by Amy McCullough
Published: January 29,2010
River Oaks, St. Dominic’s do battle over second Madison hospital
Madison County is finally getting a new hospital. And if St. Dominic’s Health Services gets its way, the county will be getting two.
The state Health Department will conduct hearings for the facility this week. A spokesperson for the Health Department said it will be at least four months before a decision is made on the matter.
Health Management Associates Inc., owner of the River Oaks Healthcare network of five Jackson metro area facilities, is opposing a proposed St. Dominic’s facility.
HMA owns the Madison County Medical Center in Canton and broke ground in September on a new building for its 67 beds off Nissan Parkway in Canton. The new facility will be named Madison River Oaks and will cost $42 million.
HMA took over Madison County Medical Center — then called Madison General — in 2002 when it was run by the county and was $9 million in debt. It currently operates in its original building built in 1965.
HMA is opposing St. Dominic’s proposed new facility of 71 beds with a $121-million price tag, arguing that according to population numbers and the formula established by the state Health Department, Madison County cannot support two hospitals.
The state Health Department certificate of need (CON) hearings regarding St. Dominic’s proposed facility will begin this week and continue through Feb. 17. Mississippi is one of 30 states that regulates healthcare services through a CON process. State law requires CON approval for the establishment, relocation, or expansion of healthcare facilities. The process is design to help ensure the economic stability of community hospital and long-term nursing care services. Other states allow hospitals to build at their own risk.
If approved, St. Dominic’s facility will be located off Interstate 55 on Galleria Parkway.
Many are concerned that if St. Dominic’s facility is built, Madison River Oaks will end up with Medicare and Medicaid patients from the north end of the county, and St. Dominic’s will receive patients with commercial insurance from the City of Madison in the south end of the county, which is a higher-income area. Physicians’ medical reimbursements for all procedures are typically lower with Medicare and Medicaid than with private insurance carriers. Doctors and hospitals make more profit from privately insured patients.
HMA has a link titled “The Threat” on its web site for the new hospital, careformadison.com, urging residents to write the Health Department and newspapers protesting a proposed new hospital in South Madison County. HMA warns that too much expansion too fast in a given area can cause health services to be strained or discontinued. The web site states that according to the state health plan, Madison County cannot support two hospitals.
Canton Mayor William Truly Jr. and the city’s Board of Aldermen signed a resolution this month stating they “are concerned that a second hospital in the county will duplicate existing services and sharply increase the cost of healthcare for everyone in Madison County… and threaten (Madison River Oaks’) ability to provide medical care to this county’s most needy citizens.”
A community group Friends of Madison River Oaks has formed and held its first rally on the Canton square Jan. 26. Group leader Dr. Linda Dunigan, a labor and delivery nurse at Madison County Medical Center (MCMC), encouraged more than 70 people who attended to use stationery available to write letters to the Health Department opposing St. Dominic’s.
“Madison County can only support one hospital,” Dunigan said. “Madison River Oaks is being built to serve the whole county… We need to let the state Health Department hear loud and clear how excited we are about our new hospital,” she said.
The state Health Department does take community support or opposition into consideration in the CON process.
St. Dominic’s estimates approximately 3,000 people have signed its petition voicing a need for their proposed facility in person or online at mystdommadison.com. Supporters of St. Dominic’s were to rally Feb. 1 at the Madison Square Center for the Arts.
Madison County Supervisor Karl Banks said in an interview that “What’s going on with St. Dominic’s is shameful.” Banks has served on the Board of Supervisors for 26 years and is a resident of Flora in the north part of the county. He appreciates HMA’s commitment to the county.
Banks said the county hospital was run by a board appointed by the Board of Supervisors prior to 2002. The county was funneling approximately $230,000 monthly to keep it afloat, Banks said. The county asked St. Dominic’s to take over the facility, and they turned it down. HMA took the county up on its offer and assumed the $9 million in debt.
“That saved taxpayers money,” Banks said, “and also stabilized healthcare in Madison County. That hospital has operated quite well in the condition that it was in — age it was in, the lack of equipment… (HMA has) done a fantastic job in trying to give us solid health care in Madison County,” Banks said.
Banks also feels a hospital in the southern part of the county would have a negative financial affect on the new HMA facility.
“If St. Dominic’s was allowed to build their hospital, they would be building it in an area where majority of people in that area have commercial insurance. And they would of course have an opportunity to draw most of the commercial insurance patents into their hospital. It would leave mostly people on Medicaid and Medicare (for Madison River Oaks). If a hospital is only going to have that funding source to pay medical bills, that hospital is going to not be able to afford the type of doctors and specialists that a first-class hospital needs. They are not going to be able to afford diagnostic and procedural equipment. It would take away from that investment by HMA,” Banks said.
