Community backlash ensues following AMC decision

Macon County residents have made a clear statement that they oppose Mission Health’s decision to discontinue labor and delivery services at Angel Medical Center in Franklin. 

New president settles in at Angel Medical

fr gorbyFor someone who has spent most of her life in Ohio, moving to the mountains of Western North Carolina has been a dream come true for Karen Gorby.

Angel Medical eyes adjacent town property for memorial garden

Whether it’s a new dad catching a breather after his wife’s marathon labor or a grief-stricken daughter who just watched her mother slip away in her arms, overwhelmed hospital visitors sometimes need to escape.

The passing of an era? Residents in Macon County say goodbye to independent hospital

At Macon Barber Shop, you can get a haircut for $10 and a shampoo for $5, but the talk is free for the asking.

In between snips of her scissors and reaching, on occasion, for the electric razor used to get that nicely topped-off look her clients have sported for more than four decades, Frankie Bowers tried to find the right words: About how it's really important that everyone, including communities such as Franklin, get the top medical care available. But also about how saddened many in the community feel about losing the local part of "local hospital."

Last week, in the latest of a handful of consolidations that have reshaped Western North Carolina's hospital industry this decade, Angel Medical Center agreed to move under the Asheville-based Mission Health System umbrella.

"It really does make me sad," Bowers said. "It's been a good hospital for Franklin, and the Franklin people have benefited from it. I have very mixed feelings — I'm not against it per se, but things just keep on changing."

George Hasara, a longtime-ago-move-in to Macon County, has a different take. Hard at working kneading dough at his Rathskeller Coffee Haus & Pub, he was friendly but direct in his assessment of the deal, which will see Mission take over management of Angel.

Mission is the sixth-largest health system in North Carolina. This means the community could benefit from more competitive bidding and pricing, more access to capital, and other perks that come with being a big guy in a medical world that is geared toward big guys with deep pockets.

"If it improves services and helps lower costs, it's a win-win for everyone," Hasara said, then hesitated and added that the "if" is an important element of his assessment.

Angel Medical Center had its inception in a clinic established by Dr. Furman Angel in 1923. The construction of the current facility, in large part, was made possible through community contributions. Angel was, in every sense of the word, a local hospital — formed by the community, built by the community and patronized largely by people living in that community.

Although Angel is a small hospital averaging just 16 inpatients a day, it is still a major economic player in the community. It has an operating budget of $800,000 a week. It employs 430 people, with salaries that are a cut above average wages for the county.

Angel leaders have stressed the agreement signed with Mission last week merely formalizes an already existing partnership.

"I don't think doctors, patients or employees will notice anything any different today over any other day," Angel CEO Tim Hubbs said.

But most people in Macon County believe the move defines a different path for the hospital, a place that has played a central role in so many people's lives here.

And, not just a central role for people native to the area — take Sue Dalgleish, owner of The Attic on Palmer Street, a place for bargain and antique hunters, who has been a Macon County resident for 17 years. She got here like so many in this community, by way of a lengthy stop in Florida. Dalgleish grew up in western Pennsylvania.

Her mother was pivotal in helping that community establish its own hospital, getting a business owner in Pittsburgh to donate the needed property. Dalgleish, like her mother before her, believes in the importance of community.

And, like Bowers, she's saddened by Angel's management agreement with Mission.

Angel, Dalgleish said, had really worked on its image, and the general perception in the community of the medical institution's services was positive.

"What I hate to see is the profit motive (driving decisions) in the entire health industry," she said.

And, Dalgleish is truly afraid Mission might mess up the food. Angel, remarkably, serves up hospital food the community raves about — it even caters, according to Dalgleish.

"You've never eaten there? You have to eat there," she said, adding that people go to the hospital not only for medical needs, but to eat breakfast or lunch — the trout is reputed to be out of this world, and the cheese biscuits are excellent, too.

Angel Hospital on the road to a merger with Mission

Angel Medical Center in Franklin, one of the last, small independent hospitals in the state, is now part of Mission Health System in Asheville.

After months of negotiations, Angel last week came under Mission’s management umbrella — likely a temporary arrangement on the road to full merger. The move does not come as a surprise. Angel has had a close partnership with Mission for years.

Angel CEO Tim Hubbs equated the deal signed last week to getting engaged after years of dating.

“I would call it the engagement period. I think in short order we might say ‘Let’s go ahead and get married’ but we haven’t set that date yet,” Hubbs said.

Hubbs would not say what would trigger an acquisition by Mission, only that it would be based on certain outcomes being realized over an undisclosed length of time.

While the deal falls short of a full merger for now, most of the benefits of affiliation will be realized right away, Hubbs said.

The move will be financially advantageous for Angel. The hospital can get bulk rates on medical supplies, push for higher reimbursement from insurance companies and get better deals on equipment or contracts thanks to the buying power and leverage that comes with being part of a larger institution like Mission.

