Contracted care | A $322 million hospital consolidation project starts making the rounds

Entering the Harold Alfond Center for Cancer Care in Augusta, one immediately notices the design — a remarkably airy, light-filled space around a waiting area that looks more like a high-end hotel lobby than a traditional hospital.

The $40 million Alfond Center, which opened in 2007, represents a new approach to the rigors of cancer treatment. The center deploys the full range of chemotherapy and radiation treatments that have become part of the lives of so many patients, but it does so in a setting that seems resolutely non-medical. The patient treatment areas all face outward, into the open air, with comfortable couches for families to gather around. Outdoor gardens and paths provide an alternative treatment setting in warm weather, and inside there are rooms for the practice of alternative medicine and therapies, from massage to acupuncture.

Gail Evans, vice president of marketing and strategy for MaineGeneral Health, which owns the center, says the cancer center is designed to take as much of the stress and anxiety out of cancer treatment as possible. This is not just a marketing point — clinical research shows that outcomes improve. Equally to the point, the new center has resulted in a 20% increase in business over the previous treatment facilities in Augusta and Waterville, one of which was housed in a hospital basement, she says.

Now, MaineGeneral officials are betting that the success of the Alfond Center can be a catalyst for a much larger project — a $322 million consolidated hospital that would replace aging facilities in Waterville and Augusta by 2015.

A certificate of need proposal was filed with the state on Dec. 21, triggering what is expected to be a lengthy review. No plan of this size has been considered since the state approved the expansion of Maine Medical Center and the new Mercy Hospital in Portland, both of which were submitted before new certificate of needs standards were put in place by the Baldacci administration.

The four-level hospital would be on a knoll close to the Alfond Center in north Augusta, part of a 160-acre complex, closer to Interstate 95. It would have direct interstate access from a proposed expansion of Exit 113 that’s now under review by state and federal highway officials.

Not only is the plan the largest to be considered by the state in years, but it seems a near miracle that the project has gotten to this stage at all. Since Mid-Maine Medical Center in Waterville and Kennebec Valley Medical Center in Augusta agreed to merge administratively in 1997, there have been years of unsuccessful efforts to plan for a single, acute-care hospital. There was even doubt whether doing so was a good idea.

Again, the Alfond Cancer may have been instrumental in achieving a breakthrough.

“When we talked about the difficulty in recruiting oncologists,” says Scott Bullock, CEO of MaineGeneral Health, “I’m not sure people believed us.” Now that the cancer center is open, “We’ve added three new doctors, and people notice the differences in their treatment right away.” Evans says the expanded patient volume is directly related to MaineGeneral’s ability to recruit doctors — a goal it is also setting for the new consolidated facility.

Bullock says that once the benefits of the cancer center were clear to the entire staff, the idea of centralizing the hospital system became less threatening and more positive.

Under the new plan, the old Kennebec Valley Medical Center on the east bank of the river in downtown Augusta would close, as would Seton Hospital in Waterville, once run by the Catholic Sisters of Charity. Thayer Hospital, the other component of the old Mid-Maine Medical Center in Waterville, would be converted to outpatient surgery with a 24-hour emergency room. Overnight admissions would occur only at the new North Augusta site.

For years, MaineGeneral struggled with the problem of discontinuing acute care in Waterville, Augusta or both. The reaction of city officials in both places was at first decidedly negative. In 2004, MaineGeneral announced a plan to consolidate in Sidney near a rural I-95 exit. The virtue of the Sidney site, a town that has no downtown or even a village center, seemed primarily to be that it was in neither of the current host cities. The plan was abandoned within months.

Then in 2005, Inland Hospital in Waterville, an osteopathic facility that had been acquired by Eastern Maine Health Care in Bangor, announced plans for a 150-bed replacement hospital that would have quadrupled its licensed bed size. The idea was that MaineGeneral would play second fiddle to Eastern Maine in collaborating on a combined hospital, an idea MaineGeneral rejected. “We are the major provider of health care in the Waterville area,” Bullock says. “The plan didn’t make sense to us.”

The two organizations ended up submitting competing certificate of need plans to the state, MaineGeneral’s involving an expansion of the Thayer campus, but neither made it to the approval stage.

MaineGeneral is now the third-largest hospital in Maine, and Bullock says the plan will solidify its market position between Maine Medical Center in Portland and Eastern Maine Medical Center in Bangor, the state’s only highly specialized-care hospitals.

Getting used to the idea

Since the consolidated hospital plan was announced late last summer, the response has been largely positive. Waterville Mayor Paul LePage said at the time that he would prefer to take his own hospital stays to Portland or Boston if he couldn’t get services in Waterville, but the response of other community leaders and the medical staff has been more supportive.

Doug Cutchin, who serves on the hospital board and heads the Waterville Development Corp. — the group that helped redevelop the Hathaway mill and is now redeveloping the Head of Falls area — sees both sides.

He knows that Waterville residents would have preferred to keep an acute care hospital in their city, but says, “If you’re in business you understand why this had to be done. I just don’t see a long-term alternative. If you tried to keep all services in two locations, both hospitals are going to wither on the vine. They couldn’t survive in this form.”

After two years of wrestling with the location decision in hospital board meetings, Cutchin thinks Waterville is “resigned” to the Augusta site. An informational meeting at Thomas College was “surprisingly positive,” he says, particularly compared to previous plans that would have moved services from Waterville.

