent or more for certain services, Thomas said.
The employees’ choice of Community makes sense because most patients are paying out of pocket for care due to plan deductibles as high as $6,000, he said.
“People are now starting to see we’re so much lower cost,” Thomas said. “The school district and county get it. They passed most of the savings onto their employees.”
St. Mary’s Hospital responds
St. Mary’s Medical Group, an independently governed group of internists and specialists employed by St. Mary’s Hospital, voted in March to resign their privileges at Community Hospital in response to the creation of the exclusive network, Prinster said.
Requiring doctors to refer to Community in order for patients to benefit may not always be in the patients’ best interest, he said. St. Mary’s could be a better choice under certain circumstances.
The St. Mary’s Medical Group decision in March resulted in five pulmonologists, two neurologists, three oncologists and one infectious disease specialist withdrawing from practice at Community, Thomas said.
Requiring St. Mary’s doctors to refer to Community for certain services eventually leads to higher health care costs, said Dr. Logan Mcdaneld, a neurologist affiliated with St. Mary’s.
For example, Community has a lower-powered MRI that creates images of the brain using a 1.5 Tesla magnet. St. Mary’s has a state-of-the-art 3 Tesla MRI, which can create much more detailed and clearer images, Mcdaneld said.
If the initial test at Community does not reveal anything, a second test with St. Mary’s more powerful MRI is the next logical step — but it also is duplicative and increases costs, he said.
“It becomes a complicated question,” Mcdaneld said. “What is cost? The dollar charge is one way to look at it. But there’s also cost-effectiveness.”
“It’s more than just dollars and cents,” he said. “It’s an equation of value. That’s hard to communicate to the county when they’re trying to stretch their dollar the farthest they can.”
The loss of the pulmonologists and other specialists has hampered Community’s ability to service its new contracts with the county, school district, and the Grand Junction Veterans Affairs Medical Center, Thomas said.
He believes the move was intentionally aimed at disrupting Community’s ability to perform.
On the other hand, St. Mary’s strategy of hiring specialists relieves Grand Valley patients of having to travel to Denver for certain kinds of care, Prinster said.
The specialty groups that have become employed by St. Mary’s in recent years were not recruited, but approached the hospital first to inquire about the possibility of an employment contract, he said.
It is unfair for Community to expect St. Mary’s to pay the salaries and benefits of specialists Community must rely on to service its exclusive contracts, Prinster said.
“Maybe Community promised something it didn’t have to promise,” he said.
Thomas has responded to the problem of losing specialists by hiring more.
“It’s just business,” he said.
Thomas has already hired a pulmonologist to replace the one withdrawn by St. Mary’s and inked a deal earlier this year with the University of Utah to offer specialty care via telemedicine.
“Community Hospital is going to be here — now and in the future,” Thomas said.
A history of cooperation
Once upon a time, both hospitals cooperated to provide health care services to many people, including uninsured and under-insured patients who use Marillac Clinic.
Physicians affiliated with each hospital routinely referred patients to the other as thought best for their care, hospital executives confirmed.
That level of cooperation no longer exists.
Both hospitals belong to the Western Healthcare Alliance and the Mesa County Health Leadership Consortium, policy review bodies, in which health care executives compare notes and discuss best practices.
Apart from this, executives from Community and St. Mary’s don’t find much to talk about.
Principals for each said they have not spoken to one another in months.
Meanwhile, Community is moving forward with plans to service its preferred provider network and construct a new hospital, Thomas said.
Future looks like more of the same
St. Mary’s has decided to follow in Community’s path. In 2015, it, too, will offer an exclusive provider network that provides steep discounts for services, St. Mary’s CEO Mike McBride said.
“In the future, there will be basically three tiers of pricing discounts,” McBride said. “One will be if we’re on a level playing field with all other providers — that will offer one discount. If preferentially steered to St. Mary’s, we will offer a larger discount. If steerage is to providers other than St. Mary’s, we will offer a lesser discount, or perhaps no discount at all.” McBride said.
The Grand Valley doesn’t need a new, $76 million hospital of the type planned by Community, he said.
A new hospital on such a massive scale will only result in duplicative medical procedures and increased costs, McBride said.
That’s not why the new hospital is needed, Thomas said.
“We don’t want to be another St. Mary’s,” he said. “We don’t want to be a Level II Trauma Center.”
Instead, Thomas said he is responding to demands from local patients who want lower-cost health care options.