DHR WANTS TO DOUBLE ITS BED CAPACITY
By G. Romero Wendorf
Doctors Hospital at Renaissance wants to double its bed capacity from 530 to 1,160. Question is, will the federal government’s Centers for Medicare and Medicaid Services (CMS) allow it to do so?
And if the hospital giant does expand, will it spell doom to surrounding county hospitals, some of whom are reportedly operating at between 50- to 60-percent bed capacity vs. DHR’s 100-percent capacity?
Those who oppose DHR’s expansion plan, mainly administrators and physicians who work for one of the seven acute-care hospitals in competition with DHR, say this is a blatant attempt at a power grab on the part of DHR. And the only thing it cares – it, being the physicians and investors who own it -- is to one day achieve monopolistic control of health care in Hidalgo County.
This newspaper has yet to verify that 50-to-60-percent occupancy rate, but according to at least two physicians to whom we spoke last week, those are the approximate numbers told to them by the respective hospital administrators.
The occupancy rates are supposedly posted online at the Texas Hospital Association website (www.tha.org), but so far, we haven’t been able to locate those numbers.
Those seven hospitals against which DHR currently competes include: Mission Regional Medical Center, Edinburg Regional Medical Center, Edinburg Children’s Hospital, McAllen Medical Center, Rio Grande Hospital, McAllen Heart Hospital, and Knapp Medical Center in Weslaco.
Combined, those seven hospitals have approximately 1,563 beds.
“If the seven hospitals are already just skating by,” said one physician, “what’s it going to do to them if DHR is allowed to double it bed capacity to 1,160 beds? Some of them aren’t going to stay open, and how is that going to help the community?”
Indeed, not all hospitals are immune to foreclosure. We saw that when San Benito’s Dolly Vinsant Hospital, a longtime fixturein the mid-Valley community, closed its doors for good in 2007.
There’s some reluctance apparently on the part of hospital administrators to currently butt heads with DHR over this planned expansion, at least on the record, because they’re currently trying to work with the physician-owned hospital to get a new county Hospital District approved by voters, presumably this November (it’s yet to be officially placed on a ballot by the county commissioners, but that action is expected soon). If passed, all the hospitals expect to benefit So, they’re all working together in collaboration to get it passed, since the federal dollars such a hospital district will produce is expected to benefitall the hospitals by helping offset the monies they currently lose to caring for indigent patients. Not all the taxpayers are keen on the idea. But now is not necessarily the best of times to finda hospital administrator willing to bad-mouth DHR or its planned expansions. At least not on the record.
Speaking to local physicians for this story, there’s also an apparent reluctance to speak out against DHR, again on the record. It’s as if they don’t want to alienate DHR too much, since they one day may want the privilege of admitting their patients to the acute-care to discuss the medical giant’s current plans for expansion.
Currently, DHR is considered a general community hospital with 530 licensed beds. Its growth has been staggering since it first opened 18 years ago as an outpatient surgery center on the corner of Dove and McColl. In 2003, it opened as an acute-care hospital with only 30 beds. Twelve years later, here we are with 500 more beds and a medical complex that shows no signs of slowing down.
McAllen’s mayor, Jim Darling, who also serves as general counsel for DHR, isn’t shy about the admiration for the facility for which he works.
“If it weren’t for DHR,” he said this week, “the Valley it is developing in partnership with the UT-RGV School of Medicine and the city of McAllen and Edinburg. Without DHR stepping up to the plate to fund the residency program, said Darling, “the medical school never would have happened.”
Now, on to the interview, which takes place in back-and-forth fashion with both Israel Rocha and Dr. Carlos Cardenas:
First question, there are some people out there who want to make you out to be the bad guys. The guys who want to steamroll over the competition, if you will. They say, look, if the area hospitals here in Hidalgo County are operating at only 50- to 60-percent capacity (still unverifiedby this newspaper, but it’s what several sources have told us), then why is DHR asking the federal government for a waiver to double its bed capacity?
Rocha: On the requirement for expansion (under Obamacare), all physician hospitals were not allowed to grow. You were grandfathered but you could not add any beds. That was the mandate under the Affordable Care Act. That was as a rule. However, there was a very complicated expansion exemption that was put into the law. None of those expansions included (the fact that all competing hospitals) had to be at 100 percent (bed capacity).