Mission already came to Angel’s aid on the monetary front two years ago, when the hospital was about to see its interest rate on some $14 million in debt jump substantially. The debt dates back to renovations and expansions over the years, Hubbs said.

SEE ALSO: The passing of an era? Residents in Macon County say goodbye to independent hospital 

Faced with pressure from the national credit crisis, the bond holders reassessed Angel’s risk level and planned to adjust the interest rate accordingly. Mission stepped in a guaranteed the debt, akin to co-signing for a loan, and allowed Angel to keep its interest rates reasonable, Hubbs said.

Tapping new capital is not a reason for the affiliation, Hubbs said, although at some point that may be a possibility.  

Small hospital challenges

A very costly undertaking for hospitals, and one that has driven other small, independent hospitals around the state to affiliate, is the transition to electronic medical records. The cost of computers and software to go from paper charts to integrated electronic patient records is astronomical, according to Janet Moore, the marketing director of Mission Hospital.

Moore said small rural hospitals have it tough these days. They usually have a high percentage of patients on Medicare and Medicaid, which pay less than private health insurance plans. There’s also a higher percentage of people who can’t pay and have to be written off.

“It leaves them in a real bind,” Moore said.

Mission can provide expertise in the increasingly complex world of hospital management. Picking the right medical code in the maze of billing bureaucracy can make a substantial difference on how much insurance companies or Medicare reimburses for a particular service.

Mission also has experts that can help Angel with best practices, from preventing falls to reducing infections among hospitalized patients, Moore said. It is not just a matter of patient safety, but Medicare and Medicaid won’t pay for infections or injuries picked up during a hospital stay.

“The federal government has said, ‘We are not paying for that anymore.’ They say, ‘That happens in your hospital you eat the cost,’” Moore said.

Another benefit: Angel can now lean on Mission’s reputation when recruiting doctors to locate in Franklin.

“I do think if you are recruiting a physician and you can be part of Mission’s system, it does feel differently for them than just a solo hospital,” Hubbs said.

That’s what inspired Transylvania County Hospital in Brevard to sign a management contract with Mission recently as well.

“What they are looking at is how do they continue to attract specialists and doctors to come there and live and work,” Moore said.

A few doctors affiliated with Mission already hold satellite office hours in Franklin, providing access to specialties otherwise not available in the community.

“We have been able to bring specialists and subspecialists to enhance what the community already has,” Moore said.

Despite fears to the contrary, Mission does not plan to siphon care out of Franklin and send patients to its flagship in Asheville.

“We’re looking forward to working more closely with Angel’s leaders, physicians and staff to help ensure the continued delivery of quality care close to home by this outstanding community hospital,” said Ron Paulus, CEO of Mission Health System.

The hospitals in Spruce Pine and McDowell County both saw both their revenue and the number of doctors practicing in their communities increase substantially following their mergers with Mission.

Angel has long partnered with Mission, both formally and informally. Angel serves as a western base for Mission’s emergency medical helicopter. The two recently embarked on a joint spine center.

Last year, Angel’s board made public that it was pursuing a formal affiliation with Mission. The terms of the contract signed by Angel’s board of directors last week are not being made public. Both institutions are private and not required to disclose details of the deal.

Hubbs would only say that the contract is long-term, longer than just a few years. The financial terms are private as well, such as the management fee Mission may be getting or benefits Angel expects in return.  

Mission facing challenges

The deal comes amidst debate over Mission’s presence in the region. Detractors claim competition from Mission amounts to a monopoly and should be reined in. Supporters counter that Mission is merely trying to provide the region with access to the best health care possible.

State regulators are reviewing Mission’s anti-trust regulations to determine whether they should be tightened or loosened. Meanwhile, a bill has been introduced by Sen. Jim Davis, R-Franklin, that would bar Mission from expanding pending a state-commissioned study. If it passed before Angel inked a deal with Mission, it could have derailed it, but not now.

“There is nothing in the bill that would create an unwind situation,” Hubbs said.

The bill could still hurt Angel from realizing the full benefits of the affiliation. It aims to limit how many doctors Mission can employ, for example, undermining its ability to recruit new doctors to Franklin.

The loss of autonomy, whether perceived or actual, is a likely side-effect of a merger. Two other hospitals that have merged with Mission — namely McDowell County Hospital and Blue Ridge Regional Hospital in Spruce Pine — have preserved a balance of power, however.

The local hospitals kept their own board of directors, although some board members are now appointed by Mission. The local hospital board has hiring and firing authority over the CEO, but the CEO also reports directly to Mission. In essence, the CEO has two bosses. And if he got conflicting orders?

“That has never happened,” Moore said.

Moore said Mission has never expected the CEO to make decisions that benefit Mission to the detriment of the local hospital, thus it’s never been an issue.

