Piedmont Medical Center awarded right to build Fort Mill hospital

The HeraldApril 1, 2014 

— Potential economic harm to Piedmont Medical Center, combined with the hospital’s commitment to York County, were the leading factors cited by an Administrative Law Court judge for giving PMC permission to build a Fort Mill hospital.

In a decision released Tuesday, Judge Phillip Lenski ruled PMC should be allowed to construct a 100-bed hospital at the intersection of S.C. 160 and U.S. 21. His ruling overturned a 2011 decision by the S.C. Department of Health and Environmental Control to award a certificate of need to Carolinas HealthCare System, the parent company of Carolinas Medical Center.

Lenski’s decision is the latest step in a nearly 10-year battle over who gets to build a Fort Mill hospital. But his decision may not be the last judicial hurdle because Carolinas HealthCare System can ask Lenski to reconsider or appeal the decision to the state Court of Appeals.

For now, PMC is moving forward foward with plans to build while Carolinas HealthCare System considers its options.

Tuesday’s decision ended a long wait for the two hospitals. Lenski heard arguments during 15 days in April and May 2013. The long wait for a decision meant a “wide range of emotions that were capped by euphoria Tuesday,” said Piedmont Chief Executive Officer Bill Masterton.

Masterton said the next step is to start planning for construction. He said he hopes to have the hospital open by 2018.

Chris Hummer, president of CMC-Pineville, said Carolinas HealthCare System was disappointed by the decision and would consider its options.

“What won’t change,” Hummer said, “is we are committed to taking care of York County patients. We have been there a long time and will continue to be there a long time.”

In his 40-page opinion, Lenski agreed with Piedmont’s argument that a Carolinas HealthCare hospital in Fort Mill would cause PMC economic harm, reduce the number of Piedmont patients and affect the Rock Hill hospital’s ability to provide quality health care. The judge also agreed with Piedmont that a 100-bed Fort Mill hospital would better serve the area for the present and future. Carolinas HealthCare proposed a 64-bed facility, which is what the state called for in its initial determination nearly 10 years ago that the area needed a hospital.

In considering economic harm, Lenski said the loss of patients would adversely affect Piedmont and independent physicians in York County. The result could be the loss of specialty services such as heart surgery, neurosurgery, vascular surgery and specialized women’s and neonatal care. If Carolinas HealthCare’s application was approved, “consquently there would be no hospital in York County providing many of the high quality and tertiary services that Piedmont provides,” Lenski wrote.

The judge also said that awarding a certificate certicate of need to Carolinas HealthCare would not stop the migration of patients to facilities in North Carolina and that CHS has no way to shift patients from CMC-Pineville to CMC-Fort Mill, as it had proposed.

Carolinas HealthCare had argued that many York County patients already travel to its hospital in Pineville, N.C. In fact, the hospital said more than 50 percent of the patients in Fort Mill and Tega Cay go to CMC hospitals

The “court finds CHS’s assumption that it would not take patients or market share from Piedmont by operations of CMC-FM unreliable,” Lenski wrote, adding that “to the extent that CHS can control where patients go for service, the court finds that there is little incentive for CHS to simply shift existing patients to CMC-FM. ... Merely serving the same patients that CHS already serves does not reflect sound business or healthcare planning principles.”

Lenski, basing his opinion on expert testimony, estimated that if Carolinas HealthCare built the Fort Mill hospital, Piedmont would lose between 1,600 to 3,000 patients per year and between $12 million to $22 million in income annually.

Piedmont’s commitment to the health care of York County residents impressed Lenski, who noted that Piedmont provides a countywide ambulance service, staffs a western York County urgent care clinic with a physician 24 hours a day, and pays the county’s indigent care tax. The commitment represents a $5.2 million loss for PMC annually.

Since last year’s hearing, Piedmont has stopped providing 24-hour care in western York County, according to the hospital.

Lenski also wrote that Piedmont’s proposal for a 100-bed Fort Mill hospital better met the county’s current and future needs.

Lenski wrote that the per-bed cost for each proposal was $1.2 million. The cost and the projected population growth meant Piedmont “will better meet the need for a new hospital in the Fort Mill area,” Lenski wrote.

In its application, Piedmont proposed moving 36 beds from its Rock Hill hospital to a new Fort Mill hospital. Carolinas HealthCare argued that would result in a “maldistribution” of beds countywide. Lenski disagreed, noting that even with the transfer, Piedmont would still have more than 70 empty beds daily at its South Herlong Avenue hospital.

Lenski also said Piedmont’s expansion plans better meet future needs. Piedmont’s proposed hospital is designed to be expanded to 250 beds while Carolinas HealthCare’s proposal calls for 20 more beds.

The judge also wrote that Carolinas HealthCare System overestimated the charity care at its proposed Fort Mill hospital. CHS estimated 6.3 percent of its expenses would be devoted to charity care. Lenski said that statistic was too high given the area’s relatively high income levels and high percentage of insured patients.

The judge also said that the guidelines Carolina HealthCare physicians use for referring patients to hospitals “suggests” these practices in York County “limit access for indigent, Medicaid, even Medicare patients.”

Michael Matthews, a Winthrop University health care management professor, said economic harm should not be the sole deciding. “It should also be based on who provides the best health care service.”

Lenski noted in his ruling that both PMC and Carolinas HealthCare System provide equal care.

But Matthews said Carolinas HealthCare’s competition poses significant eeconomic challenges to Piedmont.

Dr. Sushil Singhi, of Carolina Cardiology Associates, said Tuesday’s decision should help improve health care in York County. Residents won’t have to travel for quality care, he said. Cardiologists like himself, and other medical specialists, will have more access to cases to maintain their skills, he said.

The decision, if it stands, will also remove uncertainty that has hung over physicians and Piedmont, he said. Singhi is vice chairman of the medical staff at Piedmont and testified tesitifed for Piedmont at last year’s trial. He and other physicians have been waiting to see who builds the new hospital, noting that if Carolinas HealthCare was successful, they would change their affiliation to CHS.

With Tuesday’s decision, Singhi said his practice will move forward with hiring two cardiologists. “Other resources” may also come to Piedmont, he said.

Health care experts said the issue of patients leaving York County for health care won’t necessarily change if Piedmont ultimately builds the Fort Mill hospital.

Patient referrals are usually determined by the hospital a doctor is affiliated with and the patient’s insurance company.

“Those loyalities have been long established,” said Keith Benson, a Winthrop University health care professor.

“Patients will continue to move back and forth,” said Lynn Bailey, a health care economist based in Columbia. “That is the reality of border providers.”

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