Cuthroat clinics: Hospitals turn hostile as healthcare margins tighten

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Cuthroat clinics: Hospitals turn hostile as healthcare margins tighten

 

BY JOHN DORSCHNER

jdorschner

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In the latest sign that the once-clubby friendship of South Florida hospitals

has ended, Salud Miami, a joint effort by seven Miami-Dade hospitals to market

to wealthy Latin Americans, has announced that it is shutting down.

 

This comes after Mount Sinai in Miami Beach moved to block construction of two

West Kendall hospitals and Mercy in Miami moved to stop the sale of Doctors in

Coral Gables to Baptist Health as well as the start of open-heart surgery at

Aventura in far northern Miami-Dade.

 

Hospital squabbles go on in many markets, says Brian Klepper, of the Center for

Practical Health Reform, but they're exacerbated here because Miami-Dade is ''a

disorganized marketplace,'' with 27 hospitals vying for patients. By contrast,

the Jacksonville area has four major hospitals.

 

''It's like the Wild West,'' Klepper says. ``People get very cutthroat.''

 

And it is this proliferation of hospitals and doctors, he and others say, that

has caused South Florida's healthcare costs to frequently come close to doubling

those found elsewhere. The situation is intensified, Klepper adds, by a down

economy and the growing ranks of the uninsured, which make it that much harder

for hospitals to find revenue.

 

''There's a naturelike tooth-and-claw fight going on,'' says Santiago León, a

Miami health-insurance broker and community healthcare activist. ``Back 20 to 30

years ago, they felt there was plenty [of business] for everybody.''

 

But then came Medicare cutbacks and managed care, heightening competition.

 

The situation is less intense in Broward, which has 20 hospitals but is

dominated by four entities: the public North and South Broward Hospital

Districts and the HCA and Tenet for-profit chains. Complex dogfights there are

simply not nearly as frequent as in Miami-Dade (though Cleveland Clinic had to

fight for over a decade to get a hospital in Weston).

 

Such battles get expensive for the providers and, ultimately, for the patients

and the insurers. A prime example, says David Carbone, chief executive at

Aventura, is his hospital's 10-year battle to get a heart-surgery program

approved by the state.

 

''I cannot tell you the legal bills and consulting bills I've spent on this,''

Carbone says. ``We could have offered heart surgery free for a year on what this

fight has cost.''

 

Still, Klepper says, it makes sense for state regulators to require certificates

of need for new hospitals and programs.

 

''Oversupply is a very dangerous problem in some markets,'' he says, noting that

surveys have found that if there are too many hospital beds or services, doctors

tend to use them more, driving up healthcare costs.

 

Then again, the bureaucratic battles for expanding hospital services also add to

the costs, as competing hospitals struggle to get services and stop competitors.

In Miami-Dade, executives of the hospitals sponsoring Salud Miami, also known as

the Miami Medical Alliance, insist that the closing of the program after five

years had nothing to do with any other battles that might be going on, but

clearly there is plenty of friction these days, among for-profit and nonprofit

hospitals.

 

The program began as an initiative of the Greater Miami Chamber of Commerce's

One Community One Goal plan, a way to market Miami-Dade as a healthcare

destination to wealthy patients in the Caribbean and Latin America who could pay

considerably more than the reduced rates negotiated by managed-care plans.

Aventura, Baptist, Cedars, Mercy, Miami Children's, Mount Sinai, South Miami and

the University of Miami/Jackson each contributed $65,000 annually, with $100,000

more coming from the county.

 

In 2001, however, Mercy dropped out and the others cut back on their

contributions while stepping up their own marketing efforts.

 

Then the county lost interest.

 

NOT MEANT TO LAST

 

''The program had run its course,'' says Thomas Rozak, an alliance board member

and chief executive of Miami Children's.

 

''All hospitals are looking at less resources and more demands,'' adds Daniel

McMurray, administrator of the UM/Bascom Palmer Eye Institute, ``so they're

looking to husband their resources very carefully.''

 

''The program was never intended to last forever,'' explains Victoria

Brewer-Anderson, the alliance's executive director, adding that its demise ``had

nothing to do with the other things that are going on.''

 

But plenty of other things are going on -- and none of them easily explained.

Many healthcare officials remain puzzled, for example, as to why Mount Sinai

objected to officials last month about the state's approval of Kendall Regional

Medical Center's plan for an 80-bed hospital in West Kendall, 25 miles from

Sinai's facility. That move, in turn, led to Kendall Regional's objecting to

Baptist's plan to build a West Kendall hospital.

