HealthSouth Corp.’s plan to build a state-of-the-art digital hospital in its corporate hometown of Birmingham, Ala., may have hit a roadblock, as two local competitors filed a civil lawsuit challenging a new state law that exempts the rehabilitation provider from Alabama’s certificate-of-need process.
Not-for-profit Baptist Health System, Birmingham, and Brookwood Health Services, also in Birmingham and owned by Tenet Healthcare Corp., asked a state court to declare the law in violation of the state constitution and to permanently block the state’s Health Planning and Development Agency from issuing CONs for the $240 million hospital, which is already under construction. The complaint, a copy of which was obtained by Modern Healthcare’s Daily Dose names the agency and its executive director. It was filed May 15 in Montgomery (Ala.) County Circuit Court.
“We’ve had a (CON) process in Alabama for 17 years, and every project in the state has undergone rigorous review by the state health planning board,” Baptist CEO Dennis Hall said. “The Legislature enabled them to build the hospital without going through it, and we feel that’s inappropriate.”
Last September, the state Legislature passed and the governor approved a law granting a CON exemption to “the first digital hospital developed in the State of Alabama,” according to the complaint, but the new law was not advertised prior to enactment as required by law,
“From the very beginning, we lobbied against it, and it passed anyway, so the next opportunity we had was to take it to the judicial system, and that’s what we’re doing,” Brookwood CEO and President John Nickens said. “We’re trying to preserve the integrity of the certificate-of-need system.”
That’s not what HealthSouth thinks about the suit. “It’s a nuisance lawsuit; it’s a competitive lawsuit,” HealthSouth Chairman and CEO Richard Scrushy told the Daily Dose. “I can promise you that neither Dennis (Hall) nor John (Nickens) has been to HealthSouth and reviewed the technology that’s going into this hospital. They do not even have a clue about what they’re talking about.”
Construction on HealthSouth’s 10-story, 219-bed facility began last November. The project to develop the “hospital of the future”--in which all patient and other records would be fully electronic--began as a joint initiative with Oracle Corp., Redwood Shores, Calif., a database software company. Oracle recently left the project and was replaced by Siemens, Scrushy said.
The new facility is meant to replace 169-bed HealthSouth Medical Center, Birmingham. HealthSouth threatened that without a CON waiver it would build the hospital in another state, arguing that the traditional CON process would delay construction for six to 10 years.
It’s unlikely the dispute will be resolved soon. “We’re expecting (the suit) to go to trial in the next two years,” Nickens said. By that time, Scrushy said, the new hospital will be up and running.