Regulators set hearing on for-profit surgical center proposal

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The Green Mountain Care Board has set a hearing date on the permit application to build a surgical center in Colchester that a group of independent doctors submitted nearly two years ago.

The board, which acts essentially as judges in reviewing certificate of need applications for capital investments in the health care system, has scheduled the hearing for April 13.

The board has invited anyone interested in proposing an identical or similar facility to submit a competing application. The person would need to file a letter of intent with the board by March 29, according to the public notice.

"I'm very excited that we now have a hearing date," said Amy Cooper, executive director of HealthFirst, an organization for providers at physician-owned practices. She is the main spokesperson for the project. Nearly all the investors in the project, who are doctors, have remained anonymous for fear of retaliation from hospitals, which control surgeons' use of their operating rooms.

Hearing

The meeting will be at 1 p.m. on the fourth floor of the Tax Department building at 133 State St. in Montpelier.

"The process has been a little bit confusing in terms of being able to plan and know how long things would take, but now that we have a hearing date, it means a decision is going to be coming sometime in the near future," Cooper said.

The Green Mountain Surgical Center would cost $1.8 million to build. It would offer basic surgeries, such as knee repairs and hysterectomies, and other procedures such as colonoscopies and treatment for spinal pain.

Cooper said the facility would compete with local hospitals, such as the University of Vermont Medical Center, but only to provide the most basic surgeries and procedures. She said the facility would save patients and businesses money by offering the same services at a lower price.

"I think the empirical evidence shows that with a little competition, prices come down for all services," Cooper said.

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The University of Vermont Medical Center is in Burlington. File photo by Erin Mansfield/VTDigger

She pointed to Northeastern Reproductive Medicine in Colchester, which a pair of independent doctors opened in late 2014 offering in-vitro fertilization for $6,000, compared with $9,600 at UVM Medical Center. Since the independent facility opened, Cooper said, the hospital has dropped its price to $6,000.

Mike Noble, the spokesperson for UVM Medical Center, said the hospital charges $6,500 for in-vitro fertilization services, a bundled rate that he said includes expensive prescription drugs. He disputed that the hospital dropped the price in response to Northeastern Reproductive Medicine.

"Our charges for the program were not in direct response to the new business in Colchester, but part of evaluating how we could make our program better for patients and for our fellowship trainees," Noble said. "We began to examine our fee structure beginning in 2013 as we recognized the need for our program to be financially accessible for patients."

Hospitals say savings illusory

Since the surgical center investors submitted their application in July 2015, they have amassed nearly 25 letters of support from local businesses that want another option, doctors who say they left the state because they couldn't get time in operating rooms, and two health insurance companies.

MVP Health Care submitted a letter of support in January. Cigna, which administers plans for self-insured companies like Burton Snowboards, backed the proposal March 6.

"Having an ambulatory surgery center in the Burlington, Vermont area should increase access for Vermont residents to quality, cost-effective services," Cigna wrote. "Consumers gaining access to the right care, in the right setting, at the right price is a goal Cigna supports."

The Vermont Association of Hospitals and Health Systems, which represents all of the state's hospitals, and Northwestern Medical Center in St. Albans have been the main opponents of the facility. They will participate in the April 13 hearing.

In a final statement of opposition filed March 3, Jeff Tieman, the CEO of the hospital association, said there is no need for the facility; that it would increase the cost of commercial health insurance and the need for public funding to Medicaid and Medicare; and that it is "inconsistent with health care reform."

The hospitals argue that basic procedures, when performed at hospitals, help underwrite necessary services that ambulatory centers don't provide.

"When hospitals lose system-supporting revenue, it is harder for them to address community needs, let alone pay for services that are not fully funded, such as obstetrics or mental health," Tieman wrote. "In fact, creating excess capacity will drive increased utilization without a corresponding increase in patient satisfaction or quality."

Tieman said hospitals subsidize ambulatory surgical centers by providing "emergency backup" and inpatient services, "but (surgical centers) do not pay for the overhead inherent in that service."

"Nor does (a surgical center) pay for the emergency transportation to the hospital for its patients," Tieman said. "Thus, in a very direct way hospitals — here, all non-profit entities — subsidize the operations of (surgical centers), which are primarily proprietary or for-profit."