“We do believe that patients choose the hospitals based on quality, performance and metrics.
“We can give you a listing of different awards and accolades we've gotten, including being the top hospital in the region by US World & News Report, being the only hospital in the Valley to be ranked, and the standing for Texas hospitals under US News World Report for quality, performance and outcomes. We have some of the highest ratings in those quality metrics, and we think that's why patients are choosing (DHR).
“The main reason we're hoping to expand is to bring services that are not provided here in South Texas presently. That includes becoming a Level 2 and a Level 1 Trauma Center, bringing advanced procedures that are currently being transported out of the Rio Grande Valley, and hoping to save lives by bringing new services online here at our hospital. Those are services that are currently not offered here, and we're looking to expand to be able to meet those services and hopefully bring those services here to a community that richly deserves them.”
Dr. Cardenas: “The other part of that argument is that we have an area that's one of the fastest growing (regions) in the nation where our median age drop here was from 28 to 26 in just 5 years. I think with that being the case, the population growth in this area, the total number of beds now available, we're still relatively under-bedded for the population that we serve. And that population is expanding, not contracting.”
Not to sound like a PR guy for DHR, but especially if you consider Hidalgo County expanded by approximately 33 percent over the past decade, and in fact, doubled in population between 1990 and 2010. If you add to that, the exponential factor, the growth is not only amazing, but it becomes somewhat worrisome. How are we, the taxpayers, the medical community, going to provide for all of these people?
Dr. Cardenas: “Right, especially when you look at who it is that’s expanding. The number of children that are being born in our area is the other side of that. I think the other thing that we have to do as a community is prepare for that (growth). We have to be ready for that, and I think that we want to work with all of the members of the healthcare community to make that happen.
“Physician-owned facilities, you know, have basically had to meet a mark and/or set of criteria that no one else has been asked to meet, basically because our ownership structure is different. That's the only difference between us and anybody else, is that we have certain criteria we have to meet, and they don't have to meet any. If (one of the corporate owners of a local hospital) wants to come build another facility tomorrow, they can come do it. They don't have to ask anyone’s permission; they just go do it.”
Here I go again sounding like a DHR PR guy, but one could argue from your side, is that what you're trying to do is not wait until the need is dire but to plan ahead and stay ahead of the growth?
Dr. Cardenas: “Yes, and I think that the need is dire from where we're hearing from our population. We have a lot of needs here in the community. What I would also say is that our hospital has been the firs to really help and embrace the graduate medical education role. We have the most number of residents, we have the most number of teaching residents who are here in our community. We will be one of the largest medical sites for the medical school that is going forward for clerkship.
“We have an expanding role of research in different programs that are coming online. Our goal is to build a comprehensive medical center that will service South Texas, that will rival that of anywhere in the country, including the Cleveland Clinic, the Mayo Clinic. That's what our vision is. Our need for expansion is to be able to create that top- tier medical center that we believe the Rio Grande Valley deserves.
“With over 1.4 million people (in and around Hidalgo County), there is no reason why we should still not have a lot of these services that are needed, and in order to bring those services here, we need to grow and expand. Our growth is as much a story of the Rio Grande Valley as it is the story of our hospital. We're trying to grow so we can bring those services to a community that is deserving of them.”
You’re hoping to bring a Level 1 Trauma Facility here, I think you mentioned earlier? Currently, there’s only a Level 3 in the RGV. (The closest Level 1 Trauma Center to the RGV is in San Antonio. Closest Level 2 is in Corpus. A Level I trauma center provides the highest level of surgical care to trauma patients. Being treated at a Level I Trauma Center increases a seriously injured patient’s chances of survival by an estimated 20 to 25 percent (Wikipedia.com).
Dr. Cardenas: “Right now we’re on a journey, and hopefully our goal is to have a Level 1 Trauma facility here by 2020.”
Obamacare, the Affordable Care Act, if you will, actually made it more difficultfor physician-owned hospitals to expand, did it not?