That’s what Angel is counting on as well.

“The focus of this agreement is to maintain, enhance and increase access to health services here locally, while maintaining local input,” Hubbs said.

Angel close to merger with Mission if state bill stays at bay

The pending merger of Angel Medical Center with Mission Health System could be sidelined, at least temporarily, by a state bill aimed at limiting Mission’s influence in the region.

Sen. Jim Davis, R-Franklin, said he introduced the bill to offer a check on what he sees as a monopoly by Mission.

It would halt an affiliation between Mission and Angel that has been in the works for more than a year and is now close to a final deal.

“Right now it is in Angel’s court. We are certainly hoping within the next month,” said Janet Moore, director of communications at Mission.

Angel CEO Tim Hubbs said the decision of who Angel will affiliated with should rest with the people of Macon County, not Raleigh lawmakers.

“I have spoken to dozens of long term residents in our area that are outraged by the bill and are very upset with Senator Davis,” Hubbs said.

Hubbs said the bill was a shock.

“We were blindsided by it,” Hubbs said.

Davis met with Hubbs and key hospital leadership a couple of weeks ago to hear their concerns.

“He said the last thing he wanted to do was hurt Angel,” Hubbs said. But Davis has not withdrawn the bill or altered its language.

It is unclear just how much traction the bill has. Mission and Angel may complete their deal before the bill has a chance to move forward.

Davis suggests Mission could exploit its monopoly status to hoard health care services, limiting care patients can get locally and making them drive to Asheville.

But Davis’ bill would cause exactly that to happen, Hubbs said.

Mission will bring more health care service to Franklin, not less, Hubbs said. And without Mission, Angel may actually have to scale back what it provides, having the limiting effect Davis’ claims he doesn’t want.

“I think he has good intentions but the bill ironically would have the opposite effect,” said Trentham. “What he is trying to do ironically will limit free market choice.”

A partnership with Mission will make it easier to recruit doctors, bringing more specialties to Angel. Specialists from Asheville already hold occasional office days in Franklin if the services can’t already be found there.

“Mission and Angel have partnered for a very, very long time. We have been able to bring specialists and subspecialists to enhance what the community already has,” Moore said.

Angel most stands to gain financially. It will get better rates from insurance companies, can get more competitive prices on medical supplies and equipment due to bulk purchasing power, and tap Mission’s expertise on the complicated world of hospital administration and regulations.

“We aren’t to the point where we can’t survive without it, but we are definitely stronger with an affiliation,” Hubbs said.

Davis agreed Angel should be able to align with Mission if it wants to.

“I am not trying to stand I the way of that,” Davis said.

Davis said he understands why small hospitals need to be tied to a larger institution. Angel has 25 beds, and has 16 patients a day on average.

“The small ones just can’t survive by themselves,” Davis said.

But Davis’ bill would halt the merger for at least a year until the issue of Mission’s monopoly can be studied.

Hubbs last month announced he would retire in the next six months, altering solidifying the deal with Mission. That may be delayed now, too.

“I will stay here until we get some thing on the right footing,” said Hubbs.

Mission in the crosshairs: Hospital turf war in WNC heats up

A state bill aimed at ensuring a balance of power between Mission Health System and smaller hospitals has placed lawmakers in the middle of a healthcare turf war.

As Mission steps up efforts to acquire smaller hospitals and doctors’ practices around the region, some fear the Asheville-based health system will siphon healthcare dollars away from local communities and limit the scope of medical care patients can get closer to home.

Meanwhile, patients don’t want business motives to drive the healthcare they receive. The medical community universally asserts that isn’t the case, even as hospitals jockey over market share and fiercely guard their territory from encroaching competition.

But Sen. Jim Davis, R-Franklin, who introduced the bill, isn’t so sure.

SEE ALSO: Angel close to merger with Mission if state bill stays at bay

“Health care is a business, it is a huge business, and for Mission it is close to a billion dollar a year business,” said Davis, an orthodontist in private practice who represents the six westernmost counties in the General Assembly. “Just like any other business we have to guard against monopolies.”

If Mission’s dominance is allowed to expand unchecked, with more and more doctors and rural hospitals coming under its umbrella, Davis fears everything except routine medical procedures and basic care would be funneled to the flagship in Asheville.

“None of these hospitals in the western part of the state want to be an emergency care center and just shove everything to Asheville,” Davis said. “Local hospitals want to maintain care in the local communities.”

Mission leaders maintain they do not want to suck up business from smaller county hospitals — and if they tried, patients wouldn’t stand for it.

“The data has been very consistent that people prefer their local hospital for routine hospitalization,” said Janet Moore, communications director at Mission.

Mission plays a life or death role for patients across Western North Carolina as the only hospital in the state’s 17 westernmost counties where highly advanced medical care is provided.

It’s not in anybody’s interest to see that function undermined, Moore said. On that point, Davis agrees.

