Hospitals invoke state regs in battle for turf

Print Friendly and PDF By: Andy Miller Published: Sep 16, 2011

Behind the regulatory battle between Northside Hospital and WellStar Health System that heated up this week lies a competition for affluent patients in Atlanta’s northern suburbs.

Those suburbs have attractive features for a large health system: plenty of people with good insurance, and projections of further population growth.

WellStar, which dominates Cobb, Paulding and Douglas counties, and Northside, entrenched in Cherokee and Forsyth counties along with its base hospital in the Sandy Springs area, are eyeing each other as rivals for suburban territory, experts say.

And they’re using Georgia’s “certificate-of-need” process to wrestle over the turf.

Marietta-based WellStar sent a letter to the state Sept. 1 challenging Northside’s proposed relocation of its Canton hospital in Cherokee County. This week, Northside sent out a sharply worded press release in response, saying that a WellStar objection – that the relocation expands services – is “unfounded.’’

The hospital relocation furor follows Northside’s opposition last year to an ambulatory surgery center that WellStar plans to build at its proposed east Cobb “Health Park.’’ That issue still is being sorted out in the state’s regulatory process.

“There’s no question that the [northern suburban] area is on both systems’ radar screens,’’ said Charles Goldberg, an Atlanta-based health care consultant. “It’s all about capturing more market share’’ in suburbs that have high incomes and solid health insurance coverage, he added.

Big hospital systems are acting more like corporations in recent years in competitive and strategic thinking, he said.

Georgia’s certificate-of-need (CON) process is a complex set of regulations governing health care facilities’ expansion and construction, as well as medical services such as obstetrics and heart surgery.

Like other states, Georgia installed a certificate system decades ago to contain health care costs. Several states have eliminated such systems, while others have scaled back the regulations.

A 2008 Georgia law streamlined the CON process, exempting more hospital projects from regulatory review, such as the building of parking decks.

The law has led to fewer regulatory challenges, as well as allowing more projects to avoid CON scrutiny, said Stan Jones, an Atlanta health care attorney with Nelson Mullins Riley & Scarborough and a longtime certificate-of-need expert.

The 2008 law exempts hospital relocations when the distance is 3 miles or less, as long as the facility does not expand services. But WellStar said through a spokesman that it “believes that Northside Cherokee Hospital has failed to provide sufficient information and documentation to support its request for an exemption.’’

In its press release, Northside said the services that its Canton hospital offers will not change. The complaint by WellStar ‘’clearly is based on its concern that the new Northside Hospital-Cherokee campus will be well-received by the community, leading more community residents to obtain health care services locally,’’ the press release said.

In early August, Northside filed a letter of determination with the Georgia Department of Community Health to replace its current, 84-bed Canton facility with a new hospital, in a $250 million project.

Determination requests are often filed when a health care provider “wants to ensure that an action or service it is contemplating is exempt from certificate-of-need review,” Community Health spokesperson Pam Keene told the Marietta Daily Journal.

The proposed new Northside location is roughly 25 miles from WellStar’s Kennestone Hospital in Marietta.

Brad Guest, an Atlanta health care consultant with Subsidium Healthcare, observed that CON disputes “can sometimes seem like a war of technicalities.’’

“But at its core, CON is about the status quo — who can preserve it and who can alter it,’’ he said.

In the future, Guest said, “the most important measure of market share will be physician capacity and the ability to manage population health.’’

“CON isn’t set up to regulate that,’’ he said.

 

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