Rocha: “One big thing did change, and that is, before the Affordable Care, we could expand. There was no prohibition. DHR, along with all the other (physician-owned) hospitals, had the same right to expand as they chose to in the community. After the Affordable Care Act (came into being), physician-owned hospitals were prevented from expanding, and only physician-owned hospitals were prevented from expanding. And now, in order to expand, we had to meet a very stringent criteria to be able to expand."
So, really, even though the CMS (Centers for Medicare and Medicaid) released a list in 2012 that showed that nine of the top 10 performing hospitals in the U.S. were physician owned, as were 48 out of the top 100, Obamacare didn’t do any favors for the owners of physician-owned hospitals?
Rocha: “No, it did not.”
Dr. Cardenas: “That is absolutely true.”
There have been a lot of critics over the years who oppose doctor-owned hospitals. Now, granted, one can conceivably argue that some of those same people are saying that because they work for the corporations who own their own for-profi hospitals. But that argument is, if a doctor owns part of a hospital, he or she is going to be more prone toward ordering more tests that may be unnecessary because there's a profitmotive to it. The more tests the physician orders, the more money the hospital makes in which he or she has part ownership.
Rocha: "I think that's a fair question. I think a lot of people get asked that. I think there are so many metrics in place. This is probably one of the most regulated industries in the country. You take physician-owned facilities, and you compare them against others, this is nationwide, and you look at that. I don't know that there are any more tests ordered here. I know that outcomes are certainly better nationally in general (at physician-owned hospitals). If outcomes are better, typically that transfer into savings, not losses.
“When this conversation began 10, 15 years ago, it was very different from the conversation we’re having today. For a case of pneumonia, whether it's treated at a physician-owned hospital or a corporate-owned hospital (or a non-profithospital), the DRG (diagnosis-rated group) is the same. Under the same DRG, I'm going to get paid the same amount whether I order 10 tests or I order 5 tests. It all comes out of that diagnosis rated group reimbursement.
“I think that many of those concerns have been dealt with in a regulatory way, and the playing field is pretty level.
“What I think we have been able to do is to develop a governance structure and a creative culture at this hospital that allows those members of the healthcare team to deliver the very best care that they can to the limit of their training, and to remove those impediments that allow us to go from bedside to boardroom and make the decisions that are good for patients every single day. That happens here very, very easily.”
Dr. Cardenas: “I think that the regulatory environment has changed over this period of time. In other words how hospitals are paid and/or reimbursed has really changed.
“As time has gone on, what we don't hear about is the other side of that argument, which is why is it okay for a hospital to hire a physician and have an employed physician, but it's not okay for a physician to own a hospital? Because really, it's the same argument."
Rocha: “In other words, for an in-patient during a hospital stay, we get paid the same amount whether we run one test or 10 tests.
“If you get admitted for an appendectomy, we get paid ... I'm just going to use a round number…a thousand dollars. If I run 10 tests, I get paid a thousand dollars. If I run one test, I get paid a thousand dollars.”
That’s on Medicare and Medicaid?
Rocha: “Yes, and most private insurance companies operate the same way. Most of the time there's really not too much of an incentive to run additional tests. The only incentive you have is to accurately diagnose a patient so that they don't get readmitted.
“The other reference made earlier by Dr. Cardenas, was that in 2008, The New York Times ran an article, where it announced that for the firs time in the history of our country, more than 50 percent of physicians in our country were employed by (corporate-owned) hospitals. And those hospitals who employ those physicians use different types of compensation, one of them being a US metric called a ‘Relative value unit,’ which (monitors) how many patients are seen.
“If a hospital can employ a physician and use the same types of incentives we use in contracting with physicians, how is that any different than a physician owning a hospital?”
Let’s play devil's advocate for a minute because you guys know that obviously with the phenomenal growth that you have experienced and so forth, there are always going to be critics out there throwing darts and so forth and saying, "Hey, these guys are trying to monopolize the market, they're throwing big money at politicians, they're greasing the palms and blah, blah, blah." You've all heard those criticisms before, so I mean what are some of your typical answers to those?
Rocha: “This is what I would say. As far as forming a monopoly, you know, the only thing that we are consumed with is creating services for the Valley. We welcome competition to that conversation. If we get into a competition where every hospital is building new services, if it helps patients meet their disease needs or their conditions or helps them to get better and heal, that's a better conversation that we want to be a part of. We are not consumed by what other hospitals do; we’re consumed by what we do and what we're helping to build.