However, some Madison residents don’t believe a new facility in South Madison would affect HMA, because Madison city residents would be more likely to drive to Jackson than Canton for healthcare, regardless of the new hospital’s location on Nissan Parkway.
Bill Paretti, a Madison city resident since 2007, said “I really don’t think (a new hospital by St. Dominic’s would) affect the hospital that is being built in Canton, because most people here when they do get ill, they go to Jackson. And I think they’ll continue to go to Jackson” after Madison River Oaks is ready.
Commitment to Community
Madison Mayor Mary Hawkins Butler favors St. Dominic’s new build and disagrees with the idea that HMA is committed to Madison County residents.
When HMA acquired Madison General in 2002, part of the plan was to transfer the beds it acquired in Madison County to a newer building in Hinds County. Hawkins Butler said HMA’s actions show that its first commitment is not to the people of Madison County.
“We would have had zero beds per resident,” Hawkins Butler said. “If they were so interested in the people of Madison County, why did they try to move their certificate need out of the Madison County to Hinds County?” Hawkins Butler said.
St. Dominic’s opposed HMA’s CON application in Oct. 2005 to build the new facility near Nissan.
Banks said St. Dominic’s actions show that it only cares about “crushing competition.”
However, St. Dominic’s vice president of business development Paul Arrington said St. Dominic’s applied for a CON in 2002 to build a new 100-bed hospital after it learned of HMA’s intent to “abandon the county.”
“HMA filed the CON application, approximately 10 years ago, to abandon Madison County and move the licensed beds to Northeast Jackson. HMA’s CON application was denied, but, had it been approved, Madison County’s residents would have been left without a hospital. It was at this point that St. Dominic’s stepped forward and filed a CON application for a new, additional 100-bed hospital in Madison County. In 2002, HMA contested our plans and filed a CON application to replace the hospital in Canton,” Arrington said.
Arrington said St. Dominic’s then opposed HMA’s CON application to build a new facility because it had already applied for a CON to build its own hospital in Madison County.
“St. Dominic’s always maintained the Canton hospital needed to be replaced. Our objection was that it should not be approved as an obstacle to our hospital project,” Arrington said.
HMA’s CON for the hospital now under construction was granted in 2007.
St. Dominic’s filed a new CON in Dec. 2008 asking to relocate 71 beds from its Hinds County facility to Madison County. The entity believes the population growth in Madison will permit two hospitals according to the state health plan.
St. Dominic’s now applauds HMA’s new Madison River Oaks facility.
According to Health Department inpatient discharge data from 2008, more than 85 percent of Madison County residents leave the county for hospital care, and nearly 30 percent of those people go to St. Dominic’s.
St. Dominic’s says it is simply moving some of its beds closer to its patients.
St. Dominic’s wants to “treat our patients where they live and work. Canton can’t handle it all,” Arrington said. “It’s a win-win situation for everybody.”
State population projections show that Madison County currently has more than 89,000 residents and will have more than 128,000 residents by 2025, which is a 43 percent increase.
Madison County currently has .75 beds per 1,000 residents. Without additional beds added, it will have only .52 beds per 1,000 residents by 2025, according to population predictions.
By comparison, Rankin County with a population of more than 142,000 has 2.49 beds per 1,000 residents.
The Health Department uses the following formula to determine the need for an additional hospital in a county with an existing hospital: ADC + K( ADC ) where ADC is the Average Daily Census and K is the Confidence Factor of 2.57. The formula is calculated for each facility within a given General Hospital Service Area (GHSA). Beds available and beds needed according to the formula are totaled and subtracted to determine bed need or excess within each GHSA. Mississippi has five GHSAs, and Madison County is one of 17 central Mississippi counties in GHSA III.
Madison River Oaks also plans to serve Attala, Holmes, Leake and Yazoo counties.
HMA signed a 40-year lease with Madison General and assumed the county’s $9 million in debt when no other Jackson hospital system “stepped up to the plate,” said Davis Richards III, Madison County Medical Center CEO.
“We initially did look at moving into a brand new building (in Jackson),” Richards said, but that CON request was denied. We then set about getting a new one near Nissan, he said. “We were challenged by a competitor. We have prevailed through the state Health Department and Supreme Court,” he said.
“Every community hospital needs a financial balance in the area to serve a lot of Medicare and Medicaid patients. More commercial (insurance) business is in south Madison. In our business plan, we are looking to compete in that area,” Richards said. “Having a second hospital would definitely be a detriment to our hospital,” because according to the state health plan and today’s numbers, Madison County can only support one hospital, he said.
Richards said MHA has faith in the Health Department’s CON process: “It’s a fair process, and it has always worked. We feel confident in the judgment of the state Health Department and that it will be fair and just … It’s not a Certificate of ‘Want,” Richards said.
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