A debate pitting South Dakota's hospital industry against powerful physicians who want to start their own small hospitals ended up late last month in a win for the doctors.
The state House failed to override Gov. Bill Janklow's veto of a bill that would have slapped a two-year moratorium on hospital expansion in South Dakota. Janklow characterized the legislation as an attempt by large hospitals to limit competition.
It requires a two-thirds vote, or 47 House votes, to override a veto. The tally against the veto was 44-26. Rep. Jim Putnam (R-Armour) said he would try to get the issue reconsidered.
A few small specialty hospitals have been opened in the state by doctors, and they are draining off some of the most lucrative types of surgery, complain officials of traditional hospitals. If community hospitals lose enough business, they may have to reduce certain services or close, some people say.
"Building more hospitals makes no sense to me because that would only increase (medical) costs," Putnam said.
Other lawmakers pushing to override the veto said a temporary ban on the addition of any more hospital beds would provide the time needed to thoroughly study the issue.
"Give us two years to work on affordable healthcare. Keep our community hospitals working for us and helping the poor," said Rep. Kay Davis (D-Sioux Falls).
But those who argued in favor of the veto said a moratorium would only preserve the status quo. They said hospitals will not reduce what they charge patients unless there is competition.
"Competition is going to reduce prices," argued Rep. Steve Cutler (R-Claremont). "Remember the consumer."
Cutler said there is little chance small specialty hospitals will hurt large hospitals. He said one large hospital in South Dakota had cash reserves of $190.5 million in 1995 and had $16.8 million in profits after expenses.
Pushing for override of the veto, Rep. Deb Fischer-Clemens (D-Mitchell) said large hospitals may be able to compete, but small ones in rural areas would likely close if too many specialty hospitals spring up.
"The consumers in our rural areas, when these hospitals no longer exist, are the ones that are going to be hurt," she said.
Rep. Rex Hagg (R-Rapid City) said traditional hospitals have been making bundles of money for years. Competition will force them to reduce their charges, he said.
"In Rapid City, we have an absolute monopoly, and it hasn't been good for consumers," Hagg said.
A new four-bed specialty hospital there could change things, he said. As an example, Hagg said the mini-hospital is charging $75 for the same procedure that costs $300 at Rapid City Regional Hospital.
"We need to let the market flow and be free," he said.