|Posted on Monday, May 09, 2005|
We Mean Business. Illinois Business.
Gateway Regional Medical Center plans new hospital in Madison County
Bucking the trend of runaway medical malpractice premiums and an exodus of physicians, Gateway Regional Medical Center in Granite City is planning a new hospital near the intersection of Illinois Interstates 255 and 270.
Mark Benz, Gateway's chief executive officer, said Brentwood, Tenn.-based Community Health Systems bought St. Elizabeth's Medical Center in 2002 and renamed it Gateway. CHS operates general acute care hospitals in non-urban markets throughout the United States, totaling 74 hospitals across 22 states.
"We're doing well financially here," said Benz. "We acquired the hospital in 2002 and the revenues and the volumes have just been growing tremendously."
Gateway Regional, a 406-bed hospital located at 2100 Madison Ave., would be reduced to 206 beds under the plan, with 200 beds being moved to the new hospital.
"We think that the way the population is growing north of here in the Edwardsville, Maryville, Glen Carbon, Collinsville area that that's perfect demographics," Benz said. "We're looking potentially at the intersection of I-270 and I-255. As 255 goes north to Alton, south to Belleville and east toward the Glen Carbon area, we think it provides exceptional accessibility."
Gateway Regional's strength, due to its affiliation with CHS, has enabled it to remain successful while other area hospitals have been struggling with a combination of higher insurance premiums and loss of doctors. Benz says this strength has allowed Gateway to both recruit physicians here and retain them.
"It's due to the fact that we are a proprietary hospital and we're owned by Community Health Systems, which is a national hospital company," he said. "All the other hospitals in the Metro East are either community hospitals or they're faith-based and tend not to have the capital or the resources that a company like ours has."
One strategy CHS has used to retain physicians is that it created a malpractice foundation, a nonprofit organization that subsidizes its attending physicians' increased malpractice premiums. The hospital subsidizes this foundation, according to Benz, and funds it to the tune of a million dollars per year.
"We fund the physicians who have active privileges at this hospital and active practices in the community, 50 percent of their annual increase, up to $50,000 per doctor," he said. "That's been a way to retain the doctors in the community."
While Benz says that it's hard to keep doctors in Madison County, recruiting new physicians to the area is even more difficult.
"What we've been able to do on that is Community Health Systems created a self-funded medical malpractice insurance company in the Cayman Islands," Benz said. "For physicians whom we employ, we utilize our Community Health System insurance. We can guarantee malpractice insurance for any doctor who is employed with us. We're community-rated across our 74 hospitals in 22 states. So I don't pay the outrageous premiums that the rest of physicians are paying in Madison County," he added.
As an example, Benz said, Gateway Regional just acquired an orthopedic surgical practice. The practice was owned by six Mayo Clinic-trained surgeons who had been around a long time and were being forced out of the area by skyrocketing insurance premiums.
"Their premium in 2004 - for the six of them - was $400,000," Benz said. "On Jan. 1, 2005, it increased to $1 million annually. So we went ahead and bought the practice and employed the physicians. Now we're paying $100,000 a year for them under our insurance program. That has kept physicians here, and not just at our hospital. They have privileges at other hospitals. It's not just benefiting this hospital, but other hospitals as well."
Within the past 18 months, Gateway Regional has used this strategy to employ a total of 29 doctors.
"They still have their private practices, they still do what they've always done, but they just happen to be our employees," said Benz.
He agrees with a recent report by John C. Navin and Timothy S. Sullivan, economists in the Department of Economics and Finance at Southern Illinois University Edwardsville, which says Southwestern Illinois is underserved by the medical industry - when compared to St. Louis City and St. Louis County and as compared nationally. Benz says the source of the problem rests in the litigation.
"In our company, this is the most difficult location," he said. "We own six hospitals in Pennsylvania and they are having a significant medical malpractice crisis in that state, but it's not as bad as it is here in terms of the amount of litigation going on here especially. We see a higher incidence of litigation here than nationally - and especially in the higher incidence of frivolous claims being filed. We also see higher awards (here)."
Tough times have led to consolidation, according to Navin and Sullivan.
He says the insurance companies are trying to control utilization and cost of medical care, and hospitals and physicians continually have to justify care and treatment. Meanwhile, Medicare and Medicaid are reducing what they are paying and net revenues shrink. Medical malpractice insurance premiums are loaded on top of everything else, according to Gateway Regional's CEO.
Left with few options, administrators look to salaries, wages and benefits and end up with fewer employees, he said. That's one of the only ways the hospitals can control their costs, he says.
"Providing health care in the 2000s is much more complicated than it was 10 years ago," said Benz. "Every day is an obstacle and an opportunity."