Both of these facilities are located down the road from 49 acres that HCA purchased for $19 million in Arcola. Foust says HCA will be using the land to build a facility that will be nearly identical right down to the ER to Inovas planned healthplex, and plans to build a hospital if the need arises. Neither provider has pursued a certificate of need on these facilities yet; theyre both conducting due diligence to determine what outpatient services are needed in the market.
Pat Walters, executive vice president of Inovas western region, says that only certain services planned at its healthplex project in Northern Virginia would need CON approval.
Even as that competitive battle looms, the two rival companies have yet to resolve a legal dispute over a third facility in the county, HCAs planned 164-bed Broadlands Regional Medical Center. The company has twice won a CON from the state to build the project, which would be located in Ashburn, about 4.5 miles from 155-bed Inova Loudoun Hospital in Leesburg. Inova is on its second appeal to challenge that approval, and the matter is in the Alexandria (Va.) Circuit Court.
Neither provider will admit that a turf war has developed over the planned facilities, but its clear that HCAs aspirations in the Northern Virginia area have ruffled some feathers with Inova executives. Building a hospital four miles away from another one will dilute services for patients in that area, Randy Kelley, chief executive officer of Inova Loudoun, says of the Broadlands dispute. The result is youll have two underperforming hospitals.
HCA claims its planned facilities in Loudoun County will fill existing healthcare gaps and eventually support a growing population that will be in need of more hospitals. Right now, Inova (Loudoun) is the only (general acute-care) hospital in the county to date, Foust says. Broadlands would be the second. More than 50% of the countys residents go elsewhere for care because theres a gap in providers, according to Lewis, and the statistics have gotten worse since last year. There are only 0.6 beds per thousand people in Loudoun County, compared with three beds per thousand in the U.S. overall, according to HCA. As growth trends continue, another hospital will be needed, she says.
Lewis and other HCA officials insist that this isnt about overtaking Inova. Rather, they contend that expanding facilities in the region will give payers, providers and consumers a choice they now lack.
A situation where two big facilities are competing with each other for space is fairly common, says Josh Nemzoff, president of Nemzoff & Co., which consults on hospital mergers and acquisitions. You have two heavyweightsone not-for-profit, one for-profitgoing at it, Nemzoff says. There are plenty of situations where one provider is dominant in the marketplace, and in this case, there are two. And theyve been doing it for years in Northern Virginia, he says.
Inovas system includes six hospitals in Northern Virginia and other health services, totaling 1,725 licensed beds. Total revenue for the system has increased steadily over the past few years, from $1.5 billion in 2004 to $1.8 billion in 2006, according to Inova. In 2006, it posted net income of $277 million.
The system controls close to two-thirds of the inpatient volume on the Virginia side of the Washington metropolitan area, says Mark Cherry, market analyst for HealthLeaders-InterStudy and author of the report on the Northern Virginia market.
Inova has taken steps to ensure its status as a chief provider in Northern Virginia, formally known as Planning District 8, which includes the counties of Arlington, Fairfax, Loudoun and Prince William.
We would probably be No. 1 if we accumulated all of the Inova facilities into one group, Inovas Walters says. However, weve been seeing a lot of growth in the areas like free-standing imaging centers, which are owned by radiologists or national competitors, like HealthSouth Corp. and Insight Health Corp., the latter a nationwide provider of diagnostic imaging services.
Inova acquired Loudoun Hospital in 2005 and last year agreed to a merger with 163-bed Prince William Hospital, although the agreement is currently being reviewed by federal regulators. Prince William, a private, not-for-profit community health system based in Manassas, Va., needed a capital partner to replace its aging facilities as well as expand to serve the new growth in that area, in western Prince William County, Walters says.
Although Inova uses a sizable portion of its revenue to provide uncompensated care and its hospitals are connected to one of the most highly integrated health networks in the nation, critics contend that Inova could use its clout to dissuade competition, the HealthLeaders-InterStudy analysis stated.
HCA, which rates itself No. 3 in the Northern Virginia market, behind Inova and 335-bed Virginia Hospital Center, a stand-alone tertiary-care facility in Arlington, doesnt seem intimidated by Inova, and definitely has its sights set on becoming No. 2 through the Loudoun projects.
HCA Virginia is part of the 165-hospital HCA chain, based in Nashville, and has 10 hospitals statewide (two in Northern Virginia), as well as five free-standing outpatient surgery centers and five imaging centers. There are nearly 3,000 licensed beds in HCAs existing Virginia facilities. Plans are in the works to build six new HCA facilities in the state, including the Broadlands medical center and 126-bed Spotsylvania Regional Medical Center, a $152 million project thats slated to open in late 2009 in Spotsylvania County, in Fredericksburg.
Lewis estimates that HCA now controls 8% of the inpatient market share in Northern Virginia, and Virginia Hospital Center, 11%. Theres no reason why we cant meet our vision for expansion, she says. Net revenue for HCA Virginia totaled $1.57 billion in 2005 and $1.59 billion in 2006. Net income for those years totaled $333 million and $289 million, respectively, according to HCA.
HCA is known for its political smarts and aggressiveness and a willingness to spend money on lobbyists and political campaigns, says David Jarrard, president of Jarrard Phillips Cate & Hancock, a healthcare public affairs firm in Nashville. They often have a good team of lobbyists at whatever state theyre in, and theyre noted for investing in politics that helps them and their industry with a variety of issues, whether its reimbursement, regulations, winning certificates of public need, hospital opportunities or zoning issues, he says, although Broadlands has been an exception. They have a clear vision on what they want to accomplish.
Foust says HCA isnt giving up on the Broadlands facility, despite challenges from Inova and Loudoun County. Inova has been trying to vacate our certificate of public need for three years now, he says. As for the zoning issue, Broadlands is the epicenter of the countys growth, and we have to go where the people are. HCA has filed a lawsuit against the county to obtain zoning approval. We hope to prevail through the courts, he says. The court case is scheduled for trial in March 2008.