Hospitals, regulators lean hard on surgical center investors

Amy Cooper

Amy Cooper, the executive director of HealthFirst and the lead representative of the proposed Green Mountain Surgical Center, testifies before regulators Thursday. Photo by Erin Mansfield/VTDigger

Investors seeking to build a surgical center in Colchester faced stiff opposition from hospitals Thursday while trying to persuade state regulators to grant them a certificate of need.

Representatives for Northwestern Medical Center in St. Albans and the Vermont Association of Hospitals and Health Systems framed the proposed six-room surgical center as a “for-profit,” “unregulated” project that would hurt community hospitals and drive up health care costs.

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The local investors had spent nearly two years in a regulatory battle for this opportunity to make their case to the Green Mountain Care Board. The investors want to spend $1.8 million to open a 12,800-square-foot surgical center in Colchester for surgeons who would prefer not to operate in a hospital setting.

The investors argue such centers save patients and insurance companies money because both Medicare and private insurers pay them less than hospitals for the same procedures. These types of facilities are called ambulatory surgical centers and are both licensed and regulated by the U.S. Centers for Medicare and Medicaid Services.

But allowing the new facility, called the Green Mountain Surgical Center, to open would let these independent doctors penetrate a general surgery market that to date has been exclusively controlled by hospitals. And hospitals say that could be detrimental to the health care system as Vermonters know it.

Jeff Tieman

Jeff Tieman is president and CEO of the Vermont Association of Hospitals and Health Systems. Photo by Erin Mansfield/VTDigger

“The question before this board today is whether the application meets the criteria that need to be met to grant the application,” Jeff Tieman, the CEO of the Vermont Association of Hospitals and Health Systems, testified before the board. “We have concluded that the application … does not serve the public good.”

Tieman, who started his job in the summer of 2016, said he came to Vermont in part because he was impressed with how the state’s hospitals are all nonprofit. He said enabling a for-profit provider such as the surgical center would be a first for Vermont.

“Our system works,” he said. “Recently, the Commonwealth Fund named Vermont the No. 1 health care system in the country. … Their evaluation is based on many different elements of an effective health care system, including access, quality, outcomes and controlling avoidable costs.”

Jill Berry Bowen, the CEO of Northwestern Medical Center, hammered the surgical center, saying it would operate completely outside of state scrutiny if allowed to open. She said the center would “be able to offer new procedures as they wish,” with no oversight over its budgets or limits on its revenue.

The Green Mountain Care Board currently regulates budgets for 14 hospitals and places limits on how much revenue they can take in from patient care. The board issues certificates of need, which are essentially permits, for major capital investments in the health care industry.

Christina Oliver

Christina Oliver, vice president of clinical services at the UVM Medical Center, testifies about existing space at the hospital. On the left is Mike Del Trecco, vice president of finance at the Vermont Association of Hospitals and Health Systems. Photo by Erin Mansfield/VTDigger

Christina Oliver, the vice president of clinical services at the University of Vermont Medical Center in Burlington, said the proposed facility is not needed because the hospital’s operating rooms and procedure rooms are working far below capacity. “We have open time available every day that is staffed but unused,” she said.

“We have no requests for blocked time (in procedure rooms) and no requests to fill them,” Oliver said. “There are no requests from our queue, no complaints from surgeons waiting to get access, and no patients waiting to get access” to operating rooms.

Amy Cooper, the executive director of HealthFirst, was the main witness for the surgical center. She said Vermont ranks dead last in the country in the number of surgical procedures performed at these types of small centers, which are paid less than hospitals and often perform surgeries more quickly.

Cooper estimated that, because the proposed facility would charge less than hospitals for basic surgical procedures, it would save insurance companies, Medicare and Medicaid a total of $5.5 million a year. She also said the facility would be subject to income tax and property taxes because of its for-profit status.

Cooper said the surgical center would accept patients who cannot afford to pay, just as hospitals do. She said its pricing philosophy is to try to have Medicare, Medicaid and insurance companies pay the same price, if the center can negotiate that. Additionally, she said the surgical center wants to have a price transparency tool on its website so patients can shop around.

“This project is not against the hospitals,” Cooper said. “This project is for the patients. We in the independent practice community here believe there is space for all providers in the health care landscape.”

“It’s going to be a building of 12,800 square feet,” she said. “That’s much smaller than any new (hospital) building project or renovation that I can remember that’s been approved by the board recently.”

“This is really an incremental step I think in the evolution of the Vermont health care system,” she said. “It’s not going to drastically alter the landscape here in the state of Vermont.”

Board members press for answers

Jessica Holmes, a member of the Green Mountain Care Board, challenged Cooper to implement a company policy to have prices be lower than at hospitals. Holmes also asked whether Cooper would guarantee that the prices be available on the company’s website on the day it opens.

Cooper said she would commit to a lower-price policy. She said she wants to have a price transparency tool in place on the first day but could not guarantee it because prices will still depend on negotiations with commercial insurers.

Holmes then asked Cooper if she would commit to allowing surgeons to use the facility only if they accept Medicaid patients.

Cooper would not. She said 15 out of the 16 surgeons involved accept Medicaid patients, and about 12 percent of patients using the facility would have Medicaid for insurance.

Lunge and Hogan

Robin Lunge and Con Hogan, members of the Green Mountain Care Board, at a hearing on the proposed Green Mountain Surgical Center. Photo by Erin Mansfield/VTDigger

The one surgeon who does not take Medicaid patients was about to close his practice, Cooper said, but decided instead not to accept Medicaid. She said forcing him to accept Medicaid would hurt both the practice and the patients.

Con Hogan, another board member, said he wasn’t convinced that the project would lower costs. “Fairly or unfairly the burden of proving that is on your shoulders, not ours,” Hogan said.

“How do we get to the bottom of that subject?” he asked. “How does the board get to the point where we know or don’t know whether this project is going to reduce overall health care costs or increase them?”

Cooper deferred to Dr. Paul Reiss, a primary care doctor who also works for HealthFirst. Reiss said health care reform pilot programs have not worked yet in Vermont “because we have high quality and low utilization. What we don’t have is opportunity for lower cost.”

He pointed to other states, which sometimes have dozens of these types of surgical centers. According to national data that the investors presented, Vermont ranks last in the number of ambulatory surgical centers in the state, behind Guam and Washington, D.C.

“The proof is in what’s going on in the rest of the country,” Reiss said. “We’re behind. We’re way behind.”

Hogan replied: “I’m hearing the logic, but I can’t find the evidence. That’s what I need.”

The board is taking public comment on the surgical center through its website and will take additional public comment at its board meeting April 19.

Erin Mansfield

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