Some say new hospital will bring pain, not relief

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Friday, April 11, 2008
— Better medicine at a competitive price.

That’s what the Dean/St. Mary’s partnership promised Thursday as it announced plans to open Janesville’s second hospital in 2010.

Better care than at Janesville’s Mercy Hospital? At a price lower than Mercy’s?

Dr. Craig Samitt, president and CEO of Dean Health System, paused only a moment before answering that question: “Sure, yes. That’s absolutely our intention.”

Samitt was speaking to a room of Dean employees at the Riverview Clinic on Thursday. The employees cheered enthusiastically as he made the announcement and TV crews recorded the event.

But not everyone is so sure another hospital is a good idea.

Sen. Judy Robson, D-Beloit, said adding health care facilities tends to drive up prices.

Robson said she’s worried what will happen if a new hospital is added to a county that already has three—in Janesville, Beloit and Edgerton—not to mention easy access to the Madison hospitals.

“It’ll be hard to imagine it’s not going to drive up health care costs,” said Robson, who noted that she sits on the UW Hospital and Clinics Board.

Mercy Health System CEO Javon Bea called the Dean/St. Mary’s move reckless.

“I think it just makes no sense from any basis,” Bea said. “It’s just going to be $140 million of duplicated, fixed costs that the community is going to have to figure out how to support.

“This community needs more hospital beds like we need a hole in the head.”

Dean/St. Mary’s officials said the rising population means 100 additional hospital beds would be needed here by 2011.

Bea said Mercy Hospital fills about 90 of its 268 beds on an average day, and 30 of those are Dean patients.

So the new hospital will siphon off those 30 patients, and Mercy will lose staff to Dean because Mercy doesn’t need to care for those 30 patients anymore, Bea said.

The result will be the same number of hospitalized patients supporting more facilities, Bea said.

Mercy Hospital actually is reducing its beds to 240, converting them to private rooms, because it doesn’t need so many, Bea said. The reason has a lot to do with rapidly changing technology and medicines that mean more outpatient treatment and less hospitalization, he said.

Yes, Mercy would have lower costs because its staff would shrink, but it has fixed costs of maintaining its hospital that don’t change. The result will be higher prices, Bea said.

Dean spokesman Steve Van Dinter said the need for 100 more hospital beds comes from a calculation based on Rock County’s population, which is projected to increase to more than 160,000 by 2011.

Take into account the existing 316 staffed beds in Rock County and the Wisconsin average of 2.6 beds for every 1,000 residents, Van Dinter said.

So multiply 160, the number of thousands, by 2.6, the desired number of beds, and you get 416.

Van Dinter’s figure of 316 existing beds comes from the Wisconsin Hospital Association, he said, but The Janesville Gazette surveyed hospitals Thursday and came up with more than 400 beds in Rock County.

Van Dinter said those additional beds are likely licensed beds, which is the maximum number of beds for which a hospital holds a license to operate. Hospitals might not operate all of the beds for which they are licensed.

Staffed beds are licensed and physically available and have staff on hand to attend to the patient in the bed. Staffed beds include those that are occupied and those that are vacant.

Dean/St. Mary’s officials reject the analysis that says prices will rise with competition. Quite the opposite, they said.

“It just depends on which school of thought you subscribe to,” said Mary Starmann-Harrison, CEO of SSM Health Care of Wisconsin, St. Mary’s parent company.

Starmann-Harrison subscribes to a theory that says high quality drives costs lower.

“What we know is, we’re able to develop better systems. We’re able to become more efficient, and we’re able to maximize our quality, and I think for almost every industry, that’s true,” she said.

When challenged with Mercy’s claim that it needs less than half of its beds on any given day, Van Dinter said that Dean also is looking to capture the 40 percent of local patients who routinely go to Madison for health care.

Mercy challenges the 40 percent figure, showing Wisconsin Hospital Association data that indicate about 30 percent of the market leaves Janesville for inpatient care.

Van Dinter said the 40 percent also was based on WHA data, but for a larger area, Janesville plus Milton, Edgerton, Evansville and Orfordville.

Van Dinter said the new hospital would mean 300 new jobs, while Dean’s medical office building alongside the hospital would mean 45 new jobs—10 physicians and 35 staff.

Bea was skeptical, but Van Dinter said the new jobs do not include all the staff that would transfer from the existing Riverview Clinic to the new site.

Although Dean/St. Mary’s officials never mentioned Mercy Hospital during Thursday’s announcement, Mercy was implicit in one of their main selling points:

“There is a tremendous desire in the community for a choice in health care,” Samitt said.

Samitt said that desire was measured through a survey and in discussions with Janesville business and community leaders.

Bea said that’s not what he hears from community leaders.

General Motors recently chose Mercy over Dean as its preferred provider, Bea said, “and I guess actions speak louder than words. The General Motors action is key.”

Karen Cook, a trainer with the health care consulting company Studer Group, founded by former Mercy executive Quint Studer, said competition can help:

“You can’t just sit back and assume you’re providing the best care because you have some competition to tell you differently,” she said.

If the new hospital does cut into Mercy’s business, “they’re not going to shut Mercy down, and we’re going to be here for another 100 years,” Bea said.

View a map of exisiting area hospitals

Last updated: 8:58 pm Thursday, December 13, 2012

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