“It is essential that Mission hospital remain strong in the western part of the state,” Davis said.

Yet Moore said the freshman senator’s bill would hamstring Mission: it would bar Mission from affiliations or joint ventures with other hospitals and doctors’ practices until the end of the year, or until a study is completed.

“This bill says Mission has to compete with a different set of rules than everybody else,” said Moore. “We are a little perplexed by the bill. What problem is this legislation supposed to fix?”

Mission is already subject to anti-trust regulations, imposed when it merged with St. Joseph’s Hospital. The state dictates how much it can charge for procedures, sets a profit ceiling and limits how many doctors the hospital can employ.

“We basically operate under a microscope,” Moore said.

Davis questions whether the rules go far enough, however.

“I have heard of quite a few physicians that are concerned about the lack of competition in the medical field,” Davis said.

Davis’ bill would commission a study to determine if those concerns are warranted.

“I have no evidence Mission has done anything wrong,” Davis said. “The whole purpose of my bill is to start a conversation.”

 

Mission’s frontline

Doctors in the region are divided on whether Mission is predatory in its business practices.

“There always will be a lot of paranoia in healthcare that the big, 800-pound gorilla is going to come in and steal your patients,” said Dr. David Mulholland, a family doctor in Waynesville who is affiliated with Mission.

But, that’s not the case, he said.

“They have plenty of patients. They don’t need any more patients,” Mulholland said.

What Mission does need, however, is referrals for highly specialized care not available at local hospitals — such as neonatal intensive care, open-heart surgery or repairing aortic aneurysms. Mission needs enough volume to cover the cost of highly specialized doctors and equipment. It counts on smaller hospitals to send patients needing advanced medical care its way, Moore said.

But when the hospitals in Haywood, Jackson and Swain counties partnered up last year with Carolina’s Health System headquartered in Charlotte, Mission began fearing those patients could be sent out of the region to Charlotte.

“Hospitals have very small profit margins. If even a small percentage of that business was siphoned off to Atlanta or Charlotte, it would be a big thing. It would hurt access for everyone in Western North Carolina,” Mulholland said.

Mission had hoped the MedWest group of hospitals in Haywood, Jackson and Swain would partner with it. But when they chose Carolinas instead, Mission reacted.

Mission began actively recruiting doctors in Haywood to join its staff. It also set up an outpatient clinic practically next door to Haywood’s hospital staffed by rotating doctors from Asheville.

Critics fear such a toehold could allow Mission to steer patients to Asheville for services. But it could be Mission is merely protecting its interests.

“Would they have had an interest in Haywood County if it was still just Haywood Regional Medical Center? They probably would have said ‘No, it is a stable situation. We get the tertiary referrals and that’s what we need and that’s what we want,’” Mulholland said. But “hospital administrators know the history of what happens when other competing large health care systems come into your area.”

Perhaps the paranoia cuts both ways, however.

MedWest CEO Mike Poore said his hospitals are not sending patients to Charlotte rather than Mission.

“Our referral patterns have not changed at all,” Poore said. “Patients do not have to worry that if a physician is employed by whatever institution that healthcare decisions are made based on anything other than providing the best care.”

When Poore’s own son needed neurosurgery recently, he sent him to Mission, not Charlotte.

“The neurosurgeons at Mission are excellent,” Poore said. “There is no reason for anyone to go beyond there for tertiary care.”

Poore said there are a lot of fears, but they are nothing more than that.

“We are working very hard to work together,” Poore said.

Dr. Stephen Wall, a pediatrician in Haywood County, said Haywood is a great hospital with great doctors, as is Mission.

“I wish we could all work together regionally,” Wall said. “I wish we could do this without always feeling like we are cutting each other’s throats.”

While MedWest frets that Mission is trying to steals its local health care dollars, and Mission frets that MedWest will send patients to Charlotte instead of Asheville, competing hospitals are nothing new in major metropolitan areas.

“It is not uncommon to have surgery center, hospital, surgery center, hospital — all within a stretch of a quarter mile,” said Dr. Chuck Trentham, an anesthesiologist at Angel Medical Center in Franklin. “We just aren’t used to the big business of medicine.”

Trentham said both sides are off in their portrayal of Mission — as a predatory hospital on one hand, or a purely benevolent institution on the other.

“I don’t think they are as bad as they are portrayed, or as good as they portray themselves,” Trentham said.

Angel CEO Tim Hubbs said he does not resent doctors affiliated with Mission providing services in their territory.

“If I didn’t have them coming a couple days a week I may not have an oncologist. For us it is not competition, it is providing a benefit to our community,” Hubbs said.

Wall said the outpatient clinic being run by Asheville doctors could be driven more by doctors’ interests than Mission’s.

“There are probably too many doctors in Asheville,” Wall said. “It is a great area and doctors want to live there, so there is competition for a shrinking healthcare dollar.”

