by Chris Chase
Coastal Journal staff
BRUNSWICK — This article is a continuation of the story featured last week on the competing Certificates of Need (CON) submitted by Mid Coast Hospital and Central Maine Healthcare Corporation (CMHC) for the acquisition of Parkview Adventist Medical Center (PAMC). The first article provided a summary and history of the issue. This article will be an examination of each organization’s case for taking over Parkview.
First, a brief recap for those who may not remember all the details of last week’s article. CMHC and Mid Coast Hospital have both submitted paperwork to the state detailing their plans for Parkview’s future. CMHC aims to make Parkview a subsidiary of their company in light of their long-standing relationship, and Mid Coast aims at merging the services of the two hospitals to form one.
The question on the table at the moment is this: Which plan is right for the midcoast area, and what will happen if one organization or the other acquires Parkview? Here’s a bit more detail on the two companies and their relationship with Parkview:
CMHC is a nonprofit holding company for three hospitals and a number of care services in Maine. Of the three organizations tangled up in the battle, they are by far the largest, with their flagship hospital Central Maine Medical Center (CMMC) earning $300 million in revenue in 2010, according to the Form 990 they are required to submit to the Internal Revenue Service as a nonprofit entity.
CMHC’s relationship with Parkview started in 2002, when they began to provide emergency room staff via CMMC for Parkview. The first year of service, Parkview sent $1.7 million in compensation to CMHC for their services. That number has fluctuated over the years, with just over $600,000 in compensation sent in 2010.
On July 1, 2009, the executive management functions of Parkview were transferred to CMHC. President of Parkview Theodore Lewis was then released by Parkview and hired by CMHC to fill the same role. Currently, this contract still stands under the new administration of Parkview, with individuals on CMHC’s payroll providing administrative duties.
CMHC has also given Parkview over $10 million in non-interest loans. The first of which, $5.6 million, was given in April 2008, just before the first letter of intent was filed by CMHC to acquire Parkview in May of 2008. This letter was not followed up by a CON, and has since expired.
Mid Coast and Parkview have had a much-less friendly relationship. Mid Coast has approached Parkview in the past about consolidation, according to their CON, but have been unable to reach any agreements.
Plan for disaster?
According to Mid Coast Hospital CEO Lois Skillings, the current plan offered by CMHC would be disastrous for the mid coast area and would cause healthcare costs in the region to go up, due to the duplication of services.
According to Skillings and Midcoast Hospital, the current duplication of services costs the area $25 million every year, money which their plan would save by consolidating the two hospitals.
“Duplication of healthcare services are a significant cost in the healthcare of a community,” said Phyllis Powell, assistant director of planning, development and quality for the Maine Department of Health and Human Services.
“Excessive anything isn’t viable, for the provider or the community,” said Powell. “It’s not like having a McDonalds, a KFC and a Burger King.”
According to Skillings, the cost accrues from multiple factors, including the aforementioned duplication of services and the shifting nature of how healthcare is provided in the U.S.
“In the past, our healthcare system was all around the hospital bed,” said Skillings. “Today, it needs to be around an integrated delivery system where we’re working with primary care docs, community health, school health, employee health, toward keeping people healthier. The better job we do at that, they’ll be even fewer need for hospital beds in the future. On any given day, there is only 44 percent occupancy rate between these two hospitals already.”
One of the problems brought by this low occupancy, according to Skillings, is the services, employees and equipment that must be kept on but aren’t being fully utilized. In order for a department to function correctly, it needs a certain number of specialists, even if the need for those specialists is low.
“It takes an economy of scale to have four heart doctors, four lung doctors, three gastroenterology doctors,” said Skillings. “In order to have that service every day of the week, so that if you come in on Monday with a heart problem or if you come on Sunday night or Christmas eve, we’d have that same level of service here.”
CMHC, on the other hand, asserts that their acquisition won’t change anything.
“This is a concept that goes on all over the county,” said Chuck Gill, vice president of public affairs for CMHC. “What happens is, if you’re a standalone small hospital in this climate, you just can’t survive.”
Mid Coast asserts that the opposite is true, and that Parkview’s medical care will shift into the Lewiston area due to the changed relationship.
According to Skillings, if CMHC provides specialists for Parkview through CMMC, the result will be a drain on their own finances.
“By this Lewiston hospital coming in and scooping up the healthcare like the cream off the top and bringing it back to Lewiston, it’ll weaken healthcare in this community,” said Skillings.