 

In petitioning the Agency for Health Care Administration for a formal

administrative hearing on the West Kendall matter, Sinai claimed that it would

be ''substantially affected'' by the construction. Such objections can tie up

hospital projects for months, sometimes years.

 

At the time, Sinai CEO Steven Sonenreich was out of town and not available for

comment. Last week, having returned, he spoke for the first time about his move

but didn't say much: ``Because this is an area of potential litigation, I would

prefer not to comment.''

 

CEO FACES LAWSUIT

 

Sonenreich is being sued by HCA, the hospital chain that owns Kendall Regional.

HCA alleges that after Sonenreich left the HCA-owned Cedars Medical Center to

head Sinai, he improperly lured fellow Cedars executives and staffers to join

him. Asked if he were blocking the West Kendall facility to pressure HCA to drop

its lawsuit, Sonenreich said, ``One thing doesn't have anything to do with the

other.''

 

Executives at Mercy, in Coconut Grove, meanwhile, are trying to find a way to

stop the Baptist purchase, announced this month, of Doctors Hospital in Coral

Gables.

 

''We're concerned about excessive market concentration by one system in a given

geographic area,'' Mercy CEO John Matuska says.

 

Baptist Health already owns Baptist, Homestead, Mariners and South Miami. And,

Matuska says, research shows that Baptist already has 75 percent of the

nonpublic hospital admissions south of Kendall Drive and 45 percent of those

south of Okeechobee Drive.

 

Matuska worries that a Baptist able to negotiate lucrative contracts with

managed-care plans would lead to its ''getting paid more for services, able to

generate more capital for more projects, constantly increase salaries for

nursing personnel.'' That, he figures, would have ''an impact on the other

hospitals'' and put ``Mercy at an economic disadvantage.''

 

Mercy executives are talking to lawyers about the best route to block the

Doctors sale. Jeffrey Cohen, a healthcare attorney in Delray Beach, says that

there is legal precedent for such moves and that HCA has been forced by courts

to divest itself of hospitals in areas where it was found to have too many.

 

MONOPOLY FEARED

 

''The issue,'' he said, ``is whether the purchaser will have a monopoly.''

 

But Brian Keeley, the chief executive of Baptist Health, says that thinking of

his system as a monopolistic behemoth is ''patently nonsense.'' Doctors ``is

part of our service area. We're offering Coral Gables a nonprofit alternative.''

 

The real 900-pound gorillas of South Florida healthcare, he adds, are Tenet and

HCA, the huge for-profit chains operating throughout South Florida.

 

''We're dwarfed by them,'' Keeley says.

 

Tenet, with national revenue of $16 billion, has four hospitals -- Coral Gables,

Hialeah, North Shore and Palmetto -- in Miami-Dade. HCA, with national revenue

of $20 billion, has three: Aventura, Cedars Medical Center and Kendall. Baptist

Health has Baptist, Homestead, Mariners (in the Keys) and South Miami.

 

Says Keeley: ``Who's calling the pot black? Mercy is part of Catholic East,

which has 43,000 employees and $4.3 billion in revenue.''

 

Baptist Health has 9,200 employees and $926 million in revenue.

 

Keeley says he has intervened in the case of Kendall Regional and Mount Sinai,

trying to get a quick resolution.

 

''We got snagged into this as a bystander,'' he says. ``We don't want to do

battle with anybody. We just want to build a hospital.''

 

That could take a while if Sinai continues with its objections to state

regulators.

 

Carbone, at Aventura, knows such battles well. For most of the past decade, the

main opponent to his heart-surgery program has been Palmetto General, another

hospital in northern Miami-Dade that wants a heart program.

 

But, in the latest round, Mercy objected to the idea of Aventura, 19 miles away,

doing heart operations. Matuska says he's concerned because studies show that

the more heart operations a hospital does, the more experienced the surgery

teams become and the better the outcomes.

 

''Why diminish existing programs by adding another?'' he asks.

 

Mercy has been heavily marketing its own heart-surgery program.

 

''Obviously, it's a competitive environment,'' Carbone says, ``but we're just

trying to serve our community.''

 

That community has seen many high-rises go up in recent years to serve retirees.

Other hospitals, of course, would like to serve those retirees -- and their

inevitable heart problems.

 

''It's a free-for-all in the marketplace,'' Klepper says. ``People are getting

scrappier.''