Business Editor

Decision on Fort Mill hospital could be released this week

November 4, 2013 

The South Carolina Administrative Law Court may announce this week who gets to build a new Fort Mill hospital – a nine-year debate that’s been in and out of the courts. It could be headed there again.

In April Administrative Law Court Judge Phillip Lenski patiently listened to four weeks of testimony from representatives of Piedmont Medical Center, Carolinas HealthCare System and the state’s Department of Health and Environmental Control. After almost six months of deliberations, Lenski could:

• Affirm DHEC’s decision to award a certificate of need for a Fort Mill hospital to Carolinas HealthCare System, parent company of Carolinas Medical Center. DHEC awarded the certificate to Carolinas HealthCare in September 2011, finding the hospital was the best qualified when ranked on 33 factors ranging from the applicant’s record of providing health care and financial ability to build and operate a Fort Mill hospital to the impact of a new hospital on existing facilities.

• Reverse DHEC’s decision and award a certificate of need to Piedmont Medical Center of Rock Hill. In 2006, DHEC originally awarded a certificate of need to Piedmont. Challenges by Carolinas HealthCare and Presbyterian Hospital resulted in the courts sending the process back to DHEC for further review. That led to the September 2011 decision, which was appealed by Piedmont and Presbyterian. Presbyterian later dropped its challenge.

• Neither affirm nor reverse the decision, but send it back to DHEC for another round of agency action. That option is least preferred by all parties. They want the case to move forward. It’s also the least likely option as DHEC’s certificate of need program has been suspended for a year because of a funding veto by Gov. Nikki Haley.

The hospital without the certificate of need can ask Lenski to reconsider his decision. Lenski’s decision can also be appealed to the S.C. Court of Appeals.

Not in dispute is what each hospital system wants to build near Fort Mill.

Carolinas HealthCare has proposed a 64-bed, $77.5-million hospital near the Interstate 77Sutton Road interchange, overlooking the Catawba River. The state’s health care plan calls for a 64-bed facility.

Piedmont has proposed a 100-bed, $120 million hospital at the corner of S.C. 160 and U.S. 21. The site is now a peach orchard. Piedmont officials said its plans can be expanded to 250 beds to meet the growing population in northern York County.

Regardless of who builds the hospital, each plan calls for a 24-hour emergency room plus surgical, labor and delivery, and diagnostic services.

The arguments

In dispute is whether a CMC-Fort Mill hospital would affect Piedmont.

Attorneys for Piedmont argued a CMC-Fort Mill hospital would financially harm PMC and York County physicians. Adverse economic impact is one of the factors DHEC can consider in reviewing the certificate of need applications.

Witnesses for Piedmont testified that the Rock Hill hospital would see a drop of about 3,100 cases – or $12.5 million in revenue – if Carolinas HealthCare is awarded the Fort Mill hospital.

Piedmont attorneys said losing patients to Carolinas HealthCare over the years has changed the mix of payers, with Piedmont seeing an increase in the number of people insured by Medicare, Medicaid or having no insurance. If that trend of losing patients and revenue to CMC continues, Piedmont will see a “slow death,” said former CEO Charlie Miller. He testified he was “not sure (Piedmont) would have a competitive model” with a shift to more patients with less ability to pay. The shift, he said, may mean Piedmont will become “the hospital that it was in the 1980s.”

Carolinas HealthCare attorneys said a CMC-Fort Mill hospital would not economically harm PMC because northern York County residents are already getting their health care from CHS. A CMC-Fort Mill hospital would allow them to get health care closer to home, Carolinas Healthcare attorneys said. CMC officials estimated that they are already serving more than 50 percent of the patients in the Fort Mill-Tega Cay area. The area has a high percentage of insurance-carrying patients.

Quality of health care was also debated.

Doctors testifying for Piedmont said the loss of patients could affect their medical skills because of their need to have a certain number of cases to maintain their proficiency, especially in the more complicated specialties.

During DHEC’s review of applications, Piedmont officials said a continued loss of patients and revenues to Carolinas HealthCare hospitals in Pineville, N.C., and/or Fort Mill could force PMC to close its neonatal, infusion and wound care centers, as well as make cuts in the emergency department.

PMC currently is expanding it emergency department. The emergency department is the largest source of hospital admissions. The emergency department expansion is part of Piedmont’s strategy to compete in York County with Carolinas HealthCare. Piedmont also wants to recruit more physicians, which would increase the number of referrals to PMC. The third part of PMC’s strategy is reversing the decision on who gets to build the Fort Mill hospital.

A wild card in the debate is Haley’s veto in June of $1.7 million in DHEC funding for the certificate of need program. Haley said the program restricts access to health care, drives down quality and drives up cost.

DHEC Director Catherine Templeton has suspended the certificate program for a year, saying the practical effect of the suspension is that health care operators can expand or build facilities without a certificate of need. The law, however, still requires a certificate of need for projects costing more than $600,000.

PMC, Carolinas HealthCare, the S.C. Hospital Association and others are waiting to see how the S.C. Supreme Court acts on the governor’s and DHEC’s actions. Court watchers say a decision on whether to hold a public hearing on the issue could be reached by January.

Another factor is how the Affordable Care Act will shape health care. With an emphasis on preventative medicine, a new Fort Mill hospital may practice more out-patient care than traditional, in-hospital surgical care.

Don Worthington •  803-329-4066 •

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