A small public hospital in a growing Kansas county is the big prize in an ugly political battle that includes the nation's largest for-profit hospital chain.
The battle illustrates what can happen when hospital competition mixes with local politics and business interests.
In tiny Miami County, Kan., that combination has exploded into a war over the fate of 18-bed Miami County Hospital and its $2.4 million in cash and assets.
On one side are some county residents, led by a former hospital board member, who want the hospital closed and its assets used for other county projects.
The opposition, led by the hospital's administration, supports a deal that would turn over the hospital's assets to 130-bed Olathe (Kan.) Medical Center.
Stirring the pot is Louisville, Ky.-based Columbia/HCA Healthcare Corp., which would like to extend its Kansas City-area network to Miami County.
The county's three newspapers, meanwhile, are throwing fuel on the fire. Each has sided with a different interest in the debate, and each has been accused of bias.
"The whole thing is so bizarre; it takes your breath away and kind of wears you out," said Phil McLaughlin, publisher of the Miami County Republic, a semiweekly newspaper in Paola, Kan., that endorses the Olathe deal.
"It is an economic development issue, and that has superseded the healthcare issue for a lot of people," he said. "It is a tax issue. It is rivalry between two towns. It is ego and personality."
Miami County is located about 25 miles south of the Kansas City metropolitan area. Its population is expected to swell 16% to 29,000 people in the next two decades as families migrate from booming Johnson County, Kan., a band of wealthy communities between Miami County and Kansas City.
Although no longer rural, Miami County has yet to become wealthy. Its median household income is $29,259, nearly 6% below the state median of $31,024. The county's hospital, on the other hand, is doing much better.
Under a new administrator, Ken Huber, it rebounded from financial troubles and earned $370,000 on revenues of $8 million last year.
Because the hospital is doing so well, many county residents want to discontinue the county tax levy that helps support it. The levy generates $145,000 for the hospital each year.
Two years ago, Mr. Huber crafted a plan for the hospital's future that seemed to please everyone.
Under it, the county hospital and Olathe basically would form a holding company, called an interlocal agency, to manage a new hospital built to replace the 40-year-old county facility. The county and Olathe would split the cost of the 18-bed, $5 million facility.
Collaboration between the two hospitals seemed natural because of Olathe's presence in the market. Olathe helped recruit the 14 family physicians working in Miami County, and it owns five of the 14 practices.
Initially, there was widespread support for the agreement. After all, the county would get a new hospital at half the cost, the tax levy would end, and Olathe would extend its reach.
This spring, consensus broke down.
Gordon Schrader, a former member of the interlocal governing board, says it happened when county planners decided to continue the tax levy for eight years to help finance a more expensive replacement hospital.
"The fact is that people looked at it as giving the tax money to Olathe," Mr. Schrader said. Furious, he resigned from the interlocal agency board in March but kept his position on the county hospital board.
Others, including Mr. McLaughlin of the Republic, say opposition to the interlocal agency rose after county planners decided to build the replacement hospital in Paola, the county seat and site of the current facility. Businesses in Osawatomie, seven miles to the south, had lobbied for a site there. Mr. Schrader, they note, once was Osawatomie city manager and now heads its chamber of commerce.
In June, the county clerk's office conducted a mail-ballot referendum on whether the hospital's assets should be transferred to the interlocal agency. In a narrow decision announced June 23, Miami County residents voted 3,608 to 3,279 against the transfer.
One day before votes were tallied, Mr. McLaughlin's newspaper reported surprise news: Columbia/HCA hoped to give voters an alternative, then unspecified, to the interlocal agency.
Columbia/HCA operates two hospitals in the Kansas City area, including 260-bed Overland Park (Kan.) Regional Medical Center, and plans to expand in the region (Aug. 8, p. 138).
In the Republic article, Mr. Huber spoke out against a deal with Columbia/HCA, stating that for-profit chains act for the good of the company, not for individual hospitals.
Recently, Overland Park President and Chief Executive Officer Kevin Hicks, who's coordinating Columbia/HCA's activity in Miami County, expressed regret at the turn of events.
"Columbia/HCA got involved (in Miami County) after the public had voted to turn down the interlocal proposal," Mr. Hicks told MODERN HEALTHCARE. "It was very unfortunate that any articles were written before I talked to Mr. Huber."
Mr. McLaughlin's version of Columbia/HCA's involvement differs. It starts with a May visit from a Columbia/HCA marketing executive. "He was here to get a story," Mr. McLaughlin said. "He thought they were blocked out of a deal (with the hospital) and was going to the public forum."
In July, Columbia/HCA executives met with members of the county hospital board, county commissioners and others but made no formal proposal.
Meanwhile, despite the collapse of the interlocal, Mr. Huber urged Olathe to buy land for the replacement hospital as part of a new lease agreement. A lease between the county hospital and Olathe wouldn't require voter or county commissioner approval.
Under a plan presented to the county hospital board in August, Olathe would build the replacement county hospital with its own money and with the old hospital's assets. It wouldn't accept money from any tax levy, but it would lease the replacement facility from the county for $1 per year for 30 years.
After the lease ran out, Olathe would return the old county hospital's assets to the county. Olathe would then own the replacement hospital, but the county would control 30% of the board.
A county hospital board meeting to discuss the lease was set for Aug. 22. Again, Columbia/HCA made a last-minute offer.
That day, Columbia/HCA said it would pay the county $300,000 under a two-year lease, build a new facility without the hospital's assets and shell out about $225,000 in annual property taxes.
Despite Columbia/HCA's effort, the county hospital board voted 4-1 to approve the lease arrangement with Olathe.
Mr. Schrader dissented and said the board should take more time to review both proposals. On Sept. 27, he resigned his hospital board seat in order to campaign against the Olathe deal.
"We had everything we wanted from Olathe, plus some representation on the board," said Joe Moreland, board chairman at Miami County Hospital. "From Columbia, we wouldn't end up with any voting positions. Olathe has been here for us for a number of years, and they've always done what they've said."
The speed of the county hospital board's decision, however, is raising questions.
Many residents think the county shouldn't help finance a new hospital when Columbia/HCA would build one without county money, said Webster Hawkins, publisher of the Osawatomie Graphic and the Louisburg Herald, which oppose the Olathe lease.
Mr. Hawkins said some local residents believe Mr. Huber and hospital employees support the Olathe agreement because it protects their jobs. Others, he said, say speculators bought the land around the proposed Paola hospital site and pressured board members to make sure it was built as planned.
None of it is true, Mr. Huber said.
"I really feel what we've done is in the best interest of all the county's citizens," he said. "Olathe isn't going to go away next week. I don't know where Columbia/HCA is going."