Lincoln, Neb., is witnessing a natural healthcare progression: Physicians open a for-profit specialty hospital to compete with the local community hospitals. The biggest provider, who stands to lose the most, hits back by boosting its own program in that specialty and recruiting more doctors. Physicians say their facility will complement the acute-care hospital, while hospitals say the physicians are cherry-picking the most lucrative patients.
Sure enough, just a few days after Nebraska Heart Institute, a 23-physician cardiology practice based in Lincoln, received local zoning approval for a $30 million, for-profit heart hospital with 59 beds, the town's dominant provider, BryanLGH Medical Center, announced plans for a new partnership with a group of doctors who broke away from the NHI. About 1,500 open-heart surgeries are performed annually at BryanLGH, while a little fewer than 500 are performed at the other acute-care provider in Lincoln, 176-bed Saint Elizabeth Regional Medical Center.
BryanLGH's partner is the newly formed Midwest Cardiovascular Associates, which will have 10 physicians by January. Five of them are former NHI physicians. The other five are new to Lincoln; two were recruited from Omaha, Neb., two from Fargo, N.D., and one from Abilene, Texas.
The partners have formed the BryanLGH Heart Institute, which they said would offer a complete range of cardiac services, including a transplant program. For now, those services will be provided within BryanLGH's two campuses, which combined have 583 beds, hospital spokeswoman Suzanne McMasters said. By 2005, the joint venture will run an expanded cardiac department, which will make up the lion's share of a 90-bed expansion that will be split between the two campuses, McMasters said.
"It looks like that thing is going to get pretty ugly and polarized," said Bob Bohlman, a consultant with the Medical Group Management Association, Englewood, Colo. "These heart hospitals and specialty hospitals are popping up all over the place, and they are really polarizing."
For-profit specialty hospitals-cardiology and orthopedics seem to be the most common types-are seen as cream-skimmers, taking away the most lucrative patients from acute-care hospitals, Bohlman said. The same argument was made in Sioux Falls, S.D., last year against a heart hospital owned by a physician practice, publicly traded heart-hospital provider MedCath, Charlotte, N.C., and 521-bed Avera McKennan Hospital and University Health Center (Oct. 16, 2000, p. 60).
"With the (financial) goodies taken away from the community hospital, that is going to be financially adverse to the community hospital," Bohlman said. "What's the support for the rest of the population?"
Bohlman stressed that he is not familiar with the events in Lincoln, but BryanLGH is singing from his hymn book. "Because of the volume and cases, there is a lot of revenue generated by the cardiology program here, and it does subsidize other programs in the hospital," McMasters said.
The NHI, not surprisingly, said its plans are unchanged despite BryanLGH's announcement and the recruitment of new doctors. "We plan to break ground later this month," said J Hoffman, the NHI's marketing director. "The intent of the heart hospital was just as an additional resource. The intention is to continue to practice at Bryan's two hospitals and at Saint Elizabeth."
The aging of Lincoln's population and the city's growth-to 225,581 residents today from 191,972 in 1990, according to the city, an increase of 17.5%-have caused a logjam for heart patients, Hoffman said. The new heart hospital and its two operating rooms will serve to alleviate that shortage when it opens in spring 2003 for "all patients, regardless of insurance or case type, except transplants," he said.
Donell Martinez, marketing director for Saint Elizabeth, agreed that the market could use more capacity for cardiology patients. Saint Elizabeth recently converted some outpatient areas to inpatient beds, reversing a switch made 10 years ago, but the move didn't go far enough. "Our intensive-care unit is full, and our progressive units are full," Martinez said.
"We fully expect (the heart hospital) to complement our service," Martinez said. "I think we will see some shifts. That's to be expected when a new provider opens up in town. But we do also expect to continue to see our service grow."
BryanLGH's McMasters said her hospital and Saint Elizabeth could handle the increased patients if they could recruit enough nurses. BryanLGH leaves 45 to 55 beds unused because of a staff shortage, McMasters said. The heart hospital will only worsen the nurse shortage in Lincoln, she said, but BryanLGH expects to continue to offer high-quality cardiac care at low costs.