WILL SANTA FE SEE A HEALTH CARE DOGFIGHT?
Presbyterian’s planned new hospital will compete with Christus St. Vincent
In a city where Christus St. Vincent health care has posted its purple logo on more and more specialty practices and clinics in recent years, Presbyterian Healthcare Services is slowly staking out some turf of its own.
Many who have watched the expanding footprint of Christus over the years are rolling out the welcome mat for Presbyterian, praising the value of competition and expanded health care choices for consumers, and hoping better care and better prices might result.
“More health care choices mean positive things for Santa Fe, particularly in this very quickly growing area of our community,” said Mayor Javier Gonzales in reacting to Presbyterian’s announcement last month that it will build a $135 million medical center/hospital to open by early 2018 on Santa Fe’s south side.
But competition also can carry the seeds of disruption, as two strong health systems start vying for employees, patients, insurers and more. Besides the new hospital, Presbyterian just a year ago opened a Presbyterian Medical Group clinic on St. Michael’s Drive, across the street from the Christus St. Vincent Regional Medical Center, and plans on expanding that space by another 4,000 square feet, 13 new exam rooms and added services.
So is there room for two Big Dogs in town?
“I think there is enough population in Santa Fe County and surrounding
counties to warrant another hospital,” said Liz Stefanics, a Santa Fe county commissioner who has followed health care issues closely both as a commissioner and former state legislator.
“I really don’t think it’s uncommon” for a city of Santa Fe’s size to have another day surgery center or short-stay hospital, said George Goldstein, a Santa Fe retiree who headed a health insurance company, and served in health-related state government cabinet positions in both New Mexico and Colorado.
And that’s one thing to make clear: Presbyterian’s proposed hospital probably will have no more than 30 beds for short stays and will concentrate primarily on outpatient surgeries. The new facility is intended to “complement local services, not replace them,” said Clay Holderman, chief operating officer for Presbyterian Healthcare. “Our goal is to create choice for patients in Santa Fe.”
The emergency department at Presbyterian’s planned hospital will treat and stabilize all-comers, but will not be designed for trauma or many life-threatening incidents, such as heart attacks or strokes. Those patients would be quickly transferred to Christus St. Vincent or to other regional hospitals.
As a matter of fact, the complex cases that require long hospital stays will be left in the hands of Christus St. Vincent, with whom Presbyterian expects to continue a relationship for treating such cases among patients on Presbyterian’s own insurance plan, according to Helen Brooks, the Santa Fe area administrator for Presbyterian.
Still, Goldstein noted, “It’s going to be interesting. It can’t be a happy thing for Christus St. Vincent ... . ”
Community response
It’s not. Dave Delgado, a Christus St. Vincent hospital board member and president of SVH Support, a 50 percent owner of the hospital, contends there is no gap in services that Presbyterian’s expansion would be filling. Christus has a comparable out-patient surgery facility, the Physicians Medical Center, that has about 10 beds and is not being used to its capacity, he said.
Also, he said, the northern New Mexico population is not increasing or is increasing very slowly.
As a result, rather than providing more care and stimulating the local economy, Presbyterian’s expanded presence will mean it and Christus will begin dividing up a relatively stagnant pool of patients and revenues, he said.
“We (Christus St. Vincent) will see a loss in patients,” Delgado said, adding that 50 percent to 60 percent of the revenues for its health delivery system comes from outpatient surgical procedures. “This is going to be a major thorn in our side.”
“Presbyterian’s entrance into this market signals their attempt to serve only the most profitable patients, which consists of their health plan members,” said Lillian Montoya, chief administrative officer for Christus St. Vincent. “And they are likely to bring health care services to Santa Fe that result in higher reimbursements to their bottom line (i.e. higher profit margins).”
For its part, Presbyterian portrays its expansion as making health care more available for the 37,000 members of its insurance plan who live in Santa Fe County, many of whom have been going to Presbyterian providers in Albuquerque or Española to get care.
“The community really responded with Presbyterian being here in Santa Fe,” Brooks said, referring to the popularity of the St. Michael’s Drive clinic. Market research and conversations with community leaders have shown “they’re pleased we’re moving forward with the next step in our growth.”
Holderman said the decision to build at this time also came from pressure being put on its system from patients, insurance plans and even the state to reduce the overall cost of health care.
With the pool of Presbyterian health plan members in Santa Fe, this seemed like a good place to build a facility designed for more efficient and costeffective outpatient surgeries, he said. These days, 60 percent of all surgeries are done on an outpatient basis, Holderman said, adding that Presbyterian would like to boost that to 70 percent or 80 percent.
While hospitals do handle such outpatient procedures, they generally are not as cost-efficient as a facility designed precisely for that purpose, he added.
Delgado said he has heard Presbyterian officials say that 21 percent or 22 percent of its insurance plan members who are released from inpatient care at Christus St. Vincent go to Albuquerque or Española for their follow-up outpatient care. Holderman said he did not have information about whether that figure was accurate.
Delgado added, “Maybe a portion is out-migration, but that’s not going to drive a $135 million facility.”
Insurance plan helps
While Christus St. Vincent still may be the Big Dog in Santa Fe, Presbyterian is the Big Dog in New Mexico, with eight fullservice hospitals, including two in Albuquerque, and one each in Rio Rancho, Española, Tucumcari, Socorro, Ruidoso and Clovis.
