Cross-town rivals | MaineGeneral and Inland Hospital tussle over competing plans for new hospitals in Waterville
On Dec. 20, MaineGeneral and Inland Hospital submitted to the state Department of Health and Human Services separate expansion plans for their facilities in Waterville.
MaineGeneral, which operates 160 beds at the city's former Seton and Thayer hospitals, proposes closing Seton, expanding Thayer and keeping roughly the same number of beds. Inland Hospital, the only osteopathic hospital in Maine, would like to replace its existing 48-bed facility -- along with MaineGeneral's Seton and Thayer facilities -- with an entirely new 150-bed hospital. Each proposal would spend more than $100 million to accomplish these ends, and both would need Certificate of Need approval from DHHS in order to move forward.
Both players agree that, in theory, collaboration would be preferable to competition, and that continuing to operate three hospital campuses in one of the state's smaller markets may not make sense. And they agree that the state, which has identified expansion of hospital services and spending as key factors driving up health care costs, is not likely to approve major expansions without evidence that they meet cost-containment goals.
Yet collaboration seems a long way off, in part due to the inevitable jousting for market share natural to businesses -- even nonprofit ones -- and in part due to previous consolidations that brought about the current organization of Bangor-based Eastern Maine Healthcare Systems, which owns Inland Hospital, and Augusta-based MaineGeneral. As it stands, the state's second and third largest health care systems, respectively, have begun a battle over health care in Waterville that may eventually eclipse skirmishes such as the 2000 debate over Central Maine Medical Center's ultimately successful proposal to establish a cardiac care unit at its Lewiston headquarters.
At the center of the review process is Catherine Cobb, acting director of the Bureau of Elder and Adult Services. Ultimately, CON reviews will be conducted from the DHHS commissioner's office, since the bureau's primary regulatory oversight is of long-term care facilities. For now, however, Cobb is overseeing the process.
Under revisions begun by the Dirigo Health legislation, Cobb said, certificates of need are based not just on the projected need for services, but on conformity with the recently issued State Health Plan, which attempts to contain costs while providing uniform services across the state. Also under consideration are care indicators established by the Maine Quality Forum, another Dirigo initiative, and review of financial figures by the Bureau of Insurance.
With the numerous changes proposed by Inland and MaineGeneral, with each submitting, withdrawing and revising letters of intent, it's hard to determine the shape a DHHS review will take, let alone its outcome. "There's a little more jockeying for position now than in the past," said Cobb.
A family feud?
The discord between Inland Hospital and MaineGeneral may go all the way back to the mid-1990s, when Inland and Mid-Maine Medical Center in Waterville (itself a merger of Seton and Thayer hospitals) conducted talks about a possible merger. The discussions broke off without public explanation. Inland then agreed to be acquired by EMHS, while Mid-Maine concluded its merger with Kennebec Valley Medical Center in Augusta; the latter merged organization was then re-named MaineGeneral.
Further difficulties may have arisen from a 2003 draft of a state hospital study report, which suggested that Inland might be duplicating services available at the larger MaineGeneral campuses nearby. Or they could have come from MaineGeneral's 2004 proposal -- later withdrawn -- to combine its Augusta and Waterville operations at one site in Sidney, between the two major service center communities in Kennebec County.
Scott Bullock, MaineGeneral CEO, concedes that the plan to consolidate in Sidney prompted a bruising battle within MaineGeneral's service area communities. There were protests in Waterville, concerns in Augusta and questions about whether the rural town of Sidney could provide services for a major medical complex. Yet the consolidation plan "never meant we were diminishing services to Waterville, but that we were trying to serve all of our customers better," Bullock said.
Inland sees things quite differently. Daniel Coffey, interim CEO of EMHS, said the 2004 MaineGeneral announcement suggested that it was time for Inland to play a greater role in Waterville. Of the Sidney plan, he said, "If that had happened, we were willing to step forward to serve the people of Waterville."
According to Bullock, however, his organization is continuing efforts to realign regional services. MaineGeneral has already obtained state approval for a new, $23 million cancer treatment center in North Augusta to replace facilities in Augusta and Waterville, and another CON for a $9 million renovation of surgical wings in both communities.
After MaineGeneral dropped its Sidney plan last spring, Inland began to reconsider its own plans to renovate its existing campus. In June, Inland dropped a $17 million CON application for renovations to its three existing buildings and in September submitted a letter of intent for the 150-bed hospital. Sally Conary, interm CEO at Inland, said the new hospital is a much better idea, considering the state of the existing buildings, which date to 1971. (As this issue of Mainebiz was going to press, Inland Hospital named John Dalton as the hospital's new president and CEO.) "We would be in the position of fixing up buildings but without gaining any efficiencies. If you want to do the best job for patients, and spend health care dollars wisely, a new hospital is the way to go," she said.
