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Archive for Saturday, April 1, 1995

S SUITORS MAY BRING EXPANSION

April 1, 1995

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Business pressures and ambitions are drawing hospital groups to Lawrence to give Columbia/HCA a run for its money.

Projected images of corporate logos, goals, missions, and graphs of survey results and governance structures dominated a series of presentations this week before the Lawrence Memorial Hospital board of trustees.

One slide, beamed onto a screen in the hospital auditorium Friday morning, showed a diagram said to represent one non-profit hospital chain's key components.

One circle was labeled "Physicians." One was labeled "Hospitals," and a third "Insurance."

Patients, like Nazaree Doleman of Lawrence, weren't a part of the picture.

"This is Lawrence. People live here," Doleman said Friday afternoon.

A 37-year-old Hallmark Cards factory worker, Doleman traveled three days every week for 18 months in 1993 and 1994 to Topeka to receive kidney dialysis treatments, which are still unavailable in Lawrence.

A year ago this month, she crossed the state line to receive a kidney transplant at St. Luke's Hospital of Kansas City.

"It's bad that we have to drive out of town to get what we need," she said.

More services

On Thursday, a hospital consortium including the Kansas University Medical Center held out the carrot of new services coming to Lawrence, as well as medical teaching programs sponsored by KU, if LMH aligns itself with that group.

But Glenn Potter, vice chancellor of hospital administration at KUMC, offered no specifics, while the group's presentation, like Friday's presentation by Mid-America Health First, focused on cutting costs, boosting profitability and setting the stage for fierce competition for managed-care contracts.

"I don't want to just talk about money, although obviously that's very important," said Kay Kent, an LMH board member and executive director of the Lawrence-Douglas County Health Department. "We must continue to be sure that we look after our community health needs, and that's where the patients and the people come in. We have to look at both."

When he took office in 1993, President Clinton focused on overhauling the nation's costly health-care system, which still leaves about 38 million Americans without insurance.

Clinton couldn't get his plan through Congress, but the anxiety it caused within the health-care industry set in motion a series of changes.

"What we're definitely seeing is the fallout from what happened with health-care reform," said Graham Bailey, a spokesman for Blue Cross and Blue Shield of Kansas, the state's largest private insurer.

"A lot of people might think President Clinton's ideas went down the chute," Bailey said. "I think it was a giant wakeup call to insurers, and to hospitals and physicians, that managed care is coming, and if we can't work within the private sector they're gong to reopen it again."

Lump sums

Under what are known as capitated managed-care systems, now common in Kansas City and widely believed to be headed toward dominance in Kansas, hospitals and doctors receive lump-sum annual payments to treat large blocks of patients.

If the patients remain healthy, the hospitals and doctors spend less on them and make more money.

In February, Columbia/HCA Healthcare Corp., the nation's largest for-profit health-care company, proposed buying a 50 percent stake in LMH. The Louisville, Ky., company has said it will build a new hospital in Lawrence if it can't invest in LMH.

One way or another Columbia wants beds in Lawrence so it can compete for broad managed-care contracts. Columbia executives have said they want to create a statewide network of facilities, either through mergers, acquisitions or construction.

The LMH board heard two counterproposals this week, one from Mid-America Health First, a system of 13 hospitals that includes St. Luke's Hospital of Kansas City and Shawnee Mission Medical Center, and one from an 18-hospital coalition that includes the KU Medical Center in Kansas City, Kan., St. Francis Hospital and Medical Center of Topeka and the 13 Kansas City hospitals in the Health Midwest system.

"To use a Wall Street term, I feel like we're in play," said Dennis Strathmann, chief financial officer at LMH.

The rush to form partnerships and other deals in the hospital industry is occurring nationwide, with hospitals and hospital systems merging and forming joint ventures to maximize efficiency, cut costs and be prepared for what many believe is an inevitable focus on managed care.

Ken Martinez, chairman of the LMH board, said it would take the board several months to reach a decision about the offers presented by Columbia, Health First and the KU consortium.

"So much of the discussion does center on the cost factor and staying competitive," Kent, of the LMH board, said. "Being sure that we continue also to focus on meeting patient needs, that should not be lost. It's always in the back of my mind."

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