But while St. Vincent is the only Christus hospital in New Mexico, the system also has about a dozen in Texas, Louisiana, Chile and Mexico, along with a number of clinics. That partnership will help Christus St. Vincent respond to the competitive challenges, Delgado said. “Quite frankly, if we were a little hospital by ourselves, this would be a nightmare.”
Over the past seven years, Christus St. Vincent has invested $211 million in its health delivery system and plans to spend another $44 million to convert all of its beds to private rooms, he added.
Both competitors also have their own insurance plans, but Presbyterian’s is wide-reaching and well-established, with 470,000 members in New Mexico. The Christus Health Plan is in its early stages in northern New Mexico, and so far is limited to the state insurance exchange for uninsured patients and the Medicare Advantage plan. Perhaps not coincidentally, Christus St. Vincent not long ago stopped accepting Presbyterian’s Medicare Advantage plan, raising an outcry from and on behalf of the 2,000 or so patients in the Santa Fe area who were covered by it.
“Presbyterian has a super advantage,” Goldstein said. “Not only does it have hospitals throughout the state, but they also have a health plan.”
Having both, he explained, helps a health system “shift the shaft,” offering more flexibility to respond to competitive challenges. That flexibility can come in balancing the competing interests of the two: Health insurance has an interest in reducing the usage and complexity of medical services its customers get, while hospitals and providers have an interest in reaping revenues by providing services.
When a system has both, it can try to funnel its insurance members to its own hospitals, clinics or physicians and other providers, either by referrals or by a limitation in the number and types of providers outside its own system with whom it will enter into insurance contracts for treating its patients. Holderman said Presbyterian has no intention of dropping contracts with any of its current providers in Santa Fe and “our insurance has no plans to drive people to this facility (in Santa Fe).”
Physicians who want to join the Presbyterian medical group, though, or apply to get privileges to operate at the new hospital, are welcome, he said.
The two systems also will be competing for employees.
“I’m sure that will happen,” said Earl Potter, Christus St. Vincent board member. “Good people are hard to find.”
No one the Journal interviewed offered any opinion on which system offered better pay to its workers.
Even Lorie MacIver, president of NM1190 of the National Union of Hospital and Health Care Employees, said she didn’t have a feel for that.
“Presbyterian is pretty antiunion,” she added. MacIver refused to predict whether the union, which represents employees at Christus St. Vincent and has had many public fights with the Santa Fe hospital, would try to enroll workers at the new Presbyterian hospital when it opens.
“We’ll see what happens when it opens,” she said, adding, “Personally, I think competition is a good thing. Maybe by Presbyterian opening up, it will make Christus step up because it won’t be the only game in town.”
Indigent care issues
There’s also the question of how the growing competition might affect indigent care. Christus St. Vincent says it provides care to everyone, whether they can pay for it or not, whether they are insured or not.
“The ability to do that comes from the commercial payers,” Delgado said.
Saying Presbyterian’s insurance accounts for 23 percent of Christus St. Vincent’s commercial payers, Montoya said, “... if we experience a significant reduction in commercially insured, we will have to make some difficult decisions about the types and complexity of services we provide and subsidize.”
Loss of commercial payers could put a squeeze on any financial cushion left over to cover uncompensated care at the same time that state government is talking about possible reductions in Medicaid reimbursements to health care providers.
“We’re very, very concerned” about possible Medicaid reductions, Delgado said, pointing out that a previous expansion of coverage under Medicaid has benefited Christus St. Vincent, along with other providers in the state, by reducing the number of uninsured, potentially non-paying, patients.
Holderman echoed that concern, saying he has heard a predicted cut in Medicaid reimbursements would be 5 percent. “That is of great concern to all health care providers in the state,” he said, adding that it would amount to a $400 million cut.
Holderman said, as a nonprofit, Presbyterian provides charity care for emergency services and for what a physician would declare to be an urgent health need for an individual. He didn’t speculate on what portion of the types of surgeries offered at the new facility would meet those criteria.
Up in Española, Lauren Reichelt, director of the Department of Health and Human Services for Rio Arriba County, praised the Presbyterian hospital there for its care of indigent patients, as well as its willingness to work with local government on initiatives such as providing better medical direction over emergency responders, creating a network of outpatient detox services and instituting a policy for its physicians to check a pharmacy database to see if patients are doctorshopping to get drugs.
“I think you guys are lucky to have Presbyterian there,” she said.
On the Healthgrades website, which rates hospitals on various measures of care, Presbyterian Hospital in Albuquerque shows 15 five-star (the highest) ratings and four one-star (the lowest) ratings, while Presbyterian in Española shows no five-star ratings and one one-star rating. Christus St. Vincent shows one five-star rating and four one-star ratings.
Those totals can’t offer direct comparisons, however, since a hospital has to generate a minimum number of patients receiving a particular type of care to get a rating in each category. Presbyterian in Albuquerque is rated in more categories than the Santa Fe and Española hospitals.
It also isn’t obvious what year of data those ratings reflect.
“We are really excited about ... things we’re doing to improve quality,” said Delgado, referring to reducing readmission rates and planned construction to give all patients private rooms. “You won’t see us back down from any of that.”