Menorah Medical Center, which closed its downtown facility in Kansas City, Mo., in October 1995, has jumped across the state line to Overland Park, Kan.
In mid-October, the Jewish institution opened an acute-care hospital of 158 beds in a crowded suburban market already served by four major hospitals. It adjoins an ambulatory center that came on line in 1994. In January the complex started admitting patients to a new birthing center. The entire project cost about $100 million.
Fast-growing Johnson County, Kan., is home to Columbia Overland Park Regional Medical Center, Shawnee Mission Medical Center, Olathe Medical Center and St. Joseph Health Center.
Two more facilities are planned nearby. St. Luke's-Shawnee Mission Health system is building a new 75-bed hospital, to open in 1998. Children's Mercy Hospital intends to build a satellite in the area, too.
Kevin Hicks, chief executive officer of Columbia Overland Park Regional Medical Center, a for-profit facility not far from Menorah, argued that hospitals that move into a saturated market like his should lose their tax exemption.
"It's without debate that there is not a need for the additional inpatient beds," he said. "And that doesn't mean they can't build it. They can, and they have. I don't take issue with that."
But Hicks said Health Midwest, Menorah's corporate parent, has taken advantage of its tax status to expand its domain. "The whole issue of being a tax-exempt organization is not because you're not-for-profit, but because you're providing a community good," he said. "I don't think they've demonstrated they're meeting community need with that project. What they're meeting is the need of the Health Midwest system."
Health Midwest is the largest hospital system in the Kansas City area, but until now it has lacked an inpatient hospital on the wealthy Kansas side of the metropolitan area, where the Jewish community now mostly lives.
The new Menorah facility had originally been conceived as strictly an ambulatory center with doctors' offices attached. But when Menorah Medical Center announced in October 1993 that it was about to be bought by Columbia/HCA Healthcare Corp., Health Midwest quickly made a counteroffer that included building a new Menorah inpatient hospital to replace its older facility in central Kansas City.
Health Midwest could easily build the new hospital because, unlike Missouri, Kansas abolished its certificate of need process.
Columbia's Hicks argued that if they build it, they should operate the new hospital as a for-profit subsidiary and pay taxes on it.
Dennis McClatchey, Health Midwest corporate spokesman, replied: "He doesn't think it's serving Columbia's needs. The community decides what its needs are. It remains to be seen how the community responds to Menorah's presence."
In Health Midwest's view, the market mechanism will sort the winners from the losers through competition.
McClatchey called on Columbia to justify its plans to construct a new hospital 30 miles to the west, in Lawrence, Kan., which is currently served by one community tax-exempt hospital that has refused to deal with Columbia.
Johnson County, including the new Menorah, has 2.67 hospital beds per 1,000 population. Lawrence now has 2.86 beds per 1,000, McClatchey said. "If there are too many hospital beds in Johnson County with Menorah, there are way too many in Lawrence with Columbia," he added.
"If (Hicks) is suggesting we are somehow at an advantage by being not-for-profit," McClatchey concluded, "there is nothing to stop Columbia from converting to not-for-profit status if they want."