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Hospital calls Franciscan St. Francis expansion ‘predatory’


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Columbus Regional Hospital administrators and doctors say they see Franciscan St. Francis Health’s plan to open a downtown doctors’ office as an unwanted and potentially disruptive intrusion into the local market.

“Given the absence of any dialogue with St. Francis, it appears to me that this is purely a predatory move on their part,” said Jim Bickel, CRH’s president and chief executive officer. “We haven’t had any collective dialogue on what the need is they are trying to address and what problem they are trying to solve.”

St. Francis and Tipton Park Offices will ask the City Council tonight to approve a tax abatement for the doctors’ office at 123 Second St., in the former Goodyear building near the western entrance to the city.

ABOUT THE HEALTH CARE SYSTEMS

Franciscan Alliance

Operations

Founded in 1875 by a group of Catholic sisters from Germany.

Hospitals

Operates 13 hospitals in Indiana and South Chicago. In central Indiana, that includes hospitals in Carmel, Mooresville and Franciscan St. Francis Health on South Emerson Avenue, Indianapolis, which opened in 1995.

Headquarters

Mishawaka

On the Web

franciscanalliance.org

Columbus Regional Health

What

A regional health system serving a 10-county region; one of the largest employers in Bartholomew County, with more than 1,700 people. It opened in 1917.

Hospital

225-bed facility providing emergency and surgical services and comprehensive care in numerous specialty areas.

Doctors

80 providers within Columbus Regional Health Physicians and nearly 150 physicians on the medical staff and practicing locally.

Headquarters

Columbus

On the Web

crh.org

Based on information included in its tax-abatement application, the downtown medical office would start with two physicians, five medical assistants and an office manager, generating estimated annual salaries of $587,600. Future growth could include another physician, two medical assistants and an X-ray technician, which would add about $317,000 more in annual salaries, according to the application.

Construction would include a new façade for the outside of the building, plus gutting and remodeling the interior of the building, according to the application. If granted, the abatement would mean the company would pay no property taxes on its improvements for the first year and the taxes would be phased in over 10 years, according to the Columbus Community Development office. According to state law, costs associated with the project are confidential.

Franciscan St. Francis Health operates a hospital on South Emerson Avenue, Indianapolis, visible from I-65, which opened in 1995. According to the American Hospital Directory, it has 234 staffed beds. Columbus Regional Hospital has about the same number, at 225.

No one from Franciscan St. Francis Health responded to Republic requests to elaborate on its Columbus plans, made through the St. Francis media relations department Thursday, Friday and Monday.

Collaborative care?

Bickel said CRH works with most of the Indianapolis-based health systems and holds frequent discussions about ways they can work together to meet the health care needs of the community. However, he said the Columbus hospital has had no arrangements or partnership agreements with St. Francis.

He said St. Francis also has had no conversations with CRH about whether doctors at the planned St. Francis office in Columbus would be allowed to admit patients to Columbus Regional Hospital, or if those patients would be referred to St. Francis facilities in southern Marion County for hospital admissions, inpatient treatment or specialist care.

“The biggest issue I see with this is given the Affordable Care Act that was put into place, all of the other movement that is happening in the health care (system) at the core of that change is collaboration,” Bickel said. “The concern is that it is further fragmentation, and the more fragmented you get, the more costs you run up.”

Dr. Joseph Sheehy, chief medical officer for Columbus Regional Health physicians, said it was disheartening to see St. Francis come into the community without any discussion with the local medical community.

“Over the last few years, we have been working diligently to strengthen alignment and collaboration across the health system in our community,” Sheehy wrote in an email. “This is the right thing to do for our patients, to offer them more seamless care across the healthcare system.”

Dr. Michael Dorenbusch, general surgeon and president of Multi-County Physicians, said his physicians have a long-standing tradition of working with Columbus Regional Hospital. He said collaboration generally results in higher quality and lower health care costs.

“We recognize that more collaboration between local physicians and the local hospital is the right direction for healthcare, to provide the very best for our patients,” Dorenbusch wrote in an email. “This move by St. Francis runs counter to that.”

Bickel said he does not believe competition would reduce health care costs for local patients. Instead, redundancy and unnecessary overhead spending increases costs, he said, with extra costs shouldered by patients.

“That is why you are starting to see much more alignment and cooperation to avoid duplicating costs,” Bickel said.

Others weigh in

Joshua E. Perry, an assistant professor of business law and ethics at Indiana University, Kelley School of Business, said his research has reached a similar conclusion.

“We have research that shows that costs do increase,” Perry said.

He said the challenge in health care is that duplication of services costs more and new technology frequently only provides small amounts of improvement in care, at a high cost.

The danger for a community hospital such as CRH could be that some procedures such as orthopedic or heart care may be financially more lucrative, Perry said. Losing those patients makes it harder to help cover the costs for indigent care or emergency-room care, areas where hospitals tend to lose money, he said.

“In health care, we have to curb some of those natural inclinations and ask harder questions about if multiple providers will in fact provide access to a greater number of patients,” Perry said. “Will St. Francis be targeting patients with private insurance? Will they be allaying any of the concerns of those who are uninsured or on Medicaid?”

Ryan Brewer, assistant professor of finance at IUPUC, said that while competition typically is good for consumers and producers, the health care industry reimbursements are structured in such a way that it would be difficult for a new provider to offer consumers a cost savings.

Instead, the only way to offer a benefit would be to provide new specialized services that aren’t already provided in the community, Brewer said.

In the case of primary-care physicians, Brewer said the community already is served by doctors in Bartholomew County who have the added benefit of already being plugged into the local health care system.

He said there can be an economic downside to the community when an outside competitor enters the market.

“If there is an out-of-area provider, the cash flow is going to leave the area, which affects everyone in the community,” Brewer said.

CRH has shown it has a commitment to the community by its length of service here, its efforts during the 2008 flood and support of local initiatives such as Volunteers in Medicine, Brewer said.

James G. Anderson, a professor of medical sociology at Purdue University, said there are at least two factors pushing these sorts of community developments.

The first is requirements under health care reform that hospitals provide a continuum of care for their patients over time and they are then rewarded for any cost savings, Anderson said. By keeping patients in the St. Francis system and referring patients to St. Francis facilities in Indianapolis, the company will be able to keep them in that care pipeline.

Secondly, while there are glut of medical specialists in large cities, there is a large need for primary care physicians, especially in smaller communities, Anderson said.

“This may be a wise move for them if they are going to be basically concentrating on facilities that provide primary care,” Anderson said.

Bickel questioned why St. Francis would apply for a tax abatement, reducing the tax money paid to the county. Columbus Regional Hospital is a county-owned facility and does not pay property taxes. The only tax money being paid to CRH is the annual ambulance subsidies paid by the city and county, according to the county auditor’s office.

City Council President Ryan Brand said he has received one phone call from a physician who wanted to talk about the abatement request. But as of Monday afternoon, Brand had yet to have that conversation with the doctor.

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