HOSPITALS COOPERATE AND COMPETE

Since merger talks between the two Cape Girardeau hospitals came to an end because of opposition from the Missouri attorney general last year, there has been some cooperation but also plenty of competition between the two hospitals.

Both Southeast Missouri Hospital and St. Francis Medical Center have been promoting the cardiac department and neurosurgery center each has. Southeast has announced plans to remodel its obstetrics unit while St. Francis is considering adding obstetrics. Both have emergency rooms and minor care clinics. There are similar programs and equipment at both hospitals.

When Attorney General Jay Nixon announced his opposition to a merger last year, he made it clear that the two hospitals were free to seek areas of collaboration, and they have done so when it would result in reduced cost and improved quality, said Steven Bjelich, chief executive officer at St. Francis Medical Center. But in most areas, the hospitals do compete, he added.

"It's fair to say that even though the hospitals were not allowed to consolidate, to the extent we can we are finding ways do things together for the betterment of the health community," said James W. Wente, administrator at Southeast Missouri Hospital.

Together, the two hospitals jointly operate an electrophysiology lab, which is housed at Southeast Hospital, and a hospitalist program, which provides doctors for hospital patients without a local doctor. With each, revenues and expenses are shared, Bjelich said. Both projects were started during affiliation talks.

The two hospitals also cooperate on recruiting doctors, community events such as health fairs and screenings and on general health care issues like the joint sponsorship of the "Ask the Doctor" program, Wente said.

The hospitals compete in most other areas and that's healthy, Bjelich said. "It insures clinical excellence, competitive pricing and better customer service," he said.

This has created duplication of services between St. Francis and Southeast, as both strive to provide the services patients and doctors want and need, the executives said.

Bjelich said whether Southeast offers a service is not a consideration in decisions on adding services at St. Francis. Rather, those decisions are based on physician interest and patient need.

"We recognize that the cost of medical equipment is expensive," Bjelich said. "But it is even more expensive when patients do not have access to the equipment because it is in use at one facility or the other. Secondly, it is expensive and inconvenient and sometimes unsafe to transfer a patient from one hospital to another for a diagnostic or therapeutic procedure."

Duplication of services doesn't translate into increased cost for medical consumers, Bjelich said.

"Since hospitals are not paid according to their charges, but based up negotiated rates with managed care companies and on fixed reimbursement from Medicare and Medicaid, this is no longer an issue," Bjelich said.

Wente noted that besides competing with each other, there's also increased competition from nearby markets. The two hospitals in Poplar Bluff have merged and are expanding services and Illinois has granted certificates of need for open-heart surgery centers in Marion and Carbondale and to build a new hospital in Marion, he said.

Both are within 65 miles. "In today's world, that's no distance at all," Wente said.

Besides competition, another challenge to maintaining financial viability is reduced payments for services rendered from both the federal government and insurance and managed care providers, Bjelich said.

Hospitals nationally are extremely challenged now, Bjelich said. Some are closing their doors or reducing services because they have been unable to cover the costs of providing services because of reduced reimbursements.

Yet hospitals have to continue to advance state-of-the-art treatments and provide services to all patients regardless of their ability to pay, Bjelich said.

"There are also concerns about the ability to remain competitive in the labor market, improve competitiveness in the area of price and address needs expected in the next six to eight years," Wente said.

About 38 percent of revenues are written off as uncompensated care because of reduced Medicare or Medicaid payments, managed care or bad debt, Wente said. "That's a big number."

"How many businesses stay functional with an uncollectible rate of 38 percent?" Wente asked. "It's got to have an influence on why health care costs are increasing so much. If government paid its fair share, the cost for everyone else would be lower."

With Medicare, Wente said, the number of beneficiaries has increased and the number of benefits has increased, but payments have not kept up with inflation.

Initially, Medicare paid cost for care plus 2 percent. Now hospitals get about 80 percent of the cost of service.

"Unless we get some relief some place, a lot of hospitals are going to go out of business," Wente predicts.

Hospitals are trying to find ways to stay open, including consolidation, mergers and affiliations, Wente said.

Neither Cape Girardeau hospital is considering a partnership with an outside health care network at this time, the two executives said.

Bjelich does think networks from St. Louis or Memphis could be interested in part of the Cape Girardeau medical system. The advantages of becoming part of a regional or national system of care include improved access to capital and a centralized support services. But those would come at the cost of losing local control, local physicians, local boards, he said.

"You'd lose a sense of community ownership," Bjelich said. "That's why it's important that both hospitals remain viable providers of quality health care."

"We don't want to affiliate," Wente said. "Local control is a major issue."

Bjelich said hospitals in general must be committed to meeting the health care needs of the community, improving community health status and maintaining the viability of the health care system.

Community health status -- the incidence in the community of smoking, diabetes, obesity, hypertension -- is important because these health risk factors affect the demand placed on doctors and hospitals to treat patients.

"This area has a high incidence of tobacco use, which influences the demand on health care," Bjelich said.

Bjelich said St. Francis is working to improve health status through its wellness programs like the wellness center, health screenings and occupational health service.

A healthier community is actually advantageous to hospitals, Bjelich said.

"If we have a patients with congestive heart failure or chronic lung disease, we have a hard time breaking even on health costs for that patient," Bjelich said. Such a patient generally has multiple problems, hospital stays are longer and care requirements are greater. Reimbursements don't cover the cost of care.

"But more important is that improving the community's health status is the right thing to do because we're a community resource," Bjelich said. "Our mission is to serve the community and improve health status, not to satisfy Wall Street."