Columbia/HCA Healthcare Corp. is proposing to build a new 70-bed inpatient hospital on a site in Lawrence, Kan., where the company has already built a medical office building and outpatient surgery center.
But first it must receive permission from the city.
The hospital giant has applied for and received a zoning change from the Lawrence-Douglas County Planning Commission on a 9-0 vote. Lawrence Memorial Hospital, at 149 beds the only hospital in the area, did not oppose Columbia's request before the planning board but now has asked the City Commission to overturn the zoning change.
Those same city commissioners appoint the members of the community hospital's board.
At a meeting Nov. 12, the commission deferred action on the issue until Dec. 3.
Robert Ohlen, president and chief executive officer of Lawrence Memorial, said his hospital opposes Columbia's new venture because it contradicts the fundamental trends in hospital operation. In most communities of Lawrence's size, where two hospitals exist, they are merging to consolidate resources.
"In this scenario," Ohlen said, "we're adding a facility which we presume will add costs to the community, if nothing more, in that capitalization of the project will have to be recovered through the patients."
Splitting a finite number of patients between two facilities is going to hurt the occupancy rate at both, he said. "There's a lot of fixed cost in hospitals, so your cost per unit is likely to be high at both locations."
He also said a second hospital will create competition for labor, which will drive up the wages of nurses and technicians. Furthermore, he said, Columbia "has a fundamental need for high earnings. They've had a history of high prices. That's another angle in which there will be a need to generate more income out of this market in order to fuel their objectives."
Two years ago Columbia tried to buy a 50% stake in Lawrence Memorial but was rebuffed.
Kevin Hicks, CEO of Columbia Overland Park (Kan.) Regional Medical Center, who oversees the Lawrence project, said his rebuttal to Lawrence Memorial's plea would concentrate on market demand.
"We intend to present arguments to the City Commission much like you would see in a certificate-of-need process, even though there is no CON in Kansas," Hicks said. Hicks intends to present "the advantages to consumers and payers of having two hospitals."
The west side of Lawrence, where Columbia wants to build, is growing rapidly. "We're not the only ones that have figured that out," Hicks said. "There is light industrial development and a new high school." Also, the site has good access to Interstate 70, which connects Lawrence to Topeka, Kan., and the Kansas City suburbs. So the new hospital will meet the expanding demand for services.
"The third component," he added, "is our commitment to indigent care in the community. That's another issue they've raised."
Lawrence Memorial's Ohlen agreed that the issue of providing care to the underinsured or medically indigent plays a role in his opposition. "We city hospitals do have a responsibility for providing services for them. Indications are Columbia won't do it to the extent that we do it."