In Franklin, doctors are used to competition from neighboring counties. Several Sylva-based practices have satellite offices in Franklin, holding office hours there one or two days a week, and sending business out of the county to Harris hospital run by MedWest in Sylva.

“The same way Mission is encroaching on MedWest, MedWest is encroaching on us,” Trentham said.

 

Who’s for it?

While battle lines are being drawn over the bill, exactly how it came to be isn’t completely clear. Davis wouldn’t name names when asked who approached him about the bill or who helped write it.

“I have talked to a lot of people about this bill,” Davis said. “There were hospitals and physicians groups and individuals that encouraged me to file this bill.”

It’s no secret that Park Ridge Hospital in Hendersonville supports the bill, and many believe it was the instigator. Park Ridge has reportedly brought two lobbyists on board to advocate for the bill in Raleigh.

For now, it remains the lone hospital that has gone public in support of the bill.

Park Ridge is part of the Adventist Health System, with 43 hospitals in 12 states. While Davis is a Seventh-Day Adventist, he said he did not introduce the bill to help Park Ridge because of that shared connection.

Davis said there are a “plethora” of theories about motives behind the bill. But he said his primary concern is that “health consumers’ interests are protected.”

Despite tension between Mission and Haywood, MedWest is not for the bill.

“We just don’t feel like we have any standing to support that bill,” said MedWest CEO Mike Poore. “We don’t see legislation as how you deal with competition. We believe in providing good quality health care, strong access and a great patient experience as how we compete, and that legislation is not needed.”

Some in the medical community have accused MedWest of advocating for the legislation, however.

“There has been a lot of goings on behind the scenes and behind closed doors,” Moore said.

Dr. Peter Goodfield, an Asheville cardiologist, claims the legislation was “promulgated by Park Ridge Hospital and MedWest.”

Park Ridge in Henderson and MedWest-Haywood are the region’s biggest and likely strongest hospitals after Mission. Yet their close proximity to Asheville makes it easy, too easy, for patients to defect — and thus have the most to lose should Mission launch an all-out affront.

While MedWest’s official position is against the bill, individual doctors in Haywood County are supporting it.

Three former chiefs of staff of MedWest-Haywood have gone on record supporting the legislation and accusing Mission of predatory practices. They wrote to the state as part of the public comment period on the COPA.

“Taking patients from the local hospital and medical community undermines the strong rural hospital system we are trying to build,” Dr. Shannon Hunter, an ear, nose and throat specialist in Haywood, wrote.

Dr. Al Mina, a general surgeon in Haywood County, believes Mission’s “aggressive expansion” into surrounding counties should be halted while the issue is studied.

“I have seen them duplicate services here in an attempt to weaken the local hospitals and siphon care that can very easily be performed here to Asheville,” Mina wrote.

Dr. Charles Thomas, an oncologist with 21st Century Oncology in Haywood County, has been at war with Mission hospital for more than 15 years.

Mission has attempted to block 21st Century Oncology from opening new cancer treatment centers in the region, from Franklin to Murphy to Marion. Mission challenged state permits for the competing cancer services and filed lawsuits to the same end.

“Throughout these many battles Mission’s ‘mission’ was to prevent competition,” Thomas wrote in his public comments to the state. “Mission will continue to do everything in its power to dictate healthcare delivery in Western North Carolina – even if it means cancer patients have to travel hours to receive necessary care.”

 

Recruiting doctors

In an effort to temper Mission’s dominance in the region, Davis’ bill aims to cap the number of doctors on Mission’s payroll.

Mission can’t employ more than 20 percent of the doctors in Buncombe County under its current anti-trust regulations. It is approaching that cap now.

Mission asked the state to increase the limit, which may have backfired by opening the door to the current debate. Davis’ bill would immediately stop Mission from employing more doctors during a study period, and would cap the number of doctors Mission can employ to 10 percent for the 18-county region. (The 20 percent cap now applies only to Buncombe.)

It’s not surprising that Mission wants to employ more doctors. It’s a national trend, driven by today’s generation of doctors who find the hassle of running their own office — the stress of being an entrepreneur on top of practicing medicine — isn’t worth the freedom.

It’s also financially attractive. Doctors are increasingly being squeezed by rising overhead and lower reimbursements from Medicare and Medicaid patients. As a result, doctors are gravitating toward a new model of being employed directly by hospitals. The hospitals keep the revenue generated from the patients, while providing a steady salary to the doctors.

But allowing Mission to employ more and more doctors will give them a lock on health care, Davis said.

“Where do you think the physicians are going to refer their patients if they are employed by Mission?” Davis said.

If Angel Medical in Franklin merges with Mission, Davis questioned whether doctors would start referring patients to Mission instead of the much closer hospital in Sylva.