Augusta Mayor Roger Katz says, “If we’re going to prosper as a region, a first-class hospital is a necessity, and this allows MaineGeneral to attract top-shelf physicians.” In a glancing reference to the Waterville-Augusta competition, he says, “We’re glad it’s going to be here in the capital city.”

The site seems to be one of the selling points for the plan — rural enough to provide a peaceful setting, but close to major transportation connections that will include shuttle buses between Augusta and Waterville. Bullock credits the late Harold Alfond with the choice. “When we were talking about where the cancer center would be, he’d point to the map. ‘This is the spot,’ he would always say, and he was right.”

Now that the certificate of need application has been filed, state officials are effectively barred from commenting on the plan’s merits, but Chuck Hays, CEO of MaineGeneral Medical Center, says it is fully consistent with the State Health Plan. Among the goals contained in the plan for providers are expansion of public health services, superior design parameters — the Alfond Center is silver LEED-certified — and significant operating savings.

The hospitals now part of MaineGeneral Medical Center have 287 licensed beds; the new hospital would have 230 beds, part of the shift to outpatient services that’s been under way from some time. All of the new rooms would be private, as required for new hospital construction, which is aimed at preventing the spread of infection, improving treatment and accommodating families and visitors. “The data show that outcomes improve when families are more involved and part of the process,” Evans says.

The reduction in costs is estimated at $7 million for the entire MaineGeneral operation, which includes several physician practices and a teaching and community clinic called the Family Medicine Institute.

The operating budget is $333 million, including a payroll of $203 million and vendor payments of $130 million. MaineGeneral Health currently employs 3,500 and a reduction of 100 positions is anticipated from the consolidation.

To have its certificate of need approved, MaineGeneral must show that it can improve services to its principal and secondary markets. Evans says that hospitals have to walk a fine line between being available to patients who want to go there, and competing with other hospitals in a way that drives up costs. But there is significant “leakage” of patients from the MaineGeneral area for services that are available locally, according to a study by the Maine Development Foundation. Evans says that 12% of potential patients travel to Portland, while about 5% choose Bangor.

Bullock acknowledged that changes are coming in health care delivery and may accelerate with passage of health reform legislation in Congress. “We will have to change the way we pay doctors. We aren’t always getting the best care through the current system,” he says.

Maine’s high medical costs have sometimes been attributed, in part, to its plethora of acute-care hospitals. It has 39 acute-care hospitals; New Hampshire has 20 serving a similar population. Some of the smaller hospitals have had difficulty maintaining standards or simply staying in business.

Down East Community Hospital in Machias nearly lost its certification for Medicare and Medicaid payments this year. Blue Hill Hospital has terminated its maternity services because of financial stress, and has long been dependent on donations from area residents, registering red ink each of the past 20 years.

Still, the subject of hospital consolidation is nearly taboo, and the Hospital Commission initiated by the Dirigo Health legislation in 2003 dissolved in acrimony.

At the moment, the MaineGeneral consolidation plan is the only one on the table.

A history of mergers

Bullock says buy-in to the current plan has been helped because both of its predecessor institutions were also the result of mergers — Thayer and Seton became Mid-Maine in the 1980s, and the joining of the old Augusta and Gardiner hospitals as Kennebec Valley in the 1970s.

“The medical setting is important because it helps us do what we do better,” Bullock says. Hays pointed out that the existing buildings, which have been altered many times, are inefficient in that patients and staff must visit many parts of the building to complete a relatively simple procedure. “Since we’re dealing with sick people, these factors are more important than they would be elsewhere,” he says.

Redeveloping the existing hospital sites could be a challenge, but it’s one Augusta’s Katz welcomes. “Together with the American Tissue site” — a demolished mill complex now owned by the city — “we have two first-class riverfront properties that will be available for redevelopment.”

Katz says, “It’s taken decades, but these areas are now recognized as waterfront.” Residential development, which could help turn around the population loss Augusta experienced in the 1990s, will be key to such developments, he says. Hospital officials seem to agree that Augusta may be more valuable as a building site, though no specific plans will be made until the certificate of need is decided.

The Seton building might be a better fit for redevelopment, but Bullock says it has limitations. “The Sisters had it built like a battleship,” he says. “The walls are so thick we’ve never been able to put in air conditioning.”

While Katz is enthusiastic about the new hospital, he does have one other item on his wish list — that MaineGeneral consider paying property taxes. The hospital is tax-exempt under charitable standards for its nonprofit operations.

Bullock has a ready response. “We do pay taxes on all our leased space, and if we don’t use something for charitable purposes, we pay taxes on that, too,” he says. MaineGeneral has been the anchor tenant for the redevelopment of the Hathaway Mill in Waterville and the Carleton Mill in Winthrop, as well as the collaborative FirstPark business center in Oakland.

Construction of the hospital, which could start in 2011 and would take three years, would provide a significant boost to the regional economy “at a time when it really needs it,” Bullock says.

“We provide a range of public health services beyond those expected for hospitals of our size,” he says, including residency programs, mental health services and substance abuse treatment.

Bullock says he’s pleased to perhaps be nearing the end of the six-year search to find a suitable site and plan for a new hospital, and has no doubts about its merits.

“I’m 110% certain that this is the best way to do what we need to do,” he says. “It will be well worth the cost.”

Douglas Rooks, a writer based in West Gardiner, can be reached at editorial@mainebiz.biz.