Also on March 3, Jill Berry Bowen, the CEO of Northwestern Medical Center, filed her final statement in opposition. She echoed many of the arguments the hospital association made about increasing the cost of health care.

Bowen also challenged the doctors' claims in their application that there were long "wait times" for using an operating room. "This term (wait time) has no official definition or standards for measuring, nor has the applicant provided one," she wrote. "(Northwestern Medical Center) cannot gather data for a nonexistent measure."

"By adding more operating and procedure room infrastructure to a system that has excess capacity, the (Green Mountain Surgical Center) will do nothing to contain the cost of care," Bowen said.

Bowen said the procedures to be offered at the surgical center are profitable for the hospital, and those profits help the hospital offset costs of other services, such as running the emergency room.

"The (surgical center) may be able to drive down the cost of a single procedure for a single individual, but the cost of keeping community resources like the (hospital) operating and procedure rooms available 24/7/365 will remain," she wrote.

Bowen added: "The applicant has also alleged that Vermonters `need' this (surgical center) because Vermont patients need a choice about the setting in which they will receive services. The proposed (surgical center), however, is really about providing choice to the anonymous doctor investors who will personally profit from the (surgical center)."

"Doctors reserve operating and procedure rooms, not patients," Bowen said. "Doctors choose the space, and apparently, the doctors investing in the (surgical center) would prefer not to work with or in existing available hospital space, despite the excess capacity."

Wait time for a hearing

Cooper said she thinks the opposition from the hospital association has slowed the application. She said the investors and their lawyers were forced to answer eight rounds of questions during the application for a permit, called a certificate of need.

Susan Barrett is executive director of the Green Mountain Care Board. File photo by Hilary Niles/VTDigger

Susan Barrett, the executive director of the Green Mountain Care Board, said the time frame for approving a certificate of need can vary based on the project being proposed. She said there are emergency applications that are approved quickly and then larger applications, such as the inpatient building at the UVM Medical Center, that take longer.

Barrett said she could not comment on the application for the surgical center because it is currently before the board. She said the certificate of need laws have been in Vermont's books for decades and that the board has been discussing how and whether to streamline them.

Cooper said she and the investors had to spend $250,000 on lawyers, architects to redraw plans and financial consultants to perform analyses.

"I think it's a lot of money to anyone who would be considering starting a new, innovative business in the health care industry, and I think it's one of the contributing factors in why we don't see small businesses innovating to improve the health care industry here in Vermont," Cooper said.

Federal oversight agencies have said they see similar issues with certificate of need laws.

In a January 2016 statement regarding antitrust concerns in South Carolina, the Federal Trade Commission and U.S. Department of Justice recommended that state repeal its certificate of need laws.

"CON laws, when first enacted, had the laudable goals of reducing health care costs and improving access to care," the statement said. "However, after considerable experience, it is now apparent that CON laws can prevent the efficient functioning of health care markets in several ways that may undermine those goals."

"First, CON laws create barriers to entry and expansion, limit consumer choice, and stifle innovation," the statement said. "Second, incumbent firms seeking to thwart or delay entry or expansion by new or existing competitors may use CON laws to achieve that end."

Specifically, the statement said certificate of need laws can "raise the cost of entry and expansion - by adding time, uncertainty, and the cost of the approval process itself - for firms that have the potential to offer new, lower cost, more convenient, or higher quality services."

Marni Jameson, the executive director of the Association of Independent Doctors, a national nonprofit, said certificate of need laws are an issue across the country.

"We really need to do away with certificate of need," Jameson said. "The thinking behind (certificate of need) is that you don't have too many hospitals in the same area, (and) you don't have duplication of services. But what it really is is a tool for the hospitals to make sure that there is no competition."

Jameson said Vermont is behind national trends because it has only one ambulatory surgical center — the Eye Surgery Center in South Burlington. She said other states have many and that they improve quality and outcomes while reducing costs.

"This is long overdue, and the fact that hospitals have been able to squeeze out any competition is really unconscionable," Jameson said. "If this doesn't get passed, it will definitely be because the hospitals are throwing their weight around."

The hearing on the application will be at 1 p.m. on the fourth floor of the Tax Department building at 133 State St. in Montpelier.


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