But Mulholland in Waynesville said he does not steer them toward Asheville over Haywood.

“I let them decide where they want to go,” Mulholland said.

“I have no reason to stop using the local specialists. I still talk to and use our local physicians and trust them.”

Mission employs 150 physicians out of 700 who have privileges to treat patients at the hospital. Other hospitals employ a greater percentage of their doctors than Mission does. Angel employs 15 of the 40 doctors on its active staff while MedWest employs 75 doctors out of 230 — both more than one-third.

The majority employed by Mission are specialists. If they had to operate as a private practice, they wouldn’t be here, Moore said.

“There isn’t the volume of work here, for them to maintain their own practice would be financially very difficult,” Moore said.

Specialists employed by the hospital include several children’s specialists, like pediatric cancer and surgery.

“Without those specialists here these families and their children would be driving anywhere from two to four to six hours to get care,” Moore said.

Rural hospitals that have affiliated with Mission in recent years were partly drawn by having a heavy-weight in their corner to help recruit doctors.

Once affiliated with Mission, Angel Medical may be able to attract doctors to Franklin that it couldn’t on its own.

“We have the resources to pay the competitive salaries,” Moore said.

Mission is better equipped to help set up their offices, to buy them the equipment and technology they need, and offer them a larger network of doctors to be a part of, Moore said.

However, Davis has heard that some physicians felt forced to give up their private practices and become employees Mission. State regulators who crafted Mission’s anti-trust regulations obviously thought a cap was necessary, but didn’t foresee 15 years ago that it would be necessary beyond Asheville’s borders.

“There is a reason that was there: to protect physicians’ practices and to protect patients,” Davis said.

But according to Dr. Peter Goodfield with Asheville Cardiology Associates, tightening the cap for Mission when the national trend is moving the opposite direction is ridiculous.

“There are going to be virtually no physicians remaining in private practice. None of us can survive,” Goodfield wrote in public comments submitted to the state.

 

Mission monopoly?

Mission has already folded three smaller hospitals into its umbrella — those in Marion, Spruce Pine and Brevard. The hospital in Franklin is headed that way.

Mission is also close to a deal to build a $45 million outpatient center in conjunction with Pardee Hospital in Henderson County, seen as a threat to Park Ridge, which is also based in Henderson County.

Mission is not taking advantage of its dominance when it comes to pricing, Moore said. Its is the third lowest hospital in the state for costs, even though Mission has the highest percentage of patients in the state on Medicare and Medicaid — nearly 70 percent — who pay less than other patients.

While Davis talks about Mission’s unfair advantage, Moore said the bill actually stacks the deck against Mission.

Mission’s neighbors include Park Ridge in Hendersonville, run by Adventist Health System, with hospitals in 12 states, and Carolinas Health System in Haywood County, which has 29 hospitals under its umbrella.

“And they are claiming that we are a monopoly?” Moore said. “We don’t mind competing on cost and quality. We just want there to be a level playing field.”

Angel is a stand alone hospital, an increasingly rare status for small hospitals. It can’t continue that way indefinitely and has brokered a deal to merge with Mission in coming months. The bill would delay or even derail it.

Angel might then have to turn to MedWest for a partnership, which already has hospitals in Haywood, Jackson and Swain.

“That’s a de facto monopoly right there,” said Dr. Chuck Trentham, an anesthesiologist at Angel.

But given its market share of only 60 percent in Haywood and 57 percent in Jackson, it doesn’t come close to the definition of a monopoly, MedWest CEO Mike Poore said.

“The contrast to that is Mission’s market share in Buncombe and Madison is north of 94 percent,” Poore said.

 

 

What is COPA?

While a bill circulates in Raleigh to limit the dominance of Mission Health System, a state regulatory process is already under way to examine just that issue, independent from the legislation.

Mission is governed by anti-trust regulations dating to its merger with St. Joseph’s 15 years ago. The regulations are up for review, prompting a flurry of debate in the medical community about whether Mission’s ambitions should be curbed or it should be given the freedom it needs to serve as the region’s healthcare leader.

 

The players

Mission Health System: Memorial Mission merged with St. Joseph’s hospital 15 years ago to form a single, large hospital serving the Asheville area. It has three smaller hospitals under its wing, with plans to add a fourth.

Park Ridge Hospital: Based in Hendersonville and perhaps Mission’s fiercest competitor, Park Ridge is part of Adventist Health System with 43 hospitals in 12 states.

MedWest-Haywood, MedWest-Harris, MedWest-Swain: The hospitals in Haywood, Jackson and Swain counties recently united forming the new entity MedWest and adopting new names in the process. They are 18 months in to a three-year management contract with Carolinas HealthCare System.

Carolinas HealthCare System: As the state’s largest hospital network, the Charlotte-based system has 33 hospitals under its umbrella.

Angel Medical Center: A small standalone hospital in Franklin, Macon County. Angel plan to affiliate with Mission.

