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Sunday, July 01, 2007

Ind. Law - "State encouraging hospital competition"

Seth Slabaugh of the Muncie Star-Press reports in a long and informative story today headlined "State encouraging hospital competition: If Clarian builds a hospital west of Muncie, it would be consistent with Indiana's public policy." Some quotes:

MUNCIE -- Clarian Health Partners, which is rumored to be considering a site west of Muncie for a new hospital, has been spreading out in all directions from its Indianapolis base the past several years.

"Hospitals are told to compete," said Robert Morr Jr., vice president of the Indiana Hospital and Health Association, a trade group. "That's the rules by which they play."

Clarian was formed 10 years ago by the merger of three Indianapolis hospitals -- Indiana University, Methodist and Riley Hospital for Children.

In the past three years, Clarian has opened new hospitals in Avon and Carmel, broken ground on a hospital in Lafayette, bought 95 acres for a hospital in Fishers, bought 158 acres in Bargersville for health-care facilities and signed an agreement to pursue collaborative opportunities with Morgan Hospital and Medical Center in Martinsville.

Clarian reportedly will buy 100 acres southwest of Ind. 332 and Nebo Road -- across the street from a Menards superstore -- if the site is annexed by Muncie and de-annexed by Yorktown.

Indiana stopped regulating how many hospital beds should be built in the state in the mid-1980s. Since then, certificates of need no longer have been required to build hospitals.

"The public policy in Indiana -- and in Washington -- for 20 years has been to stimulate competition," Morr said. "The public debate is: Does competition lower cost and increase quality, or does it increase cost and lower quality? After 20 years, that question has not been answered." * * *

"I'd be surprised if Clarian built a hospital up there (in Muncie), but you never know," said Dennis Dawes, president of Hendricks Regional Health, a 45-year-old, county-owned hospital in Danville, just eight miles from where Clarian opened a hospital in Avon three years ago. "Keep in mind, Hendricks County is the second-fastest-growing county in the state. That's why Clarian did what they did."

Delaware County has been losing population since 1970 as auto and other factories have downsized and closed.

"I would think they wouldn't want to go to an area like that," Dawes said. "Clarian's impact on us has been very minimal because we're a fast-growing area."

Adding a second hospital to a county whose population is declining "certainly will not do anything but drive costs up if it happens to dilute the patient volume," Dawes said.

Clarian's hospital strategy in Delaware County could be to attract as many good-paying, heavily insured patients as possible and "keep the others -- the uninsured and underinsured -- going to the other place," Dawes said.

More from the astory:
Blake Dye, president of Henry County Memorial Hospital, also questions whether more hospital beds are needed.

"We have a responsibility in health care to build what is needed," he said. "I just read today there is overbedding in Indianapolis, which can lead to duplication and increased costs, which is not good for citizens or businesses. I don't know why anyone would go into Delaware County to compete. Ball Memorial Hospital has historically met the community's needs and I think it still does. So I don't understand it."

Morr responded: "From a public policy standpoint, the answer to the overbedding question is that competition serves the public interest. In a free market, patients will vote with their feet. In a free market, you can build filling stations on all four corners. Do you need four on the same corner? The market will decide. Can they all survive? Probably not. Right now in Indiana, we're seeing an explosion of pharmacies -- Walgreens and CVS in the same market. Are we well served? Should there be government regulation of pharmacies? The answer is no." [emphasis added]

But is this a free market? Can an uninsured person find out all the information he needs to choose the "best" hospital? (Or is the real question, can an uninsured person even be admitted to a hospital, regardless of promise to pay?) And if the individual is insured, isn't it the insurer which will be "voting with its feet," not the patient?

Finally, not mentioned in today's story, but important in this discussion are two Indiana federal court decisions in late 2005 and early 2006, where county efforts to place a moratorium on health care construction were rejected by the courts. See this Jan. 31, 2006 ILB entry titled "Re recent federal court decisions on whether Indiana communities have right to restrict new medical centers."

Posted by Marcia Oddi on July 1, 2007 08:48 AM
Posted to Indiana Law