A year ago, the opening of 74-bed Innovis Health brought Fargo, N.D., its third acute-care hospital amid a drama pitting physicians and an out-of-state Blues plan against a for-profit hospital.
Fargo healthcare is still a stage production, but drama has been replaced by mystery.
Is Innovis, built and equipped at a cost of $90 million, succeeding at providing better-quality care for less money? That was the advance billing given by its owners, Dakota Clinic, a 175-member multispecialty group practice based in Fargo, and Blue Cross and Blue Shield of Minnesota (Oct. 30, 2000, p. 34).
Neither party will disclose the not-for-profit hospital's financial results or any evidence that the hospital has reduced costs in the Fargo market during its first year of operation. "We're meeting the financial goals that we set for Innovis," said Steve Youso, the Minnesota Blues vice president involved with the hospital.
As for cost, Youso said the Minnesota Blues has the figures to do a DRG-by-DRG cost comparison between Innovis and its competitors, 380-bed MeritCare Health System and for-profit Heartland Health System, but he considers the information proprietary.
Dakota Clinic doctors used to admit the bulk of their patients to Heartland, licensed for 203 beds but staffed for only about 110 beds. The physicians and the hospital had a bitter divorce over lucrative ancillary services, which the clinic had provided from its offices adjoining the hospital. Heartland is owned by Clarent Hospital Corp., Houston, which, when it was known as Paracelsus Healthcare Corp., ended the cushy arrangement the clinic had.
For public consumption, Youso said he is confident that Innovis is the most cost-efficient choice for Minnesota Blues members, who number about 15,000 in the area, which includes Moorhead, Minn., across the Red River from Fargo.
One critic of the Innovis project said it's too early to tell whether the hospital will boost costs in the market. Michael Unhjem, president and chief executive officer of Blue Cross and Blue Shield of North Dakota, Fargo, wants to see another year of results to get a true handle on cost. The national shortage of physicians, particularly specialists, has made it hard for the providers to recruit new physicians, and that has kept a lid on spending in Fargo, he said.
Several characters have left the stage. The hospital's first CEO, Bruce Frederick, resigned in March. His replacement wasn't named until earlier this month-Paul Wilson, 43, who is leaving as vice president of operations at Banner Health System, Phoenix. Banner announced in September that it would close its administrative offices in Fargo, where Wilson was employed, and sell its 10 Great Plains hospitals to focus on the growing Arizona and Colorado markets (Sept. 24, p. 20).
Frederick now works as a consultant with Joint Commission International, a unit of the Joint Commission on Accreditation of Healthcare Organizations, Oakbrook Terrace, Ill. In response to written questions, Frederick said opening the hospital was his goal, and after that happened, career opportunities allowed him and his wife, Linda, to return to Wisconsin, where they have personal ties.
Even before Frederick slipped away, his employer, Avera Health, Sioux Falls, S.D., had exited. Avera had a 10-year contract to manage Innovis and provide three top executives, but the Catholic system parted ways with Innovis in late January. Officials from Avera, Dakota Clinic and the Minnesota Blues agreed it was a mutual decision.
Tom Moser, senior vice president of network operations at Avera McKennan Hospital and University Health Center, Avera Health's flagship hospital in Sioux Falls, said Fargo was outside of Avera's primary market, centered in eastern South Dakota.
Youso offered a slightly different take. "There was just a difference in philosophy in how a hospital should be managed day to day," he said. "We want Innovis to be something new, from a delivery-system standpoint. I think the interest for Avera, and frankly other hospital systems that could have been involved, they wanted to fit Innovis into their system."
Perhaps the biggest mystery is how long Fargo will keep its three hospitals. Unhjem said two or three parties-including MeritCare-have investigated buying Heartland. "If it were MeritCare, and they would pull it into their system, we would view that positively," Youso said. "If it were someone from the outside, with deep pockets, who had the potential to spend money to compete, that could be a problem."
Louis Kauffman, Heartland's president and CEO, declined to be interviewed by Modern Healthcare. Kauffman is leaving the system at the end of the month. MeritCare's president and CEO, Roger Gilbertson, M.D., declined to comment on the hospital's interest in Heartland but said he's a lot less certain that three hospitals will thrive in Fargo than he was a year ago.
Frederick, who was recruited away from what was then known as Dakota Heartland to take the Innovis job, doubts Heartland can make it alone. "I do not think (Heartland) will be successful and anticipate it will struggle to survive unless it is incorporated into an existing system," he said. "A new healthcare player in this market would be crazy to buy (Heartland) with MeritCare and Innovis in the marketplace."