"We make sure that we keep an open market, that it's fair, that it's available, but we are going to build a hospital that fully meets the needs of our community and we're not going to be deterred because other people are afraid to keep (up).
“What I would also say is you can see very quickly from a few statistics that our hospital is 100 percent committed to this community. We treat the largest number of indigent patients. We treat the largest number of Medicaid patients in Hidalgo County. We're the largest contributor financiall to getting the medical school of the ground and getting graduate medical education built in South Texas.
“Our hospital committed over $60 million to create residency programs in South Texas that are going to train future doctors and help enrich the community, and we have continued to bring research programs and investments here that have virtually no net margin on them but simply only advance the level of care.”
Dr. Cardenas: “I think the other thing you can say as a corollary is that our vision goes beyond healthcare. It goes to economic development; it goes to expanding educational opportunities for our youth; it goes to every aspect of every major pillar it takes to build a great community. That's what we're about. We've always been about that. You will always find DHR at the table when it comes to bettering this community, whether it's at a discussion to consider whether or not we should add or increase more numbers in, say, for example, a community college infrastructure or helping to build the medical school or the residency program.
“It's up to us, and if it means we've got to take the slings and arrows, so be it. We will be at the front end of the line, firstin line to get shot at if it means what we have to do for our community comes first We don't see ourselves strictly as just a hospital, but rather we see ourselves as an entity that is fully and completely committed to raising the level of the quality of life in South Texas. That's what we're all about. That's what this is ... that's what drives me every day I wake up.”
What do you say to critics who say, look, these DHR guys, all they’re trying to do is create a hospital monopoly here and drive all the other hospitals out of business.
Rocha: “We actually want every hospital to do well in South Texas because we want everybody to have a hospital to care for them. But we are not going to be held back because other hospitals don't want to pursue the advance lines of services that we want to. It costs money to bring specialties here like the Cleveland Clinic, the Joslin Diabetes Center. It costs money to pursue Level 1 trauma; it costs money to build a large transplant center; it costs money to build advance levels of services, to have specialists on call, in order to achieve the quality and skill ratings that we hope to build in our center; it all costs money.
"Maybe not everybody wants to (invest that much money) but because we want to, it shouldn't be something that's negative. We welcome everyone to the table.”
There’s a rumor floatin around that DHR is in discussions with the Mission Hospital to either forge a relationship with it or purchase it. Any truth to that rumor?
Rocha: “There are no discussions that involve us purchasing Mission Hospital.”
When I hear people in the medical community say that most of the area hospitals with which DHR competes are operating at about a 50 to 60-percent bed occupancy rate, how are you stacking up against those numbers?
Dr. Cardenas: “What we say is, we are 100-percent occupancy when you take into account in-patient, out-patient and observation stays. We are at 100 percent occupancy most days of the year.”
When will you findout if you get the waiver, the permit from the federal government (Centers for Medicare and Medicaid Services) to see if you can double your bed
Rocha: “We should findout sometime hopefully in the late fall, early winter.”
And as of right now, what’s standing in your way?
Rocha: "I believe they (the CMS) look at the public comments (that were sent in to the government earlier this year from DHR’s competitors – both competing hospitals and competing physicians -- and concerned members of the community who disagreed with DHR’s rapid growth). We're responding to the comments and validating some of the data, and then CMS reviews them.They closed the commentary (last month), and I think they have up to 180 days to review the comments and come up with the decision.”
Have you been able to review and look at the public comments?
Rocha: “We have. We reviewed the comments, and we found nothing that disagrees with our data. We're validating our data points and just sending reminders of the data we submitted and the confirmation we had and moving forward with our application and keeping our fingers crossed, and hope all goes well, not only for us but for the people of Texas so we can bring some new services online.”
CMS) look at the public comments (that were sent in to the government earlier this year from DHR’s competitors – both competing hospitals and competing physicians -- and concerned members of the community who disagreed with DHR’s rapid growth). We're responding to the comments and validating some of the data, and then CMS reviews them. They closed the commentary (last month), and I think they have up to 180 days to review the comment and come up with the decision.”