Angel Medical, Mission consider partnership

Angel Medical Center in Franklin may soon come under the wing of Mission Hospital in Asheville.

Smaller, rural hospitals are increasingly forging partnerships with larger hospitals as it becomes tougher financially to go it alone. Angel’s 15-member hospital board unanimously voted to explore an affiliation with Mission for both financial reasons and in hopes of improving health care in the community.

“There is no question there are some financial advantages,” said Angel CEO Tim Hubbs. Particularly when it comes to economies of scale when ordering supplies and negotiating purchase contracts.

“They have more negotiating power than us. We are one-twentieth of their size,” Hubbs said.

Mission brings in more than $1 billion in net patient revenue a year and has 800 doctors that practice there. Angel has 41 physicians and averages about 15 patients staying each night in the hospital

Medical care for people in Macon County could also benefit, Hubbs said. Doctors would have the benefit of consulting with specialists over cases and diagnosis. Ideally, doctors from Mission in more specialized fields would be willing to hold office hours in Franklin certain days of the month, helping patients who now have to travel out of the county. Hubbs said Mission won’t try to compete with established practices in Franklin, and would only make forays into specialties that Macon County doesn’t have the patient base to support.

Last year, Haywood Regional Medical Center joined forces with WestCare hospitals in Sylva and Bryson City. The trio then entered a management contract with Carolinas HealthCare System, a massive conglomerate based in Charlotte with 32 hospitals under its umbrella.

Two years ago, that number was just 22 — showing just how rapidly rural hospitals are affiliating with bigger institutions.

Mission, meanwhile, has partnerships with the hospitals in Spruce Pine and McDowell County. The hospital in Brevard is exploring an affiliation with Mission as well.

Hubbs said the Angel hospital board feels Mission is a better fit than jumping on board with WestCare and Haywood. Hubbs said Angel has a long-standing relationship with Mission already, and Mission has continually broached the subject of an affiliation with Angel over the years.

Mission vied for an affiliation with WestCare and Haywood but was beat out by Carolinas. That makes Angel all the more important strategically for Mission as it aims to transition from its reputation as the go-to regional hospital for advanced procedures to a flagship institution at the head of a regional network.

“I know they would love to see other hospitals in the region join them as well,” Hubbs said. “I think they have to figure out what they can bring to the table.”

Mission was too close for comfort for many Haywood physicians, who felt the proximity makes Mission more of a competitor than potential partner. Franklin physicians could feel the same way toward WestCare. Several medical practices in Sylva have satellite offices in Franklin, capturing patients who are then seen at Harris instead of Angel.

Hubbs said the presence of Sylva-base physicians in Franklin has been mutually beneficial in ways, however.

“WestCare over the years has provided office space over here to give their physicians fuller practices, and we also had some weak spots in terms of physicians in our own community,” Hubbs said.

An affiliation with Mission could take many forms, from an outright sale of the hospital at one end of the spectrum to a management contract on the other. Hubbs envisions something in the middle, with some level of shared ownership yet a measure of local autonomy.

“We wouldn’t want Mission to be able to control all things,” Hubbs said.

Hubbs said Angel Medical Center has lost money the past two years, though he would not share hard numbers. The hospital’s financial statements are private.

The loss is largely due to upfront costs of new equipment and recruiting new doctors, both of which will reap benefits down the road.

“We have been making heavy investments in the future,” Hubbs said.

Angel Medical continues to stand alone

While neighboring hospitals count down the days until an affiliation is finalized, Angel Medical Center in Franklin continues to stand alone during a time when independent hospitals are becoming increasingly rare.

Angel Medical CEO Tim Hubbs said the small hospital is doing fine financially and is meeting its mission to serve the community. That said, an affiliation isn’t out of the question if the right one came along.

“That is something we always have to evaluate on an ongoing basis,” Hubbs said. “I don’t think they want to merge for the sake of merging. I think the sentiment is we want a strong local hospital.”

There can be financial benefits in a merger or affiliation with other hospitals, but it can also result in a loss of local control, Hubbs said. The two factors would have to be weighed when considering an affiliation.

“Can we get economies of scale and still have autonomy?” Hubbs said.

Roughly 70 percent of hospitals in North and South Carolina are part of a larger hospital system.

Haywood Regional Medical Center and WestCare, which serves Jackson and Swain counties, anticipate launching a new joint venture in January. The two entities will manage daily operations jointly, yet keep their assets and long-term balance sheets separate. The venture also calls for partnering with Carolinas HealthCare System, a conglomerate based in Charlotte with a network of 23 hospitals.

Angel was engaged in preliminary discussions of a merger with WestCare a few years ago, but it failed to materialize. Angel’s board of directors hesitated for fear of seeing some of their local medical services absorbed by Harris Regional Hospital in Sylva.