Contrasting views
In addition to submitting its new hospital plan to the state, EMHS initiated talks with MaineGeneral about collaboration on such a project. The two sides have sharply contrasting views about those discussions, starting with when they began. While EMHS says it made overtures 18 months ago, Scott Bullock contends there was no serious conversation until last summer.
In addition, Bullock describes the discussions as an episodic process marked by unrealistic proposals by EMHS. "In the first version we saw, they offered us a choice. They would control 93% [of the single new hospital] in one [proposal], and 68% in the second." Bullock said he saw neither as a serious offer. Only later, he said, was the idea of a 50-50 split put on the table. But that option isn't particularly enticing to MaineGeneral, according to Bullock, since its Waterville operations are currently much larger than Inland's. In addition, he says, jointly operating a hospital in Waterville would mean decoupling from MaineGeneral's Augusta facility and undoing some of the benefits of the 1997 merger.
Coffey says the offer to collaborate was genuine, and generous in light of what he describes as continuing concerns about MaineGeneral's commitment to Waterville. "They're moving the cancer treatment out, and who knows what else might follow?" he said.
Bullock says that MaineGeneral will centralize services that make sense -- such as the cancer center. He pointed out that the organization's latest CON application will move inpatient psychiatric services in both communities to Thayer in Waterville, while consolidating in Augusta the substance abuse services now offered at Seton.
Under the circumstances, it is hard to see how the two sides will come to agreement. In the Waterville area, the hospitals have been pressing their case hard. Inland officials met with town councils in Oakland, Fairfield and Winslow to advocate for their single-hospital proposal, and asked for an endorsement of their plan. Oakland's council endorsed the single-hospital concept, but declined to back Inland's particular proposal. More recently, MaineGeneral has requested similar meetings; so far, one presentation, to the Oakland council, has taken place, on Nov. 30.
In Waterville, the city council declined to meet with representatives of either hospital separately. "We just don't know enough about the whole affair," said City Administrator Michael Roy. "It's not clear what shape it will take or how it will be managed."
Calling George Mitchell
So the action now shifts to the CON process and, again, EMHS and MaineGeneral have different approaches. In its application submitted at the deadline for large hospital projects on Dec. 20, MaineGeneral proposed adding 204,000 sq. ft. at Thayer while closing Seton. It would renovate an additional 64,000 sq. ft. at Thayer. Additional third-year operating costs, the crucial measurement under the state's revised CON process (see "Need to know," below), would be $4.4 million.
At the Dec. 20 deadline, EMHS submitted not a CON application, but another letter of intent, withdrawing the one it made earlier. It now intends to apply under the small-hospital program, with a deadline of April 1, because, according to what Coffey called "much better and refined estimates," the now $147 million, 150-bed hospital won't increase third-year operating costs, but in fact will save $1.3 million over what's now being spent. Because the new hospital would result in less than $500,000 in additional operating costs -- due in part to the fact that it would be replacing the city's existing 208 beds, at three hospitals, with 150 beds at one facility -- it belongs in the small hospital category, he said.
As for how this proposal would win the support of MaineGeneral, the letter of intent from Conary and Coffey says only, "Inland Hospital and EMHS will continue joint planning efforts with all stakeholders in Waterville (including non-EMHS providers) on the final design of the new facility."
Whether DHHS will respond favorably to MaineGeneral's straightforward construction plan or to EMHS' more innovative take on the CON process isn't clear. Bullock wasn't shy about offering his own assessment. He said approving both plans was "impossible," that approving Inland's (without MaineGeneral's cooperation) was "almost impossible," and that approving MaineGeneral's alone was "very improbable." He agreed that it's quite likely the state will simply turn down both proposals and send the parties back to the drawing board.
But EMHS apparently thinks the state might use Inland's latest plan, when submitted in a few months, as a means to push collaboration on its own. Coffey pointed out that, with a 150-180 day review process, DHHS would still be mulling MaineGeneral's application when EMHS's is due.
Michael Roy says Waterville city officials don't see much evidence that there's a real road map to how collaboration could take place. In fact, he said, the two hospital organizations seem far apart.
"Both sides need to hire a skilled mediator, to focus on whether the goals are similar and the groups have enough in common to work together. Maybe we could get George Mitchell up here," he said, referring to the former U.S. Senate leader and Disney chairman, a Waterville native. "First, they have to establish a platform for cooperation before the work can go any further."
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