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Format: 04/23/2014
Format: 04/23/2014

News

Pittsburgh Tribune-Review: Independents aim for top care to compete with giants

Wednesday, March 3rd, 2010

By Mike Cronin
PITTSBURGH TRIBUNE-REVIEW

Dr. Thomas Muzzonigro has been on both sides, and he prefers working for an independent hospital.

"I wanted to have a say in how I practiced," said Muzzonigro, 43, an orthopedic surgeon affiliated with Butler Health System who did his residency at the University of Pittsburgh Medical Center from 1995-2001.

"I've seen how big (hospital) systems function, and there are a lot of political aspects to it," said Muzzonigro, who performs procedures when needed at UPMC Passavant and UPMC Cranberry.

"If you're employed in a big system, they might determine things like how you schedule patients and what equipment and medication you can or can't use," said Muzzonigro of Pine.

The number of independent hospitals in Western Pennsylvania has dwindled since the 1980s, when most local hospitals were independent. Many closed or joined larger systems for reasons that include financial pressures, challenges in recruiting doctors and an inability to obtain advanced medical technology, say experts such as Samuel H. Steinberg, a Florida-based consultant to hospital executives.

Data from the Pennsylvania Health Care Cost Containment Council show nine independent hospitals in Allegheny, Armstrong, Butler, Fayette and Washington counties. Two hospitals, Sewickley Valley Hospital in Sewickley and The Medical Center in Beaver, formed a partnership in 1996 that is independent of any larger system.

"Overall, hospitals are not different from other industries such as agriculture, where the family farm has all but disappeared and been replaced by corporate operations," Steinberg said. "At one point, there were about 6,000 hospitals in the country. Now, there's about 4,000."

Those that survive, and sometimes thrive — such as Butler Health System in Butler County, St. Clair Hospital in Mt. Lebanon and Jefferson Hospital in Jefferson Hills — offer specialties such as cardiovascular procedures, joint replacements and wound care. They take advantage of being the only viable hospital within a certain area. Or, their size and patient base enable them to make money.

"Successful independent hospitals usually offer high-quality care. If they do a lousy job, the patient will go to someone else," Steinberg said. "They also tend to focus on doing maybe five things really well, not 25. If they do a distinctive job, then they can build volume."

St. Clair executives, for example, take pride in the hospital's ability to prevent dangerous and costly infections resulting from IV insertions and patient falls. They tout the hospital's response time in opening blocked arteries of heart attack victims. The hospital, which opened in 1954, has 329 beds and 525 doctors. It employs 2,100.

"We lead Western Pennsylvania in getting 94 percent of those suffering an acute heart attack into the hospital and their artery open in fewer than 90 minutes. We set the industry standard," said Dr. G. Alan Yeasted, senior vice president and chief medical officer.

Many of the region's independent hospitals recently renovated or expanded or plan to so.

St. Clair, for example, completed a $13.5 million emergency department expansion in 2008. Hospital officials said the emergency department treats 50,000 patients a year, making it one of the region's busiest.

Butler Health will complete "its largest construction project ever" this summer, said President and CEO Ken DeFurio. The $152 million project, which began in 2008, will add 210,000 square feet and more than 60 beds. The hospital, open since 1898, has 232 beds, 231 doctors and a staff of 1,700. Its annual budget is about $210 million.

"This will ensure we don't turn anyone away simply because we're full. It's an offshoot of our success," DeFurio said.

Officials at Ohio Valley General Hospital in Kennedy decided to become regionally renowned for treating wounds and for a top-notch pain management program, said President William Provenzano. Ohio Valley opened in 1906 and has 117 beds. It has about 300 doctors on staff and a $68.8 million budget.

"Unless you find a way to become profitable, you can't stay in existence," Provenzano said. "Many hospitals join systems for financial reasons. But, eventually, that's not going to work either. Look at Braddock. They weren't making money, and UPMC closed them."

Going big

UPMC Braddock closed recently after executives cited underutilization: patients typically occupied about 50 of its 123 beds.

Oakland-based UPMC dominates the region with 14 Western Pennsylvania hospitals and five in other countries. That means executives can spread infrastructure costs over all of them instead of just one, as an independent hospital must do, said Robert DeMichiei, UPMC's senior vice president and chief financial officer. By doing that, doctors and nurses can concentrate on medicine and not management and overhead, he said.

"With our model, the hospital focuses on the doctor and patient," DeMichiei said.

Other advantages to large systems include reduced duplication, increased reimbursement rates from insurers and clout when purchasing medical supplies and technological upgrades, experts said.

"The question is: Will those efficiencies be passed along to consumers?" said Gary Kaplan, a partner in the Downtown law firm DeForest Koscelnik Yokitis & Kaplan, who teaches health law at Carnegie Mellon University.

When hospitals face less competition, they don't negotiate as hard with insurance companies for reimbursement, said Martin Gaynor, the E.J. Barone Professor of Economics and Health Policy at Carnegie Mellon.

"Higher premiums may be passed on to employers, and those costs passed on to workers in the form of lower pay or fewer benefits. It's not a good thing," Gaynor said.

According to 2006 data from Dartmouth University's Dartmouth Atlas of Health, Pittsburgh inpatient hospital reimbursement rates are above national and state averages, but outpatient reimbursement rates are below the averages.

"The pros for larger institutions include they have more political influence and can buy levels of talent that smaller ones can't," said Steve Foreman, a professor of economics and health administration at Robert Morris University in Moon. "The cons include decisions and changing directions become difficult. It's harder to spot trends, adapt and innovate."

Gregory Burfitt, president and CEO of Allegheny General Hospital and West Penn Hospital in the West Penn Allegheny Health System, said not all organizations are so bureaucratic that it takes a long time to make decisions — or that they restrict doctors from practicing the way they want.

"Our system is physician-led," he said. "Decisions are not made just by an administrator. We take into account the opinions of the physicians who practice here, so we approach solutions to problems in concert."

To read more, visit the Tribune-Review website.

 

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