According to Steve Trockman, the director of community relations and outreach for Mid Coast, providing care through Lewiston serves to fragment healthcare in the community and lead to worse quality and worse service.
“Let me give you an example: Somebody comes in to either the emergency department or to see a specialist at Parkview, and they may be transferred to Lewiston for service that may have been available right here in this community,” said Trockman. “Lets say that person gets discharged. They come back here [Brunswick], and there is a complication, and that service isn’t available at Parkview on the weekend, and they end up coming in here, oftentimes to our emergency department. Well we essentially have to start over if they weren’t a patient of ours.”
Welcome to the process
According to Gill, CMHC’s success in their other two acquisitions, the Rumford and Bridgton hospitals, has shown that the business model can be successful in a small community.
However, Mid Coast feels that their success in those regions cannot be compared to the Brunswick area, as those areas did not have a second hospital in them that already covered a great deal of the healthcare needs for the region.
“You know, in their entire certificate-of-need application, they didn’t even mention that Mid Coast is already here,” said Skillings. “It’d be as if we decided to put a new hospital in Bridgton and Rumford. Would they be afraid of competition? No, but the argument is: Is there enough resources to support that?”
According to Mid Coast, the Brunswick region is only able to support one hospital due to the size and population of the area. Parkview disagrees.
“In this market it just happens to be that there are two hospitals in this community, and we want to give people a choice,” said Randee Reynolds, the new president of Parkview.
“Parkview firmly needs to remain open,” said Tory Ryden, director of communications for Parkview. “We’ve never made any assertions that there’s not room for two hospitals in this area.”
According to Mid Coast, the evidence is in the numbers. Before CMHC got involved with Parkview and gave them their first loan, Parkview had posted several years of losses. In 2008, the year the first loan was made to Parkview their expenses outweighed their revenue by $3.6 million even with the loan, and in 2009 they again posted a $2 million loss, according to their Form 990. According to Mid Coast, without the money being funneled to Parkview by CMHC, the hospital wouldn’t be able to survive in the area.
In addition, the funding for Parkview is different than that of the other small hospitals in CMHC’s employ. Bridgton and Rumford both receive federal and state subsidies as Critical Access Hospitals, due to their existence as the only hospitals within a 35 mile area. Parkview, being one of two in the area, does not get that distinction and does not receive the same funding.
The reality, according to Gill, is that the entire argument Mid Coast has presented, regardless of its validity, has nothing to do with the current situation. The CON submitted by CMHC only details a change of the administration at Parkview, and has nothing to do with the services offered.
Although Mid Coast’s assertions that an increase in services could have disastrous consequences may very well be true, CMHC has proposed absolutely no increase in services, at least so far. One of the main tenets of their CON is that services will remain the same.
According to the cover letter of CMHC’s CON, there will be “no changes in services, increases in beds, or new equipment.” In addition, they do not propose to accrue any additional capital or operating costs.
Essentially, Gill feels that the entire argument and a source of a lot of the worry at Mid Coast is groundless as Parkview isn’t changing from a customer and service standpoint.
“The day-to-day will continue as is,” said Gill. “All of that stuff they said is interesting, but it has nothing to do with this situation.”
On October 2, the Department of Health and Human Services decided that Mid Coast Hospital’s CON was not subject to review under the CON statutes, and they “will not and cannot review it.”
Although that sounds like a victory for CMHC, the truth is a bit different. Essentially, the plan proposed by Mid Coast isn’t off limits, it just doesn’t need approval. If things work out between Mid Coast and Parkview, they could very well do it on their own without having to go through the CON process.
Now, however, the Mid Coast plan cannot be considered as a competing plan alongside CMHC’s in the CON review process, according to Powell. However, at the public hearing, Mid Coast can submit the exact same information they already have to become public record, if they wanted to do so, and their plan is still a part of the consideration.
“Welcome to the Certificate of Need process,” said Powell.
For now, the situation still stands relatively unchanged. CMHC’s proposal will go under state review, in order to determine if their CON can be approved. Parkview’s stance also remains unchanged, and according to Reynolds, they are still siding with CMHC due to their longstanding relationship. Additionally, according to Trockman, Mid Coast will most certainly be weighing in on the proceedings and submitting their information into the process.
The public can weigh in on their personal feeling in the matter at the hearing, which will be held October 24 at the Brunswick Knights of Columbus, at 10 a.m.