“We were afraid the focus would be in Jackson County,” Hubbs said. “We would like it to be in our best interest and not in the best interest of someone somewhere else.”

While Angel has an agreement with Mission Hospital in Asheville to house a medic helicopter at the hospital, there is no official partnership with Mission, Hubbs said. Angel was selected as a base for the medic helicopter largely for its strategic geographic location as a jumping off point for Mission to serve trauma patients in the far west.

Hubbs said no affiliations are on the table right now, but nothing is off the table either.

“I think they are receptive to things that make sense,” Hubbs said of Angel’s board of directors. “If we get to the point we can’t survive without it, then we’d have to consider it, but we are not there today.”

Angel CEO says hospital investing in its future

When Tim Hubbs stepped down as the CEO of Drake Software, a Franklin firm that writes accounting software, he thought the frenzy of tax season was behind him and he would coast out his years with the hassle-free title of consultant.

He was soon coaxed into taking on the job as CEO of Angel Medical Center, however, and landed in the middle of a constantly changing industry that sometimes makes him yearn for the good old days of tax season crunch time at Drake.

When Hubbs took the helm at Angel in summer of 2008, the hospital had been through a handful of CEOs over a five-year period, most of them in interim roles. His immediate predecessor was there just two years when the hospital board decided a different direction was needed. In a replacement, the board was looking for stability and a face the community was familiar with.

“I think there was no question if I was available and willing to take that spot, they saw advantages to not having to do a search process. They thought it would be a win-win and only time will tell if that’s the case,” Hubbs said, flashing a humble grin.

The truth is, Hubbs was no stranger to health care. He had served on the Angel Medical hospital board for six years, so he had a working knowledge of local issues facing the hospital. Predating his time at Drake, he had worked in hospital administration — namely as the chief financial officer for East Tennessee Children’s Hospital — in the ‘80s and early ‘90s. It doesn’t hurt that Hubbs is Franklin born and bred and got his MBA right here at Western Carolina University.

One of his biggest challenges upon re-entry to the field?

“Obviously getting used to terminology again,” Hubbs said. “Everybody has their acronyms.” Between doctors and nurses, insurance companies, the Medicare bureaucracy and hospital regulators, Hubbs had his fair share of jargon to brush up on.

From the business end, Hubbs was struck by just how difficult it is to profitably run a hospital today.

“There is this enormous pressure to say we have to be as efficient as we can,” Hubbs said.

He has apparently done well on that front, however. While Angel only has 25 inpatient beds, they are routinely full.

One of the biggest financial challenges is failure by Medicare and Medicaid to fully reimburse hospitals and doctors for the true cost of services.

“Health care was tough from a reimbursement standpoint when I left, but it has gotten more difficult,” Hubbs said.

Factor in those unable to pay their bills who must be written off as charity cases, and the hospital’s already thin margin is constantly being squeezed.

“That is health care in general. You bring it down to a smaller, rural area, and it makes it even tougher,” Hubbs said.

A few hundred thousand for a big hospital is small potatoes, but it can be the entire operating margin for a hospital of Angel’s size. Yet there are dozens of variables that could swing revenue or expenses by that amount. It can only take one thing to throw off the balance sheet — and “there’s lots of ‘one things’ that can hurt you really bad,” Hubbs said.

The most obvious are the caliber of doctors practicing at the hospital.

“One physician can make a difference,” Hubbs said.

Hubbs has made recruiting new physicians a priority. The hospital has recruited eight new doctors in the past year.

The hospital has a roughly $45 million operating budget, Hubbs said. In recent years, the hospital has averaged a 1 to 2 percent positive cash flow. It’s too thin for Hubbs, who hopes to raise it to a 3 to 4 percent margin, the most a small, rural hospital can feasibly hope for.

But in the most recent fiscal year ending Sept. 30, the hospital saw its first minor loss in several years, Hubbs said. Hubbs would not specify how much the loss was, and isn’t required to since the hospital is a private nonprofit entity. (The information will eventually be available on the hospital’s annual 990 tax return, which is public record for nonprofit entities.)

Hubbs said the small operating loss is not a surprise, but rather was undertaken consciously. The hospital spent money in two key areas: on nurses and doctors.

While other hospitals enacted workforce reductions during the recession, Angel not only didn’t trim jobs but gave its nurses raises. Hubbs said the nurse salaries at Angel were too low and not competitive with the rest of the region.

“We had to make a pretty big commitment,” Hubbs said of the raises.

The hospital also spent money recruiting doctors. While doctors historically operate as independent practices — setting up their own offices and billing patients separately — Angel is embarking on a new trend of making doctors employees of the hospital itself. It requires more of an upfront cost by the hospital to help the doctors set up their practice and cover office overhead, with benefits realized down the road.

“We went into the year knowing we would lose money, but we saw it as an investment,” Hubbs said.

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